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2009-10-09T21:15:00.001-07:00

For years, exponents of speed‑reading techniques have sought to persuade us that our ability to absorb and retain meaningful information is limited only by our own imagination – and that it’s our misconceptions about the brain’s capacity to take in vast amounts of data that stop us from learning how to read more effectively. ‘We stop refining our reading skills at a very young age,’ says Tony Buzan, one of the world’s leading authorities on innovative learning techniques. ‘Once children are taught how to read – for instance, using traditional phonic or look-say methods – they’re considered to be literate; after that, it’s simply a case of expanding vocabulary and comprehension. But this is missing a critical point – it’s like learning to walk without then going onto practise running or dancing.’

Buzan believes that we all have the ability to double or even triple our reading speeds – and that this ability need not diminish with age; in other words, it’s not too late to learn. So why do so many people regard speed-reading as a bit of a cop-out?

A common assumption is that by reading faster, students are more likely to miss key information. Rowan Hoskyns-Abrahall, co-founder of Solve IT With Science, which developed Really Easy Reader software, disagrees: ‘It’s just not the case,’ she says. ‘It’s true that you can learn to skim-read faster – and this is a useful skill for reviewing documents and books to see what they contain. But if you intend to absorb the contents properly, then you’ll need to read them properly. More importantly, when you’re properly focused and can drop distracting thoughts, your concentration improves, so your comprehension increases. This is where truly faster reading can save a great deal of time and add value.’

Speed reading is one of the most effective ways of, in a sense, upgrading your brain-power, while unlocking your innate creativity, says Buzan: ‘And it’s far from a quick fix – learn how to speed-read effectively and it can transform how you learn and work, with lasting results.’

Overcoming belief systems
Hoskyns-Abrahall adds that belief is a common barrier to many personal achievements, not just attaining faster, more effective reading speeds. ‘Most people have been reading at the same speed for years without any change – so they naturally find it hard to believe that it’s possible to read faster to the same effect, never mind even better results,’ she says.’ They’re therefore surprised when their reading skill improves dramatically and instantly. But it gives them great confidence.’

What advocates of speed reading say is that people must overcome ‘sub-vocalisation’ – the human trait where we hear the sound of our own voice as we read. Really Easy Reading’s software uses ‘rapid serial visual presentation’ (RSVP), which eliminates this trait but matches the average reader’s true ability to absorb information. And by utilising RSVP, reading speeds might typically multiply to over 600 words a minute – an increase of about 300%.’

‘Once readers have used easy reading techniques, they have to admit that they can seriously improve their reading skills,’ says Hoskyns-Abrahall. ‘Their pre-conceptions were integral to – and indeed, conflicted with – their previous educational experiences and perceptions.

Speed up your studies
The most popular use of speed-reading techniques amongst students is for revision. No matter how well-structured or bite-sized the chapters and sections, no matter how memorable the examples and box panels, there may be an enormous amount of ground to cover.

‘Revision is based on memory retention,’ says Hoskyns-Abrahall, who references the ‘Ebbinghaus Curve of Forgetting’. This theory holds that there are a certain number of times it’s necessary to revise a subject in order to commit it to memory.

‘Essentially, students would read the information, revising it, say, five times, with longer lengths between each reading,’ she continues. ‘In other words, they’d read the material now, read it again in an hour, then a day, a week, a month, six months and so on. According to the theory, this should result in 80% retention. So, obviously, as a crucial element of revision is the length of time it takes to re-read the material, speed-reading provides a great advantage.’

Buzan’s speed-reading techniques are highly focused on recall – he says it’s not enough to store information away in the brain; it’s the ability to retrieve key facts and figures when you need them that makes the key difference.

‘If you learn to speed-read properly, you will achieve far more than you can imagine,’ he says. ‘You’ll be able to communicate your knowledge when commanded to, in a way that’s relevant to the needs of the user. That’s why speed‑reading includes an essential element of preparation – you can’t simply steam in and absorb a whole chapter without first previewing the material, taking in factors such as structure, headings, sub-headings and key words – as well as applying your own knowledge of what you, as the reader, are looking for, and what the author is striving to impart. Speed-reading is not an abdication of the brain.’

At the office
But it’s not just for passing exams that speed-reading skills can be deployed profitably. In the knowledge economy, office workers must absorb, retain and recall enormous quantities of information.

‘Sifting through the large daily amounts of emails, reports and web pages really brings the need for speed-reading to the fore,’ says Hoskyns-Abrahall. ‘However, it’s not just about reading as such. Other knowledge techniques can help with managing and channelling information quickly and effectively – such as making fast notes from material, and then structuring documents for presentation or publication. Any speed-reading products worth their salt must also include elements that boost these complementary techniques.’

Looking forward
Speed reading, or simply reading faster, is likely to become more integral in business – and in society, where ‘knowledge is power’, and where the ability to manipulate information is a pre-requisite in today’s (and tomorrow’s) working environment.

‘The ability to save time, and compress both learning and knowledge management into shorter periods, will allow less stressed but more informed and productive lives,’ says Hoskyns-Abrahall.

‘In fact, in the same way that computing advances have allowed more to be done in the available time, speed reading will add further to this. Immediacy of information will become king!’

Work / study balance

2009-10-09T21:14:00.001-07:00

Work / study balance: planning your study time

Studying while holding down a job is a whole new ball game, requiring a considerable amount of planning, including around factors you might not have much control over – such as workload pressure or the demands of your boss. Our advice - plan ahead:

Give yourself a break – accept that achieving the perfect balance between work, study and your personal life is a ‘big ask’; that doesn’t mean you shouldn’t try, but don’t beat yourself up about occasionally having to make compromises.
Develop the habit of good habits – no-one wants to be stuck in a rut, but having a structure that allows you to stay disciplined while allowing a degree of reasonable flexibility will help you get into the groove of your studies without feeling straitjacketed.
Identify when you’re at your most alert – optimise your studies by keeping this time free for your textbooks and homework; if that means finding a quiet room in the office during your lunch hour, or before or after work, so be it – and your diligence and dedication will be on display to the powers-that-be.
Maintain a study diary – and add your study schedule into your office diary; you’ll be far less likely to break the commitment you’ve made yourself if your sessions are written down in black and white.
Less is more – a two or three-hour study session might seem like a good idea when you’re bursting with energy and enthusiasm, but loses its allure at the end of a long, gruelling day at work; by all means put aside evenings to study but take plenty of breaks, especially if you’re reading reams of text on a screen.
Just five minutes – it’s easy to convince yourself there’s little point in studying for much less than 15 or 30 minutes; but short bursts can pay huge dividends; try writing key points in colours on small filing cards to revise on public transport or when waiting to meet friends.
Take physical breaks – crouching over a book or laptop and concentrating on taking in all you read will take a physical as well as mental toll; stretch, take short walks; even try breathing exercises to re-energise yourself and ensure you don’t give up because of discomfort.
Seize the day – everyone’s different but many of us are better at assimilating complex information during the daytime.
Brain food, but at the right time – certain foods boost our brain power and wellbeing, so ensure you have a balanced diet that includes protein-rich staples (such as fish, broccoli, nuts, dairy products) and sources of serotonin (such as pasta, starchy vegetables and cereals) but be careful not to load up immediately prior to a study session; let your body’s digestive system do its work before you settle down.
Don’t head to bed on your studies – you need quality sleep to be an effective student (and be fit for the office); allow yourself time to relax between studying and sleeping; read or do something to take your mind off the subject.

25 Corporate collapses – and the lessons learnt

2009-10-09T21:08:00.001-07:00

There have been some high-profile corporate failures over the past year, and the evidence suggests that the bloodbath isn’t over. We take a look at 25 more prominent cases to draw salient lessons for every business.

It’s getting ugly out there. Credit agency Dun & Bradstreet believes one in nine companies could hit the wall this year, although some accountants and restructuring experts are privately worried that 30% of their clients are in danger of collapse.

In the last 12 months, around 8898 companies have been placed in administration, liquidation or receivership. But what’s most worrying is the number of big brands that have collapsed, including household names such as ABC Learning, Kleins, Strathfield and Midas.

Greg Hayes, director of accounting firm Hayes Knight and SME expert, says the collapse of iconic brands is a troubling sign. Not only does it indicate the wider economy is heading for a prolonged downturn, but the collapse of big-name companies can often have devastating knock-on effects.

Hayes gives the example of ABC Learning: “ABC over the past three or four years were growing at such a phenomenal rate. If you were a small or medium business that was supplying ABC, this has this huge multiplier effect.”

While SMEs are always warned not to become too reliant on any one customer, that sort of growth is hard to resist.

“Typically very few small businesses, if they had the tiger by the tail, would let it go,” Hayes says. “But if your ABC falls over, then the tiger in the tail can turn around and bite you. Then it’s a question of ‘can I adjust my cost base quickly enough to save my business?”

But you don’t need to be the supplier of a collapsed brand name company to run into problems.

Hayes gives the example of the collapse of Storm Financial, another group that had grown at a very fast rate and achieved large market coverage in a short space of time. The fallout from Storm’s collapse is being felt throughout the financial planning space.

“All of a sudden across the whole sector, people who are absolutely unrelated to this business are picking up some of those legacy issues,” Hayes says. “The flow-on impact is that a lot of people are saying to their financial adviser, ‘are you OK?’.

“I think we are in a marketplace where we are going to see a lot more of that ripple effect.”

To help you avoid the traps that cause companies to fall over, we’ve prepared a list of the 25 most prominent corporate collapses in the past 12 months. As the year goes on, the lessons from these disasters are likely to become even more important.

ABC Learning Centres

Date: November 2008
Sector: Childcare
Lesson: ABC Learning founder Eddy Groves had a pretty good little business going in Australia – profitable, fast growing and underpinned by government childcare subsidies. But his forays into the US and British markets distracted Groves from the day-to-day running of the Australian business, and without his scrutiny the low-margin operations started losing money. Eddy’s ambition of creating a global childcare giant was his undoing – had he stayed focused, ABC’s fate could have been very different.

Allco Finance Group

Date: November 2008
Sector: Financial services
Lesson: Like fellow fallen finance groups such as MFS, Allco’s problem was simple – too much debt. Add this to a business model that was insanely complex and you have a recipe for disaster.

Apollo Life Sciences

Date: October 2008
Sector: Biotechnology
Lesson: You have to feel sorry for companies in the biotechnology sector. It takes years of research, product development and trials for these companies to turn a profit, which means they must continuously raise cash to stay alive. The funding freeze has hit the sector particularly hard – no-one wants to be involved in companies with long-term risks. As always, cash is king.

Asset Loan Group

Date: September 2008
Sector: Financial services, property
Lesson: Another company that seemed to believe the good times would last forever. When the credit crisis hit, this small Queensland financier-turned-property-developer began frantically trying to sell assets to repay debt. But as the property market went into freefall, getting a sale across the line took too long, and Asset Loan Group went under. As administrator John Greig said, timing was the company’s biggest problem in the end.

Australian Discount Retail (Crazy Clark’s, Go-Lo, Sam’s Warehouse)

Date: January 2009
Sector: Retail
Lesson: The collapse of Australian Discount Retail’s three cheap-and-cheerful chains was a shock – discount stores generally do well in a recession. But the company’s private equity owners had loaded the company with $201 million of debt, giving ADR little room to move when retail spending slowed. As always, debt kills.

Bill Express

Date: July 2008
Sector: Financial services
Lesson: The collapse of electronics payment provider Bill Express hit the company’s customers – mainly newsagents and small telecommunications providers – very hard. In hindsight, the company’s financials were clearly a mess – despite reporting a profit in every year it was listed (since 2004) the company managed to rack up debts of $180 million by the time it collapsed.

Beechwood

Date: May 2008
Sector: Construction
Lesson: The collapse of New South Wales’s largest homebuilder sent shockwaves through the property sector. The company was squeezed from three angles; demand dried up as the economy tanked, the cost of contractors and tradesman continued to escalate, and the credit markets froze. But Beechwood and the other collapsed home builders were guilty of undercutting each other and destroying margins in the process.

CFK Childcare

Date: November 2008
Sector: Childcare
Lesson: The collapse of ABC Learning sealed CFK’s fate – its attempts to sell its assets became impossible when ABC went under. The lesson from the childcare sector collapses is that apparently cottage industries such as childcare (which had, until 10 years ago, been largely dominated by community groups and single operators) are not always as easy to corporatise as it may appear.

Commander Communications

Date: August 2008
Sector: Telecommunications
Lesson: Technology experts say Commander Communications treated its customers poorly, overcharging them for relatively old technology solutions. That was OK when the company had a strong position in the SME market, but as competition increased, customers turned away and revenue fell.

Destra

Date: November 2008
Sector: Digital media
Lesson: Digital media company Destra was always difficult to describe, mainly because it had so many different elements, from digital music businesses through to publishing through to marketing. The speed at which these diverse businesses were cobbled together proved to be the company’s undoing – Destra bought separate companies in the three years before its collapse, with most of the acquisitions funded by debt. In the end it was a case of too much, too fast.

EBS International

Date: July 2008
Sector: Online retail
Lesson: EBS International was better known as EBusiness Supplies and became one of the biggest traders on eBay until its collapse last year. The company’s grow-at-all-costs mentality seemed to have been its undoing – it kept selling more and more goods even as its problems with suppliers and delivery mounted, further compounding its problems and eventually leading to its demise.

Elderslie Finance

Date: July 2008
Sector: Financial services
Lesson: Former Liberal leader John Hewson resigned as chairman of Elderslie just weeks before the company was placed in receivership. The company’s problem was simple – it ran out of cash as investment markets tumbled and fee revenue shrunk. Another example of a business model built for good times but unable to weather the downturn.

Environinvest

Date: September 2008
Sector: Agribusiness
Lesson: Environinvest, which was founded by former Victorian state government minister Roger Prescott, was an unlisted public company that operated agricultural investment schemes, including tree plantations and cattle projects. While the company’s debt and poor cashflow forced it into administration, there were clear issues with management – in correspondence with the company, auditor David Nairn of HLB Mann Judd noted “ambiguous transactions with little documentation” and questioned the timeliness of financial reporting.

EzyDVD

Date: December 2009
Sector: Retail
Lesson: EzyDVD is one of those rare birds – a collapsed company that actually found a new buyer, the Franchise Entertainment Group. Poor management seems to be the big problem here. The company reportedly lost $3 million in its last few years of operation and founder Jim Zavos went through two CEOs in quick succession in 2008. Now that the company’s unprofitable stores, warehouse and headquarters have been shut, the new owner should be able to turn the business around.

Freightlink

Date: November 2008
Sector: Infrastructure
Lesson: The collapse of Freightlink, owners of the Adelaide-to-Darwin railway, surprised no-one in the transport and logistics sector. The sheer cost of building the line meant the company had to take on huge borrowings, but revenue never lived up to the company’s over-inflated expectations. Freightlink was doomed to fail.

GMC

Date: December 2008
Sector: Manufacturing
Lesson: The collapse of power tool maker Global Machinery Company was a shock, but the reason was clear – Bunnings. When the hardware giant took GMC’s products of its shelves in early 2008, GMC’s sales plummeted and its debt load became difficult to manage. The lesson? If you can’t get on the shelves of the dominant retailer in your sector, you are in trouble.

Herringbone

Date: December 2008
Sector: Retail
Lesson: Luxury shirt brand Herringbone revelled in its image as outfitter to the financial services whiz kids of Martin Place and Collins Street. But as the financial crisis swept through the office towers of Australia, Herringbone’s sales fell by 23% in two months. Luxury goods always struggle in a recession, but Herringbone’s position was made all the more precarious by its debt levels.

Kleins

Sector: Retail
Date: June 2008
Lesson: As well as the usual problems of mismanagement and too much debt, low-cost jewellery retailer Kleins was guilty of one of retail’s biggest sins – failing to keep up with its consumers. The arrival of costume jewellery chain Diva should have forced Kleins to freshen its product range and chase a younger consumer, but the company simply didn’t move quickly enough. Sales dried up, stock built up, and eventually the doors closed.

Lift Capital

Date: May 2008
Sector: Financial services
Lesson: It was no coincidence that stockbroker and margin lender Lift Capital collapsed shortly after Opes Prime. While the company was tottering because of market conditions, the ripple effects from Opes caused a run by clients, almost immediately condemning the company to administration. The lesson is clear – when one of your competitors goes down, be prepared to feel referred pain.

MFS (aka Octaviar)

Date: September 2008
Sector: Financial services, property, tourism
Lesson: It took MFS the best part of year to die, but the company’s fate was sealed in a few short weeks at the start of 2008 when a billion dollar pile of debt crushed the company as the credit crisis struck. Debt is bad enough, but when your entire business model is built around the idea of borrowing money to buy over-priced assets, you will almost always hit trouble when the business cycle turns.

Midas

Date: January 2009
Sector: Automotive retail
Lesson: Midas was put in administration early this year by its high-profiled shareholders, including former Coles boss John Fletcher, although the administrator is hopeful of finding a buyer. Midas’s ill-fated move into LPG conversions (which were suddenly less attractive because of falling petrol prices) didn’t help its cause, but its incredibly acrimonious relationships with franchisees was also a constant distraction for management.

Opes Prime

Date: April 2008
Sector: Financial services
Lesson: In hindsight, the collapse of margin lender Opes Prime was the moment the global financial crisis hit Australian investors. While the Opes mess will probably take years to sort out, at the heart of its problems was poor management. When a key client’s debts exploded, the company appears to have been unwilling or unable to act. But in the end, this brought the entire company – and about 1400 clients – down too.

Raptis Group

Date: February 2009
Sector: Property
Lesson: Jim Raptis was all but wiped in the property crash of the late 1980s and early 1990s, but the spectacular boom in Gold Coast property during the last decade allowed him to rebuild. Now, it’s all gone again. Not surprisingly, the problem was the same – Raptis Group was so heavily geared that when the apartment sales dried up, the company was simply unable to pay its financiers and subcontractors.

Storm Financial

Date: January 2009
Sector: Financial services
Lesson: The collapse of financial planning group Storm Financial has been covered in depth, but the key problem was the company’s inability to build a business that could last through a business cycle. The company’s model – and its advice to clients – was based around the bull market, and when financial markets crashed Storm was unable to cut its cost quicker than its revenue was falling. A business must be strong enough to make it through good times and bad.

Strathfield

Date: January 2009
Sector: Retail
Lesson: The management of mobile phone and car audio retailer Strathfield has been a problem for the last few years, with directors, executives and shareholders coming and going at an alarming rate. The revolving management door has not helped the company’s profitability and a disastrous Christmas trading proved to be the final straw. As any good manager knows, stability is crucial to business success.

Lehman collapse: Lloyds and HBOS a disastrous deal hatched in a Mayfair flat

2009-09-16T23:30:00.001-07:00

The collapse of Lehman Brothers a year ago had serious ramifications for other banks, not least HBOS, which was forced to seek a merger with Lloyds TSB. At the time the deal looked problematic but it soon turned out to be disastrous for Lloyds, with the Government having to step in to bail it out and its chairman, Sir Victor Blank, eventually stepping down. We take a close look at the merger

It was in a three-bedroom flat in a plush corner of St James's in Mayfair that HBOS received its last rites as an independent bank. Andy Hornby, chief executive, often stayed in the executive apartment when away from his Yorkshire home but this time the flat would serve an altogether different purpose.

Hornby was preparing to sell Britain's biggest mortgage lender in a deal that would be struck in the space of 12 hours and reshape the face of UK high street banking forever. The alternative was unthinkable: nationalisation.

Lehman collapse: in full.

All Hornby's hopes rested on a merger with Lloyds TSB. Conscious that such a huge deal would require utter secrecy, he decided the most private venue for talks was HBOS's Mayfair suite. With him were his finance director, Mike Ellis, and main adviser, Simon Robey of Morgan Stanley. From Lloyds, Eric Daniels, chief executive, arrived with finance director Tim Tookey and his lead adviser from Merrill Lynch, Matthew Greenburgh. It was the middle of the afternoon on September 16, the day after Lehman Brothers' collapse, and HBOS's shares were in a tailspin.

HBOS had long been considered Britain's most vulnerable lender because of the £198bn mismatch between loans and deposits that made it heavily reliant for funding on the paralysed money markets. Lehman's failure the day before was the final straw. Confidence had evaporated and by Tuesday it was clear the run on the stock would soon become a run on the bank.

The six began hammering out a plan. Although presented as a merger, Lloyds would take over HBOS at a discount to its book value. In the driving seat, Lloyds took a firm negotiating stance, while "Andy was in a state of panic", one person at the meeting said. "There was a lot of aggression between the two teams. You always get that in a bid but this was compressed into a few moments and the stakes were enormous. Obviously, it got heated."

Room service was ordered as the hours wore on. At one point, Sir Nick Macpherson, Permanent Secretary to the Treasury, arrived to discuss how the Government would honour a pledge to override competition rules made the previous day by the Prime Minister to his friend and Lloyds' chairman, Sir Victor Blank. Satisfied, Macpherson left, leaving the bankers to battle over terms until the early hours.

By 3am, an indicative price of 285p a share was struck and senior politicians informed but, almost immediately, it became a point of contention. The following morning, HBOS shares continued their dramatic collapse. Fears that the bank would not have the liquidity to meet counter-party demands and collapse before the deal was signed meant that news of the talks was leaked. Robert Peston, the BBC's business editor, carried on his blog at 9am that Lloyds had bid "near 300p a share". HBOS shares immediately rallied and the worst fears were allayed.

Daniels, though, was furious. He had indicated a price, not agreed one, and threatened to pull out altogether. Despite pressure not to renegotiate from politicians and HBOS, Daniels refused to be coerced into the deal. With nationalisation looming, Hornby, now in his office at Bishopsgate, was again reduced to "a state of high anxiety".

However, Daniels was not going to let the long-sought trophy slip from his grasp. He had first approached Hornby about a merger two months earlier, when HBOS's £4bn emergency rights issue was in jeopardy. Hornby had dismissed it on the grounds that the competition authorities would never approve, just as he had when the two men had broached the subject in the past. But a seed was sown.

Later, Sir Victor took the issue up with the Prime Minister on a business delegation to Israel, when an understanding was reached that, if necessary, the Government would protect Lloyds from the competition authorities. It was Sir Victor who called Lord Stevenson, the HBOS chairman, on the fateful Tuesday morning. As one insider put it: "He told Dennis, 'We've got the go-head from Gordon Brown on competition. You've got to do something'."

As time ebbed by on the Wednesday, and aware a deal had to be announced the following morning, Daniels relented and by mid-afternoon returned with a lower offer of 232p a share. In no position to negotiate, a relieved Hornby accepted. So began another sleepless night – this time in the offices of Lloyds' lawyers, Linklaters. About 30 people from each side prepared the documents over "pizza and limp salads" as the office lights blazed. The merger was announced the following morning.

In the immediate aftermath, with HBOS stabilised, Daniels was hailed as a banking saviour. But nagging doubts slowly surfaced as it became clear Lloyds had not secured any protection from the Government. Lloyds had simply imported HBOS's £198bn funding gap on to its own balance sheet.

The strategy, it seemed, was to gamble that Lloyds' reputation as a conservative bank would reassure markets. Unfortunately, the reputational influence worked the other way. HBOS, the bigger bank, soon began infecting Lloyds with its bad commercial and mortgage lending. The markets did not recover from the Lehman aftershocks and, on October 13, the UK's largest-ever banking bail-out was launched.

One banker observed that "Lloyds had a chance to pull out or demand extra Government support" over the weekend that the rescue was devised. Instead, they negotiated a 27pc reduction in the offer, from 0.833 new Lloyds shares for each HBOS share to 0.605. At that price, the deal transferred £15bn of value to Lloyds and it promised another £1.5bn in annual synergies. At the same time, the Government injected £17bn of capital into the combined bank, £5.5bn specifically for Lloyds, for a 43pc stake. Hypnotised by the value transfer, though, Lloyds shareholders voted the deal through.

That £15bn now looks like poor compensation for the losses incurred. HBOS made a £10.8bn pre-tax loss in 2008 and another £9.5bn loss in the six months to June. The scale of the HBOS's bad lending forced Lloyds to pledge £260bn of "toxic" assets to the taxpayer-backed insurance scheme, which it is now desperately trying to wriggle out of by raising capital independently. Making matters worse are European competition regulators, who are threatening to unpick the deal. In the worst-case scenario, Lloyds, which now has a third of the UK's mortgage and current account markets, could be forced to demerge Halifax.

Investors are seething at the loss of shareholder value and furious that Lloyds abandoned its reputation as a conservative lender. The merger has already cost Sir Victor the chair and many believe his replacement, Sir Win Bischoff, who joined this week, will shortly arrange Daniels' departure. In time, if the competition regulators allow it, the deal – hatched over a few hours in a Mayfair flat – may prove the doubters wrong. For the moment, though, it is viewed as among the most calamitous ever.

Balfour Beatty to raise £350m to fund acquisition

2009-09-16T23:26:00.001-07:00

Engineering and construction group Balfour Beatty is readying a surprise rights issue of as much as £350m.

Balfour Beatty

The company, which is widening the M25 and building the London Olympics Aquatic Centre, is planning to use the capital raised to fund an acquisition.

Bankers at JP Morgan Cazenove and Hoare Govett, now part of Royal Bank of Scotland, have been appointed to run the rights issue, which is expected to be launched within days.

Balfour Beatty is due to drop out of the FTSE 100 at Friday's reshuffle. Shares in the company have risen in the past month but retreated on Wednesday, slipping 7 at 344p.

Bankers have warned institutional investors to brace themselves for a spate of capital raisings over the next few weeks as companies repair battered balance sheets, pay down debt and raise finance for opportunistic acquisitions.

Companies with expansion plans rather than refinancing needs are trying to raise cash before the rush. Balfour Beatty, which has a reputation for running its business with surplus cash, was recently singled out by analysts at Numis as the most attractive contractor because of its strong balance sheet and order book, as well as its diversified income streams. It has a confirmed order book of £12.5bn from international infrastructure companies – about 30pc of its business is in America.

In August Ian Tyler, chief executive, said operating profits were up 30pc to £114m and added he was confident the group would make "good progress in 2009''.

Nearly $160bn (£139bn) has been raised on the public markets in Europe so far this year. Analysts estimate that this could rise to $250bn by the end of the year. RSA Insurance and Barratt Developments are thought to be next to raise capital. RSA has hired Merrill Lynch and JP Morgan Cazenove to ready a potential $500m rights issue to fund acquisitions.

Courtesy By Telegraph

Investors call for action on global warming

2009-09-16T23:20:00.001-07:00

More than 180 of world's biggest investors aim to overcome opposition in US and elsewhere to climate change legislation

More than 180 of the world's largest investors, with collective assets of $13tn, put their combined weight behind a passionate call for strong US and international action on global warming in New York today.

"We cannot drag our feet on the issue of global climate change," said Thomas DiNapoli, who heads the $116.5bn New York state pension fund. "I am deeply concerned about the investor risks climate change presents, and the human cost of inaction is unthinkable."

The summit drew together managers of the world's leading investment funds, including those from HSBC, Henderson, Schroders, Société Générale and Scottish Widows, and pensions funds from California public employees to the BBC and Church of England. It was aimed at overcoming entrenched opposition within the US and elsewhere to climate change legislation, by showcasing the scale of investor support for climate change action and the potential for mobilisation of private capital.

"For anybody who suggests that regulating carbon or acting on climate change is impractical, here is appropriate contradiction," said Mindy Lubber, the president of Ceres, the green investor network that helped organise the conference. However, she warned: "Investors are ready to put money into green tech, but they are not going to act until the government acts and makes clear that the right incentives are in the right place."

The investors' endorsement for action on climate change comes amid signs of a loss of momentum in the final stretch of negotiations towards a deal to tackle global warming in Copenhagen in December. The group warned that failure to act effectively would have disastrous consequences in human and economic terms.

In contrast to inaction, Lord Nicholas Stern, author of the 2006 Stern report on the economics of climate change, said: "Building a low carbon economy creates opportunities for investment in new technologies that promise to transform our society in the same way as ... electricity or railways did in the past." He added: "Unmitigated climate change poses a threat to the global economy."

In their joint statement the investors supported the tougher targets for reducing greenhouse gas emissions put forward for negotiation at Copenhagen, including cuts in greenhouse gas emissions by developed countries of 25-40% by 2020.The conference was held amid rising frustration that the US Congress and the international negotiations are faltering in the final days before Copenhagen. Stern, in his remarks, said it was time to move away from the "quarrelsome stupid politics" surrounding climate change.

Unemployment hits highest since 1995

2009-09-16T23:19:00.001-07:00

Those claiming benefit increased to 1.6 million, the highest since May 1997

The jobless rate in Britain is nearly 8%. Photograph: David Sillitoe

Unemployment has jumped to its highest level since mid-1995, pushing the jobless rate in Britain up to nearly 8%, official data showed today.

The Office for National Statistics (ONS) said the jobless total on the broad International Labour Office measure rose by 210,000 in the three months to July, taking the total to 2.47 million. That rise was broadly in line with those of recent months and economists said there was little to suggest that the increases in unemployment were slowing.

The narrower claimant count measure, which only includes those claiming unemployment benefit, rose by 24,400 in August to 1.6 million, the highest since May 1997, and a rate of 5%, the worst since September of that year. That increase was also in line with those of the previous two months.

The ONS reported that average earnings growth slowed sharply to just 1.7% in the three months to July versus the same period last year, down from 2.5% in the three months to June.

TUC general secretary Brendan Barber said: "There are now over a million people out of work for more than six months, one in three of them under 25. There are no signs of recovery here.

"This is not the time to take risks with policies that could make unemployment worse. It might look rosier in city dealing rooms but out in the real world unemployment is the number one issue."

Catherine Matthews, a partner at licensed insolvency practitioners Tomlinsons, said: "With so many firms folding, the prospects of re-employment are proving increasingly slim for those that have been unfortunate enough to lose their jobs.

"The big problem for Britain's businesses, the reason why so many of them are going bust and laying off staff, is the banks aren't lending. The funding and financial support needed to survive just isn't there. It's what small and medium-sized business owners, and the accountants we work closely with, are saying to us day in, day out."

Economists were concerned about the slowdown in pay growth, which could prevent the economy recovering quickly from recession. Vicky Redwood at Capital Economics said: "As [Bank of England governor] Mervyn King highlighted yesterday, even if the recession is technically over, it will continue to feel like one for many people for a long time yet."

OECD sees 25 million unemployed

The Organisation for Economic Co-operation and Development also warned today that the recession could push unemployment across the developed world to a record high.

In its latest employment outlook report, the OECD predicted that the jobless rate across the world's 30 richest countries could come close to hitting 10% by the end of 2010. That would equate to 25 million people having lost their job in the downturn.

The OECD said that 15 million jobs had already been lost since the end of 2007, and called for more government action. "A major risk is that much of this large hike in unemployment becomes structural in nature," the Paris-based group warned.

"This unwelcome phenomenon occurred in a number of OECD countries in past recessions when unemployment remained at a new higher plateau compared with the pre-crisis level even after output returned to potential, and it took many years, if ever, to bring it down again to the pre-crisis level," it added.

Water company complaints fall in UK

2009-09-16T23:18:00.001-07:00

Customer complaints fell by nearly 15% last year, the Consumer Council for Water says, but several firms have been warned about poor service

Water companies struggled with new billing systems last year. Photograph: Cate Gillon/Getty

Customer complaints to water companies in England and Wales fell last year, although a handful of organisations have been warned about ongoing poor service, the industry's consumer body revealed today.

The Consumer Council for Water said overall complaints to water companies in England and Wales dropped last year by nearly 15%.

With the exception of metering, all major categories of complaints – billing and charges, water and sewerage services – have triggered fewer complaints from consumers.

A few companies had significant improvements in complaint figures as they recovered from problems in previous years, bringing the industry average down. However, other companies saw rising disatisfaction among consumers. Complaints concerning United Utilities rose by more than 36%, and United Utilities, Southern Water, South East Water and South West Water had the highest number of complaints for the number of customers they serve.

Companies showing a drop in complaints included Severn Trent Water with 40% fewer complaints, and Thames Water with nearly 27% fewer complaints on the previous year's figures. Southern Water's complaints dropped by 48% but it still had a high number of complaints compared to other companies.

Other companies continued to receive relatively few complaints, including Yorkshire Water, Wessex Water, Portsmouth Water and Sutton and East Surrey Water.

Dame Yve Buckland, chair of the Consumer Council for Water, said: "We have pressed water companies with poor complaint numbers to improve their performance, and it is encouraging to see the response from many companies. For example, complaints to Severn Trent Water and Thames Water both dropped for a second year in a row."

She said customers were beginning to tell the council they could see improvements in service. "Of those who needed to get in touch with their water company last year, 81% told us they were happy with the way the contact was handled. The year before that figure was 71%. At the same time, nine out of 10 customers tell us that they are satisfied with the service provided by their water company."

Buckland added that while the figures were a step in the right direction, it was not good news for all water customers.

"We are still particularly concerned with South East Water's complaint figures. For a smaller company that only provides water, and is not involved in the sewerage side of the business, South East Water's complaint figures are very poor, and they have been for several years," she said.

The water industry trade body, Water UK, said it was "pleased" by the overall downward trend, adding: "The number of complaints investigated is also down.

"The industry dealt successfully with 99.4% of complaints through their own processes. It is also pleasing to see that several companies have recovered well from one-off difficulties linked to new billing systems, which had caused temporary complaint surges in the past."

Jersey beats UK on financial regulation

2009-09-16T23:16:00.001-07:00

IMF rates Jersey ahead of UK on compliance with international financial regulation rules

Jersey's Mont Orgueil Castle. The IMF said Jersey complies with 44 of 49 recommendations to cut financial crime. Photograph: Toby Melville/Reuters

Jersey's compliance with international financial regulation and supervision rules is rated ahead of the UK, according to a detailed study by the International Monetary Fund (IMF).

Jersey, which has earned notoriety as a tax haven, complies with 44 of 49 anti-money laundering and financial crime busting recommendations compared with only 36 by the UK.

The IMF's latest assessment has been welcomed by Jersey's financial elite, eager to portray the island as a premier international financial centre rather than a secrecy jurisdiction.

The island has long been seen as an important staging post for washing illicit cash. Sani Abacha, the corrupt former Nigerian leader, made use of a number of bank accounts in Jersey, Liechtenstein, Luxembourg and Switzerland when he looted his country's coffers of hundreds of millions of pounds. The Swiss authorities revealed Jersey's role in the scandal rather than the island's own regulators.

Tens of millions of pounds linked to the slush fund of allegedly corrupt BAE arms deals flowed through Jersey accounts, and of the £1bn siphoned illicitly from Angola's state owned oil firm, huge sums went through the country.

But while rating much of Jersey's financial architecture as meeting international standards set by the Financial Action Task Force, IMF investigators did find fault in some of the island's supervisory arrangements.

In particular, it was concerned that Jersey's regulators had limited knowledge of the activities of special purpose vehicles registered on the island. In addition, the IMF stated there was no "official oversight" of the quality of auditors working in Jersey, though it said arrangements are being made to strengthen this area.

The IMF was also concerned with Jersey's reliance on "intermediaries and introducers" undertaking due diligence assessments of clients. The IMF's financial system stability update stated: "The assessment concludes [Jersey] does not comply fully with the international standard." Jersey, it noted, does not agree.

But Geoff Cook, chief executive of Jersey Finance, said: "The IMF has given Jersey's finance industry a ringing endorsement for the quality of its regulation and legislation, the transparency of its regulatory processes and the robustness and resilience of its banking system.

"In addition, the IMF review has reaffirmed a number of features of Jersey's regulatory and supervisory regime, referring to Jersey as one of the pioneers of the Tax Information Exchange Agreements. It highlights that Jersey's financial institutions and trust company businesses are well supervised to counter terrorist financing and money laundering, and that Jersey's finance industry has continued to maintain open and co-operative relationships with regulatory authorities overseas." The IMF said Jersey's financial industry had been affected by the global crisis, but described financial soundness indicators for institutions licensed on the island as "satisfactory". There have been growing concerns over the financial viability of offshore financial centres as the economic downturn takes its toll. A Treasury report, due next month, is expected to warn ministers that they may have to bail out some UK dependent tax havens.

Though Jersey is projecting a budget deficit of as much as £100m, the IMF said: "Stress tests confirm the [Jersey] system is resilient to a range of shocks. However, there is a high concentration of risk and spill-over risk from parent banks."

Critics of offshore finance say evidence suggests money from the island accounts for the majority of all foreign direct investment from repressive regimes such as Djibouti, Libya and Turkmenistan and that it will face huge pressure as a growing international consensus looks set to break open so-called secrecy jurisdictions. But Cook said: "Critics of Jersey's finance industry should ... recognise that the standard of Jersey's financial services regulation and supervisory capabilities are either ahead of or on a par with the regulatory positions of both EU member states and G20 countries."

Barclays sells $12bn of risky assets

2009-09-16T23:13:00.001-07:00

• Barclays spins off troublesome loans to Cayman Islands fund

• Former Barclays Capital staff will manage the toxic assets

Two top bankers are leaving Barclays to manage a fund in the Cayman Islands that is buying $12.3bn (£7.47bn) of the bank's most troublesome assets.

The deal was criticised by analysts who questioned its complexity, but it will enable the British bank to report a more stable performance in future. Throughout the financial crisis, Barclays has been forced to defend the way it was pricing and accounting for these troublesome assets and is now hoping to smooth out the effect of the investments on its profits.

The assets will not actually be removed from the bank's balance sheet for regulatory purposes but the accounting treatment will be changed, allowing Barclays to avoid taking further big hits by no longer needing to price its assets at current market values through the convention known as "mark to market".

Under the deal terms , Stephen King and Michael Keeley will set up C12 Capital Management which, while based in New York, will manage the new Cayman Islands-registered fund Protium and buy the assets from Barclays.

The pair are leading a team of 45 traders who are leaving Barclays Capital, the investment banking arm of the bank, to join C12. It will receive an annual management fee of $40m from the bank to look after the loans, which have turned toxic since the credit crunch.

The complexity of the transaction surprised analysts at a time when the regulators had been calling for more clarity in the structure on banks. Others expressed astonishment that the Financial Services Authority had sanctioned such a deal.

Protium will be funded by $450m of working capital provided by two major investors in the US and other unnamed partners, as well as by a $12.6bn 10-year loan from Barclays itself. Analysts believe that the undisclosed backers of Protium should generate a lucrative return on their investment in the fund.

There was a sceptical response from analysts to a conference call with Barclays's finance director, Chris Lucas, who admitted that the bank might need to hold more capital as a result of the deal which in itself would not create a profit or a loss for the bank.

Credit Suisse analysts described the transaction as "a little strange" as Barclays appears to be giving up any benefit from the value of the assets. Ian Gordon, analyst at Exane BNP Paribas, said: "It's being presented as providing a more stable, certain outturn, but you could argue they are giving away the upside but not really being sheltered from much of the downside."

The $12.3bn of assets being sold to Protium forced Barclays to record a £1bn loss in 2008 and include residential mortgage assets, collateralised debt obligations and other complex financial instruments at the heart of the credit crunch.

Analysts had predicted the bank would incur further writedowns on the loans, two-thirds of which are insured by monoline insurers, which became well known during the credit crisis for having provided insurance to some of the complex instruments that are now under water.

The bank will remain exposed to the cash flow on the assets through the $12.3bn 10-year loan from which Barclays expects to make $3.9bn of profit on interest payments. The loan could become impaired if the cash flow of the assets is affected by any falls in value.

Lucas said: "We are not seeking through the transaction to effect a change to our underlying credit-risk profile. But we are restructuring a significant tranche of credit market exposures in a way that we expect will secure more stable risk-adjusted returns for shareholders over time. We also bring in investors with an appetite for the cash flows arising from the assets."

"For Barclays, this represents a good opportunity to create greater predictability of income and economic capital utilisation," Lucas said.

Barclays shares closed at 380p, up 3%.

Make accountants accountable

2009-09-16T23:09:00.001-07:00

It is clear from the EU's G20 preparations that its neoliberal ideology perpetuates respect for those who oppose regulation

At a time when numerous EU figures are descending on Dublin as part of efforts to browbeat Irish voters into accepting the Lisbon treaty, one man has been conspicuous by his absence.

Charlie McCreevy, Ireland's representative in the European commission, has barely featured in the media coverage of the campaign ahead of the referendum on 2 October. His apparent willingness to be muzzled could be explained by how he unintentionally helped persuade his compatriots to reject the same treaty last year by admitting that he hadn't bothered to read the document.

McCreevy, whose portfolio covers financial services, has not displayed the same reticence about the global economy. Last weekend, he made the ludicrous suggestion that we shouldn't blame the financial crisis on unregulated capitalism but on the "failure of the education system which rarely encompasses sufficient emphasis on the life skills needed to understand, manage and mitigate personal financial risk".

If McCreevy really thinks that ordinary people should be blamed for Wall Street's woes because they haven't figured out how derivatives work, then it is fortunate that his stint as commissioner will soon come to an end. Sadly, the neoliberal ideology that he espouses (to extremes) won't be leaving Brussels with him, judging by the EU's preparations for the G20 summit in Pittsburgh.

Wrapping up an earlier G20 pow-wow in April this year, Gordon Brown announced the demise of the "Washington consensus", under which key international players had foisted market fundamentalism on the poor. Yet at the beginning of this month, the EU's finance ministers facilitated at least a partial return to the days when the west meddled in the economic and political affairs of Latin America with the sole intention of protecting the profits of multinational firms.

On 1 September, the International Monetary Fund allocated $150m to Honduras, despite the fact that the country's democratically elected government had been toppled in a rightwing coup. Rather than protesting at how the IMF was conferring legitimacy on an illegally installed regime, the EU agreed one day later to endow the fund with $178bn. (It took the IMF another week before it announced that the money wouldn't be released to Tegucigalpa until the fund had decided if it could recognise the new regime).

In his latest stunt, Nicolas Sarkozy has pledged to walk away from the Pittsburgh summit if he doesn't secure an agreement on limiting bankers' salaries. This threat will probably come to nothing, just as happened with a similar vow by the French president to leave London if the previous G20 summit didn't go his way. Of course, he's right to insist that the bonus culture is scrapped but this is only one of a range of measures that the EU should be seeking.

Sarkozy's finance minister, Christine Lagarde, is perturbed by a new blueprint for changing the way that assets held by banks are valued that has been drafted with the Pittsburgh summit in mind. Her anger would perhaps be better directed not at the detail of the proposal but at the body behind it: the International Accounting Standards Board. The IASB is a private firm dominated by the accounting industry, banks and multinational companies. Although it was only established in 2001, it sets the standards that listed companies in more than 100 countries must follow. Its activities may sound arcane, yet without clear accounting standards none of us can have any idea what major firms, some of which are more powerful than governments, are up to.

Lagarde's reservations notwithstanding, the EU has been generally supportive of the IASB. Am I the only one struggling to explain why such an untrustworthy and unaccountable group is treated with respect not only by governments but also by some anti-poverty campaigners? Christian Aid and a few like-minded organisations are calling for the G20 to demand that the IASB co-operates in efforts to secure a new system whereby large companies have to report how much tax they pay in each country where they operate.

I fully support the principle of country-by-country reporting and applaud the fight against tax swindling, which, according to Christian Aid, could be depriving poor countries of $160bn per year. But how can we have any confidence in a body like the IASB, stuffed with men (its 15-member board has only one woman) with a deep-rooted aversion to regulation?

In December last year, Prem Sikka, an accounting professor at the university of Essex, wrote: "Accounting has done grievous harm to too many innocent citizens and is central to the current financial crisis. Rather than allowing private interests to make public policies, accounting rules should be made by an independent body representing a plurality of interests."

If the standards of the IASB have been central to causing the crisis, why on earth is it still operating?

'We should be loving (Business) Angels instead', says ACCA small business committee

2009-09-16T23:07:00.001-07:00

More support for equity finance and business angels needed

Equity, not debt, holds the key to financing the future of the UK’s small business sector, according to ACCA’s (the Association of Chartered Certified Accountants) Small and Medium Sized Enterprises (SME) Committee.

In the latest of its quarterly policy briefings, called “Improving SME access to equity finance”, ACCA’s Committee believes that the economic recovery could prove to be business angel's shining moment.

Professor Robin Jarvis, Head of SME Affairs at ACCA, explains: "For years, individual equity investors have been out of the limelight, first hit by the dotcoms bust, then crowded-out by easy credit and now discouraged by the economic climate."

Like the SME Committee, the Government knows that the UK will now have to build new industries without the benefit of easy credit. The Department for Business, Innovation and Skills (BIS) recently finished collecting evidence for the Rowlands review of growth finance, which was launched in June. But the SME Committee says this is unlikely to go far enough.

Professor Robin Jarvis adds:

“The Rowlands Review is looking into ways of supporting established, cash-positive businesses with solid growth potential. There may well be a case for that, but that’s not the kind of businesses that new, innovative industries are built on.”

Instead, the Committee has called for more support for equity finance in general and particularly business angels – the wealthy investors and business mentors popularised by Dragons’ Den. The Committee’s latest paper suggests four priority areas where the government and accountants can make a difference:

• Tax incentives. The Government’s Enterprise Investment Scheme (EIS) is helpful, but still limited in its potential. The Committee cites France’s solidarity tax exemption as an example of providing tax incentives without falling foul of EU State Aid rules.

• Support for networks. – Networks can help business angels identify investment-ready businesses and leverage the experience and capital of their peers. Subsidising the gate-keeping function of angels is one easy way for Government to make a real difference without spending much.

• Developing investment-readiness – Angel investors are constrained by a lack of opportunities rather than by a lack of funds – the Committee noted that accountants need to build demand for equity finance by helping SMEs understand the benefits of equity and signal their value to potential investors.

• Developing exit routes. – Equity investors don’t make any money from their investment unless a business is sold or goes public. Exits could become more attractive and more numerous if businesses were able to achieve fairer valuations (for instance, by better valuing intangible assets) and investors could be lured with lower levels of capital gains tax.

The Committee, however acknowledges that interventions into the angel investment market are no simple matter. Professor Jarvis adds: “The Committee is concerned that the government does not have enough information on Business Angels to inform policy in this area, so we’re working with BIS to correct that. Our members facilitate a great deal of this type of investment so if anyone knows how that market works, they do.”

Courtesy By ACCA

Copenhagen climate change summit: ACCA’s eight steps to success

2009-09-16T23:06:00.001-07:00

Global economic instability could lead to a decline in direct environmental investments and reduce the rigour of future climate change legislation, asserts ACCA (the Association of Chartered Certified Accountants) today in a position paper about the UN Climate Change Conference 2009 - called COP 15.

The report from the global accoutancy body - which has championed sustainability issues in business since 1990 - offers eight recommendations for governments, policy makers and business ahead of the COP15 meeting in December 2009.

Mr Arif Masud Mirza, Head of ACCA Pakistan, says: “The dual challenges of climate and economy have led to a unique opportunity to re-build the global markets with systems sympathetic to climate change. And the trillion dollar bailout of the banking sector proves that governments and businesses around the world can work together quickly to avert disaster.”

ACCA’s report also recommends that governments should respond to the economic conditions by implementing measures that will encourage environmental investments and a more sustainable approach from business.

Mr Mirza adds: “Business has a massive role to play here in how they communicate their commitment to a low carbon economy. ACCA champions the extension of corporate reporting to include the social and environmental aspects of a business and has launched awards for sustainability reporting in Australia and New Zealand, Hong Kong, Malaysia, Pakistan, Singapore, South Africa, Sri Lanka, and the US and Canada.” ACCA is concerned that without a co-ordinated strategy to tackle the financial crisis in a sustainable way, the possibility still exists that the stimulus and recovery packages may lock us into the root causes of climate change. If we follow the model of the banking bailout, we can achieve a sustainable, low carbon, climate resilient future.

Courtesy By ACCA

Signs of recovery based on fragile evidence, says ACCA survey

2009-09-16T23:05:00.001-07:00

Claims that the world’s economy is recovering is based on fragile evidence, according to the latest Global Economic Conditions Survey by ACCA (the Association of Chartered Certified Accountants).It has repeated its warning that world economic leaders should guard against complacency - and not confuse less panic over the crisis with strong evidence that the recession is over everywhere.ACCA’s third quarter survey of 1,200 finance professionals in 92 countries has shown that while more finance professionals now believe the downturn has ‘bottomed out’ they also believe that a reliable recovery is still unlikely to return before late 2010 - more than a year away. Although business confidence continued to recover in the third quarter of 2009, those who saw improvements in conditions (31%) were still outnumbered by those who had lost confidence (33%). While increasing percentage of members (34%) now believe that global economic conditions are either about to improve or already improving, the emerging consensus, expressed by 44% of respondents, appears to be that current conditions mark the bottom of the downturn and will persist for some time. Nearly 40% are reporting that their organisations’ income is unlikely to change over the next 3 months, with an equal number anticipating further losses of income, while only 22% have seen their prospects improve. The survey also shows that as business incomes continued to decrease in the third quarter of 2009, there was a rise in late payment as well as supplier and customer bankruptcies. Investment in staff fell at an accelerated rate in the third quarter and investment in capital projects, which had previously shown signs of stabilising, seems to be weakening further. The figures also revealed dramatic differences in how finance professionals thought government would react to the situation, with 77% of respondents in Africa and 60% in the Asia-Pacific region expecting increases in public spending, while 68% of Western European respondents expecting spending cuts. Western Europe was the only region in which public spending was, on balance, expected to fall over the next five years.

ACCA to sponsor 2009 Emerging Markets Summit

2009-09-16T23:02:00.001-07:00

Chief executive Helen Brand to participate in panel discussion

Helen Brand, ACCA chief executive, is to take part in a panel discussion on 'Financing trade with emerging markets' at the forthcoming 2009 Emerging Markets Summit, taking place in London on 17-18 September.

The event, of which ACCA is a discussion forum sponsor, will see four heads of state and more than 20 chief executives and presidents of global multinationals leading the debate on key changes in international business and growth prospects.

Among those addressing delegates at the event will be:

Lord Mandelson, UK Secretary of State, Department for Business, Innovation and Skills
Gloria Macapagal, President, Republic of the Philippines
Mohamed Ghannouchi, Prime Minister, Republic of Tunisia
Paul Kagame, President, Republic of Rwanda
Augstin Cartens, Minister of Finance, Mexico
Catherine Ashton, European Commissioner for External Trade
Tony Fernandes, Founder, AirAsia

Courtesy By ACCA

Small business and the financial crisis

2009-09-16T23:01:00.001-07:00

Small and medium sized enterprises (SMEs) are an important part of developed and developing economies as they play a key role in creating jobs, innovation, supporting stability, macroeconomic growth and act as a growth engine. In OECD countries, SMEs represent 95% of all enterprises, accounting for two-thirds of employment and being the main source of new job creation (1). As such, SMEs in many countries around the world are the major source of economic recovery and assist the return to sustainable growth.

SMEs are particularly badly affected in times of financial crisis, due to the reduced demand for products and services, sudden rises in the prices of raw materials, energy and food, liquidity and credit related problems, variations in exchange rates, inflation, and still are subject to a relatively high cost of capital. Access to finance continues to be one of the most significant challenges for the creation, survival and growth of SMEs, especially those that are innovative. Start-ups in particular are most vulnerable, often lacking the resources to survive the downturn.

In addition, the uneven application of regulatory and legal frameworks that have primarily been designed for large-listed companies leads to market failure and requires governments to intervene to support these important contributors to the economic well-being of countries. SMEs will require effective short-term measures to address these financial and other aspects that are a part of their business environment. It is critical in these circumstances that regulators think small first.

SMEs need more urgency on measures to help restore confidence, on issues such as late payments, access to finance and employment support measures. These will need, however, to be linked to structural improvements in the SME financial environment over the longer term in order to be successful and to restore growth.

The current economic context is a unique opportunity for governments around the world to find more far-reaching ways to collaborate and partner with business, civil society as well as between governments, to pool efforts to build infrastructure, build social capital and encourage institutional changes and help improve the operating environment for business.

Governments need to ensure that the SME interests are adequately represented within government. Separate agencies, with strong influence and links within government, that deal with small business policy and manage government intervention relating to business support may be needed in order to ensure adequately focused policy and a clear point of contact. Ensuring that small businesses have a strong voice within government is crucial to ensuring a small business-friendly environment. Regulation, for example, is a key area for creating the right environment both for entrepreneurship and for business to prosper. World Bank research has found that countries with burdensome regulation have larger informal sectors, higher unemployment, and slower economic growth (2).

Working collaboratively, governments can do more to support host governments in developing and emerging markets with the development of enabling frameworks that encourage responsible private sector investment. For example, by supporting efforts to put in place effective regulatory and voluntary standards; legal frameworks; funding and investment vehicles; policy consultation mechanisms; accountability structures; and civil society networks.

Governments can also support the creation and strengthening of local business associations, chambers of commerce – which are often weak or non-existent – as well as essential ‘institutional infrastructure’ (linkage programmes, skills/training programmes) for SME development.

Although, much of the emphasis is on governments to act 'locally' to the problems confronted by SMEs during this crisis, there are important issues that have a global dimension and need to be addressed to ensure the sustainability and growth of the SME community. For example, the level of SME cross-border activity is increasing year on year through the development of technology and communication.

It is important that SMEs are protected against external events that are out of their control such as fluctuations in exchange rates. SMEs around the world need special attention and support in the current financial crisis.

Green taxation is politically essential not just politically correct

2009-09-16T23:00:00.001-07:00

ACCA paper advises on green tax policies -

Using environmental and green taxation to boost falling tax revenues needs careful planning by government and policy makers says ACCA (the Association of Chartered Certified Accountants) today as it publishes a position paper called Green taxation in a recession.

ACCA warns governments that carbon taxes will not be the panacea national governments are probably expecting.

Chas Roy-Chowdhury, global head of taxation at ACCA, says:

“We’re not advocating tax hypothecation – where a tax is explicitly raised to fund the development of a specific service. Green taxes need to be transparent and unambiguous so the public and business understand what benefits are going to result for the potential pain caused.”

“Public trust in green tax systems is vital; government and policy experts need to strike a balance between the need to raise revenues and the environmental objective underpinning the policy. The trouble is, they’ll hurt.”

Green taxation in a recession offers five clear recommendations:

1. Ensure green taxes are global, with global co-ordination of policies and ideas.

2. Design and implement green taxation policies carefully – and then measure and analyse the results.

3. Consult widely with electorate / business before introducing taxes so they understand what is happening and why.

4. Raise awareness of the need for this type of taxation - explain the benefits.

5. Make green taxes explicit and transparent, so they are understandable.

ACCA also asserts that global synchronisation in green taxation policy is a necessity. Chas Roy-Chowdhury says: “If environmental taxation lacks international co-ordination, it will not impact global pollution levels, as companies will simply relocate and move the pollution problem with them. If measures are implemented unevenly, in one country and not another, it leads to a loss of international competitiveness. Scrutiny of business’s environmental performance will only increase as we move to a low carbon economy. But business needs policies that are transparent, clear, credible and certain in order to achieve carbon reduction goals.”

Chas Roy-Chowdhury says: “Governments must use tax policy as an instrument of positive change - and that's the challenge for the future.”

Green taxation in a recession can be found at this link:

http://www.accaglobal.com/pubs/about/public_affairs/unit/global_briefings/green_tax.pdf

- ends -

Green tax around the world

- Sweden has taxes aimed at reducing energy consumption and additionally provides subsidies or exemptions for energy derived from sustainable or renewable sources.

- In 1990, Finland became the first country to introduce a carbon tax.

- The US has implemented tax measures to increase investment in renewable energy sources enacting tax credits for the expansion of wind, solar, biomass and other renewable energy technologies.

- China taxes the disposal of household and commercial waste and has a further tax on the disposal of waste water, while companies that reduce their water consumption are offered corporate income tax allowances.

- Germany has implemented taxation on emissions on transport, which are calculated directly on the level of emissions.

- Australia introduced a small levy on fertiliser as early as 1986. Although this does not raise significant amounts in tax revenues, it has had an impact on the type and amount of fertiliser used.

- In Denmark 5.9 percent of tax revenues are made up of environmental taxes, according to Eurostat, by far the highest proportion in the EU and arguably the highest in the world.

- The UK has implemented a range of environmental taxes, including the Climate Change Levy, a tax on the end-use of ‘taxable commodities’ (principally electricity, gas and coal) by commercial customers, and the Landfill Tax, which taxes people and organisations when they discard waste in landfill sites.

Courtesy By ACCA

Habib Bank and MCB interested in buying RBS Pakistan

2009-09-09T22:04:00.001-07:00

KARACHI Habib Bank Ltd. KSE symbol (HBL) and MCB Bank (MCB) both have separately said they are interested in buying Royal Bank of Scotland’s (RBS) operations in Pakistan.

In a notice to the Karachi Stock Exchange (KSE), Habib Bank said it “will soon start due diligence of Royal Bank of Scotland’s operations after seeking regulatory approvals from the State Bank of Pakistan.”

Muslim Commercial Bank (MCB Bank) also told the KSE Karachi stock exchange that it will approach the central bank for approval.

Analysts said the successful bidder would get access to RBS’s clients in Pakistan, which are spread across 80 branches in 24 cities. RBS has taken over this clientel from ABN Amro Bank Pakistan which it took over last year.

“In case Habib Bank buys Royal Bank of Scotland’s operations, the entity will become the number one bank in terms of deposits and assets, surpassing National Bank of Pakistan,” said Mohammad Sohail, a Karachi-based independent economist.

Habib Bank is currently the second-largest Pakistani lender by assets, followed by MCB Bank.

As of December 2008, RBS had deposits worth PKR79 billion and outstanding loans worth PKR68 billion.

Royal Bank of Scotland (RBS) had in February announced a three- to five-year plan to dispose of non-core assets. It had identified its Asia assets as well as a number of businesses related to the loss-making global banking and markets unit for sale.

Independent study highlights closeness of international convergence of auditing standards

2009-08-27T21:26:00.001-07:00

The case for global convergence of auditing standards is strengthened, says ACCA as EC study is published

ACCA believes the case for the global convergence of auditing standards has been strengthened following the publication of an European Commission report comparing future EU and US standards.

The report, prepared independently by the Maastricht Accounting, Auditing and Information Management Research Center (MARC), evaluates the differences between International Standards in Auditing (ISAs) and the standards of the US Public Company Accounting Oversight Board (PCAOB).

The ISAs have been clarified by a recently-concluded modernisation and are currently the subject of an EC public consultation on their adoption in EU member states.

'This is an important study, and its independence is a key factor,' said David York, ACCA's head of auditing practice. 'Comparing the US system with that proposed for Europe is a timely exercise that also holds lessons for governments, regulators and investors.

'This is a valuable identification and understanding of the similarities and differences between the two systems. In the main, MARC concludes that there is little or no difference between audits under the clarified ISAs and PCAOB standards; this will increasingly be the case in future as the PCAOB is proposing to change its standards on the auditor's assessment of and response to risk, essentially to catch up with the risk-driven principles-based ISAs. There will remain significant differences because of the Sarbanes-Oxley need for separate reporting by auditors on internal control over financial reporting.

'The report confirms that investors are in favour of one set of auditing standards that are followed on a global basis; so it will be interesting to see the reaction to the study in the US. The report also makes the significant point that auditing standards are just one element. Audit quality depends on how they are applied by firms and enforced by regulators. By extension, investors should be in favour of consistent global standards of audit firm governance and transparency and consistent regimes of inspection and oversight.'

Courtesy By ACCA

ACCA Pakistan joins hands with BP

2009-08-27T21:24:00.001-07:00

ACCA Pakistan awarded BP Pakistan Exploration with Platinum Approved Employer status in recognition of their commitment towards training and development of ACCA trainees. ACCA’s Approved Employer Scheme plays a pivotal role in the recruitment, development and retention of the ACCA qualified employees in the approved organisations. It allows organisations to reach global best practice in the provision of learning and development opportunities for ACCA trainees and members. The certificate was presented to Mr Farhan Sadiq- Head of Finance, BP by Mr Arif Masud Mirza, Head of ACCA Pakistan. During the ceremony Mr Farhan Sadiq emphasized BP’s commitment to professional excellence and the role of organisations such as ACCA Pakistan in supporting the industry to achieve the same. He stated, “BP looks forward to continuous engagement and co-operation with ACCA in achieving this objective”. Speaking at the occasion, Mr Arif Masud Mirza discussed potential areas of cooperation between BP Pakistan and ACCA Pakistan, including training of Cambridge ICFE, IFRS Diploma and Diploma in Financial Management for its employees. He also highlighted the launching of a Career Portal that would facilitate screening process for recruitment by ACCA Approved Employers in the future.

ACCA Pakistan joins hands with Adamjee Insurance

2009-08-27T21:23:00.001-07:00

ACCA Pakistan awarded Adamjee Insurance Company Limited (AICL) with Silver Approved Employer status in recognition of their commitment towards training and development of ACCA trainees and members. The certificate was presented to Mr Mudassar Zubair, CFO, Adamjee Insurance by Mr Arif Masud Mirza, Head of ACCA Pakistan. During the ceremony Mr .Mudassar Zubair stated that, “It is a great pleasure in becoming an ACCA Approved Employer. Our vision is to explore, innovate and differentiate to become leaders to the Insurance Industry. We are constantly exploring new avenues and developing new methods to excel in our endeavors through teamwork and determination.’’ ACCA’s Approved Employer Scheme plays a pivotal role in the recruitment, development and retention of the ACCA trainees and members in the approved organisations. It allows organisations to reach global best practice in the provision of learning and development opportunities for finance and accounting professionals. Speaking at the occasion, Mr Arif Masud Mirza, Head of ACCA Pakistan said that awarding Approved Employer Status will open new vistas of mutual growth for ACCA Pakistan and Adamjee Insurance. He congratulated Adamjee’s entire team for joining the list of over three hundred high profile Approved Employers who are currently investing in ACCA Training programme.

Accenture Provides Application Co-Sourcing To BritAmer Tobacco

2009-08-27T20:57:00.001-07:00

Accenture, a global technology services and management consulting company, and British American Tobacco have signed a five-year application co-sourcing contract. This contract will help British American Tobacco to improve its design and also in the development and implementation of IT solutions for its various business operations. However, the financial terms of the contract were not disclosed.

According to this contract, both the companies will design a wide range of applications together for British American Tobacco’s functions. These applications include finance, sales and marketing, and supply chain. Accenture will develop these applications for global, regional, as well as for local use. This program will be beneficial for transforming the solution delivery function of British American Tobacco into a standardized, global and simplified operation.

A joint application development center has been set up to deliver the co-sourced services. It will be delivered through the Accenture Global Delivery Network with British American Tobacco in Spain. It will also involve the delivery centers of India and Philippines.

Craig Wallace, the head of solution delivery of British American Tobacco, believes that this co-sourced program will make them more effective across their global enterprise. He further stated that collaborating with Accenture will enhance their skills, knowledge and capabilities. This will also help them to reshape and transform their solution delivery within the business. Craig Wallace mentioned that “Accenture is arguably the leader in this field and brings world-class people, tools and assets, combined with a deep understanding of and close relationships with SAP and Siebel”.

Koen Van Bockstaele, the senior executive of Accenture’s Consumer Goods & Services practice, stated that this program will help British American Tobacco to deliver their IT solutions in a more coordinated, focused, and efficient manner across their global operations. Mr. Bockstaele also said “We look forward to helping the company significantly improve the speed of technology delivery and reduce the level of complexity in the process”.

Courtesy By Big4

Bearingpoint Signs Agreement For Sale Of EMEA Practice

2009-08-27T20:56:00.001-07:00

BearingPoint, a global management and consulting service provider, has announced that it has signed a definitive agreement with the European management team of the company. The agreement was signed for the sale of the EMEA (Europe, Middle East and Africa) practice. It was done for an aggregate purchase price of around $69 million US dollar in total consideration.

The terms of this definitive agreement states that the EMEA practice of BearingPoint is now a legally-independent entity and is owned by EMEA management. Moreover, it will operate as one single partnership. Peter Mockler, BearingPoint EMEA’s executive vice president, and the existing management team will be providing leadership in order to facilitate the transition of the practice successfully. The practice will also continue to operate under the brand name of BearingPoint. Thus, it will benefit from existing brand awareness and equity.

Peter Mockler said that they are confident and that this is the best path for both their clients and employees. He further said “The EMEA leadership team and I are dedicated to the success of the practice and remain steadfast in our commitment to serving our clients”.

The sale of the EMEA practice will be completed either on or before August 31, 2009. However, the sale is subject to the fulfillment of some conditions as well as to the bankruptcy court approval. Moreover, the company has neither assured that the Court will approve the proposed sale nor claimed that this particular transaction will be completed.

Courtesy By Big4

Deloitte And Oracle Extend Alliance For IFRS Solutions

2009-08-27T20:54:00.001-07:00

Deloitte, a leading multidisciplinary and professional service provider around the world, has extended its alliance with Oracle, the largest business software company of the world. They are extending their alliance to help the executives address organizational challenges that are associated with the conversion to IFRS (International Financial Reporting Standards). Jointly, Deloitte and Oracle will focus on the various industry-specific challenges that USA and other countries can face while adopting International Financial Reporting Standards.

International Financial Reporting Standards is a set of accounting principles, which focuses on principles and objectives. However, it is less dependent on detailed rules in comparison to U.S. GAAP (U.S. Generally Accepted Accounting Principles). Some of the benefits of IFRS are greater transparency, improved efficiency, reduced complexity and increased comparability. It’s due to these benefits that the investors, who want a clearer insight into corporate performance, have globally accepted IFRS. A roadmap was published by the U.S. Securities and Exchange Commission for adoption and transition of IFRS. This will run from 2011 to 2016. The transition to IFRS will impact the tax, financial regulatory reporting, systems and business processes of a company. However, this impact may vary depending upon the industry as well as the countries from where a company operates.

Deloitte believes that IFRS affects a number of aspects of a company. It may even create effects which may flow throughout the organization. Performance measurement implications and internal and external reporting can also be associated with IFRS. Jointly, Deloitte and Oracle will deliver guidance and innovative solutions to assist the leading Fortune 1000 companies so that they can plan for the transition of IFRS. The highly specialized financial management solutions and IFRS integration team of Oracle and the cross-functional service capabilities of Deloitte will provide an exceptional depth of industry experience. This will help the organizations to manage multiple accounting frameworks, improve business processes and information quality, capitalize on opportunities and enforce global standards.

Terrance Wampler, VP - Financials Product Strategy of Oracle said that “Over 100 countries already require or permit the use of IFRS today, and many organizations are already using Oracle solutions to comply with IFRS requirements”.

Courtesy By Big4

Financial detectives

2009-08-19T21:30:00.001-07:00

Thanks to the behaviour exhibited by characters such as the notorious Bernard Madoff, fraud continues to plague the international business community. Recent scandals involving Siemens of Germany, Satyam Computer Services of India, and Daniel Dantas of Brazil indicate that fraud has become endemic in our financial world. And it shows no signs of slowing down. If anything, rapidly deteriorating economic conditions will only serve to encourage even more unscrupulous acts. Those with careers in fraud examination should not find themselves unemployed anytime soon.

What is fraud?

Although no precise international legal definition exists, the term 'fraud' is generally used to describe a variety of acts – including deception, embezzlement, corruption, bribery, forgery, extortion, collusion, theft, conspiracy, misappropriation, concealment of material facts and false representation. In its broadest sense, fraud encompasses any crime for gain that uses deception as its mode of operation.

In general, fraud examiners work to resolve allegations of fraud. But their specific tasks are many and varied, depending on factors such as position, background, industry, and organisation type. A look at current job postings throughout the world shows that fraud examiners may perform audits, conduct financial analyses, interview witnesses and potential suspects, obtain documentary evidence, write investigative reports, present or testify to findings, research records, examine documents and transactions, occasionally conduct surveillance, and assist in the detection and prevention of fraud.

Although many fraud examiners are accountants, fraud examination is not the same as auditing or forensic accounting. Auditing encompasses a general review of financial data for the purpose of expressing an opinion on that data. And because many frauds are financial crimes, there is necessarily a certain degree of auditing involved. Forensic accounting – which is the use of accounting knowledge or skill for courtroom purposes – is often performed in a fraud examination.

Aside from accountants, there are numerous other categories of fraud examiners. They include law enforcement officials, attorneys, finance executives, educators, computer scientists, information technologists, corporate security specialists and private investigators. Organisations throughout the world employ fraud examiners. These organisations include government bodies at all levels, public and privately-held corporations, accounting and auditing firms, law firms, insurance companies, business consulting firms, banks, security consulting firms, detective agencies and small businesses.

The examiner's ideal profile

Given the variety of fields and contexts in which fraud examiners work, it should be no surprise that the skills they need are also many and varied. Not only are certain professional skills and qualifications required, but there are also certain character and personality traits that are invaluable to the field.

For example, fraud examiners working as forensic accountants in the healthcare industry must combine their accounting, auditing, legal, and investigative knowledge to analyse and interpret business and financial evidence. To be successful, they must possess strong analytical and research skills, along with knowledge of the inner workings of the healthcare industry. They must understand billing systems and the many types of fraud perpetrated by medical providers, patients and facilities. Many hold degrees and other professional designations in accounting, law, or a related field. Aside from having certain technical abilities, fraud examiners who work as forensic accountants must be ethical individuals who have remarkable curiosity, attention to detail, intuition and persistence.

Let us look at a more blurred role – that of the external auditor of a publicly traded company. Are these also fraud examiners? If not, do they have any responsibility for combating fraud? If so, what exactly is that responsibility?

Despite the fact that such questions have haunted auditors, investors and the public for decades, there are still no clear answers.

ISA 240, from the International Auditing and Assurance Standards Board, claims that although auditors are required to conduct audits with a healthy degree of scepticism (by obtaining 'reasonable assurance' that financial statements are free from material misstatement caused by fraud), the 'primary responsibility' for fraud prevention and detection rests with management and those charged with governance. But before they buy into this, auditors should take note of myriad lawsuits that have been brought against auditors around the world for failing to detect fraud. There also exists the reality that many auditors will encounter some sort of fraud during their career.

Of course, auditors won't catch every fraud. But this doesn't mean they shouldn't take steps to increase their chances. External auditors must be well-versed in fraud detection and prevention, in addition to their core competencies in accounting and auditing. They must also be ethical, inquisitive, analytical and detail‑oriented.

Aside from formal education and on‑the-job training, what can accountants and auditors do to cultivate their fraud examination skills? Those interested in becoming a fraud examiner may want to consider pursuing the Certified Fraud Examiner (CFE) credential, administered by the Association of Certified Fraud Examiners (ACFE). This globally recognised credential denotes proven expertise in fraud prevention, detection, and deterrence. By obtaining student membership (offered at a discounted rate) of the ACFE, students gain access to a comprehensive set of resources on fraud, including articles, tips, career opportunities and advice.

A career in fraud examination is challenging career and financially rewarding, and growth in the field of fraud examination will remain strong so long as fraud continues to invade the international business community. Given all current indicators, fraud examiners with the right combination of skills and experience should enjoy long standing careers.

Table – Auditing vs fraud examination: the differences explained

Joseph T Wells is founder and chairman of the Association of Certified Fraud Examiners

Green financial futures

2009-08-19T21:29:00.001-07:00

With world leaders at the G20 summit earlier this year pledging $1.1 trillion to boost the economy while aiming to build an inclusive, green and sustainable recovery, the future looks bright for renewable energy.

Not only are renewable energy companies busy developing green technologies, such as wind, solar and geothermal, but traditional energy companies – the oil and gas behemoths – are also banking on a greener future, and basing their strategies around promised investment from government and fiscal incentives to up their game.

All of which is great news for accountants working in renewable energy, who tackle sector-specific financial issues against the backdrop of a dynamic commercial environment.

Challenges for accountants

One of the financial challenges particular to the renewable energy sector is explained by David Gray, finance director of independent energy consultancy McKinnon & Clarke: 'The main issues are balancing short-term and long-term goals,' he says. 'Prices for renewables will undoubtedly come down in the long term and are forecast to drop below traditional energy prices – but how do renewable companies balance the current needs of profits, cash flow, investment in R&D and investor needs against the longer-term potential benefits to be gained?'

An associated difficulty is that accountants have to rely on traditional financial modelling – such as return on investment – while dealing with a business model that usually presents an imbalance with traditional technology payback in terms of time and efficiency.

FDs working in renewable energy also face familiar problems shared by their counterparts in other industries amid the global economic crisis.

'Those who took on too much debt in the past few years are now working hard to make the interest payments or refinance the debt as it matures,' says Robin Griffiths, an interim CFO who has worked extensively in oil and gas, as well as mining. 'For those management teams that were more conservative, some great opportunities are materialising to pay good prices to purchase rivals or enterprising young companies who were less prudent. For accountants, those with good treasury or corporate finance experience are really feeling wanted right now.'

One benefit renewable energy has over some other sectors is that there is a government-supported drive to invest. But how are the promises to build an inclusive green and sustainable recovery likely to convert into real investment?

Griffiths is sceptical as to whether it will translate into hard cash in the short-term. 'Unfortunately, we are now seeing that the direct investment available from governments is minimal, as they are too indebted themselves to have much free cash.'

The next big thing?

The truth is that investors will gravitate towards the areas most ready for profitable expansion. Adrian Scholtz, who leads KPMG's renewable energy corporate finance activities in the UK and Germany, believes the most likely are 'directly linked to investment promises in the Budget'.

The first is wind power; Scholtz says that the UK's Budget announcement of £525m for the development of offshore wind projects directly led the Eon board to announce investment in building the first phase of a wind farm in the Thames Estuary which, once complete, will be the world's largest.

Scholtz also believes that carbon capture and storage is an area ready for expansion, where natural storage facilities such as old oil and gas fields are used to catch CO2 and store it.

Griffiths, though, warns, 'We will only start approaching profitability for the total product once there is sufficient demand to push down unit costs sufficiently – which for many green technologies seems years away, if not longer – and the most obvious hope for profitable renewables in the short-term is the mass production of some kind of clean car technology.

'On the back of commercial development, some of us hope that costs will come down enough to enable their deployment to somewhere with real pressing need and suitability such as mass solar energy to a developing part of Africa. And accountants can help be a part of that.'

Career prospects in renewable energy

For trainee accountants, what is the job market climate in renewable energy?

'Career prospects for trainees are strong,' says Roland Seddon, regional director at Hays Senior Finance. 'Jobs in renewable energy are likely to increase over the coming year.'

And those jobs can be found not only at the energy companies themselves but also at the professional services firms that advise them. They provide, says Scholtz, a 'big opportunity for people with financial skills to have more commercial roles'.

And as well as tax-related issues increasing in the future – such as organising tax-efficient structures for energy companies – he says that the majority of his work involves investment appraisals.

Working in industry is also attractive, partly because of the buzz surrounding renewable energy and its importance going forward, not to mention its worthy connotations.

'Blue chip energy companies are diverting more of their resources into this sector; we are seeing more and more small renewable energy start-ups,' says Seddon. 'The fact that it's a growing sector – one that's enjoying increased investment – makes it very attractive. Candidates are increasingly looking to work for companies that can demonstrate a social and moral conscience; and they are keen to display green credentials on their CVs.'

Although previous experience in renewable energy is valuable when looking for work, few finance professionals have long track records due to the relatively embryonic state of the sector. So which existing skills will stand you in good stead?

Those with experience in the mining, manufacturing and engineering sectors have an advantage, according to Seddon, who adds, 'Strong candidates will be able to demonstrate skills in investment appraisal, raising finance and corporate finance – skills attractive to a number of employers in renewables as they look to grow over the coming years.'

International opportunity for green thinkers

So if you want to do your bit for the world and move into renewables, which countries will serve you best as you forge an international career?

The answer may surprise you because, while the US fares poorly due primarily to its carbon emissions, Gray points out, 'Most of the largest international players are either based or have a presence in the US; it has companies covering all of the main renewable energy sources. For example, there are companies such as SunPower, who developed photovoltaic [solar] solutions with far greater efficiencies, while GE Energy is the world's leading turbine supplier.'

If you want to work in Europe, Germany is considered by many to be a leader in the development of green policies. 'Germany accounted for 50% of the world's photovoltaic installations in 2007,' says Gray. 'A large part of the reason for this is the system of feed-in tariffs, which rewards those who invest in renewables and export to the grid with high resale prices for the energy exported. This seriously reduces the payback times for renewables.'

As Gray concludes: 'Because of the conflict between traditional financial accounting methods and environmental concerns it certainly helps for accountants to be green thinkers, so that they can think outside the box and look at other returns, rather than just financial ones.'

CASE STUDY: HEENA PANESAR

Heena Panesar is studying for three of her final papers with Kaplan Financial and currently working at Switch2 Energy Solutions, which procures and sells energy to private wire networks. It uses combined heat and power (CHP) engines, which produce heat and electricity in the same process, consuming about 35% less fuel than if the energy is produced separately.

'I wasn't specifically looking to get into the energy sector; I had no idea what was involved, but two and a half years later, it has turned out to be a great area to be working in. When I started, I had no idea what a CHP engine was and how it was energy efficient,' says Heena.

Heena particularly likes working in the energy sector because it is so dynamic. 'It's a great field to work in – there's a growing need for renewable sources of energy, and new developments are moving more towards the use of CHP as an efficient and green way of producing energy. '

She has developed a sound knowledge of the sector through her work.

'On a monthly basis, I produce the financial accounts – but in line with that, there's a lot of investigative work to do on the inputs and outputs of the energy system. I get involved with everything from calculating the selling tariffs for our customers to producing models to monitor the efficiency of the system. I have meetings with clients to discuss any issues that have been identified as a result of the analysis; this can in turn save the company money.

'Now, I'm using the technical knowledge to contribute to the company on a profit level – and it's great working for something that's so important these days.'

Beth Holmes is a freelance journalist

ACCA Increase to exam and exemption fees

2009-08-19T03:36:00.001-07:00

From 16 August 2009, the exam and exemptions fees for the ACCA Qualification will be increased. These fees will apply to all students who register with ACCA after the closing date of 15 August and to all students entering for the December 2009 exams.

New fees

Papers F1-F3 £53

Papers F4-F9 £66

Papers P1-P7 £78

Students who registered for the ACCA Qualification before 15 August and have submitted requests for exemptions will still pay the existing exemption fees:

Papers F1-F3 £50

Papers F4-F9 £60

Why is ACCA increasing fees?

The demand for the ACCA Qualification continues to grow and more students are sitting exams in more locations than ever before. Consequently, the costs we incur in running our exams continue to increase.

In addition, to maintain the rigour and reputation of our exams, we are continuing to invest in the latest technologies in exam assessment and delivery to ensure our exams continue to be administered in an efficient and secure manner.

Please can you inform your students of these changes.

Regards

ACCA

Global ACCA pass rates for the June 2009

2009-08-19T03:24:00.001-07:00

More than 5,000 students successfully complete exams

17 Aug 2009

A total of 187,335 candidates took 370,715 papers in ACCA's June 2009 exams session. This compares with 182,449 students taking a total of 365,528 papers in December 2008.

The exam results, issued on 17 August 2009, revealed that 5,416 students successfully completed their final examinations to become ACCA affiliates.

The pass rates for the June 2009 sitting of the ACCA Qualification are as follows:
F1 Accountant in Business - 73%*
F2 Management Accounting - 57%*
F3 Financial Accounting - 55%*
F4 Corporate & Business Law - 43%
F5 Performance Management - 41%
F6 Taxation - 61%
F7 Financial Reporting - 30%
F8 Audit and Assurance - 34%
F9 Financial Management - 42%
P1 Professional Accountant - 48%
P2 Corporate Reporting - 44%
P3 Business Analysis - 50%
P4 Adv Financial Management - 30%
P5 Adv Performance Management - 32%
P6 Adv Taxation - 37%
P7 Adv Audit and Assurance - 37%
SOURCE: ACCA

Train the Trainer

2009-08-18T03:24:00.001-07:00

ACCA Pakistan’s teacher training initiative

As part of ACCA’s continued efforts towards developing excellence in professional accounting education and establishment of best practices among tertiary accounting educators, a workshop - “Train The Trainer” was held today at a local hotel in Karachi led by Dr Afra Sajjad, Head of Education and Policy Development, ACCA Pakistan and Mr Wali Zahid, CEO, Skillcity. The participants appreciated ACCA’s innovative efforts at enhancing the capacity of accounting faculty. They felt that the workshop was very useful and relevant to their work as it enabled them to learn new teaching skills and methodologies. Speaking at the event, Dr Afra stated that the “Through initiatives like Teach the Trainer ACCA aims to facilitate tutors to help young men and women of Pakistan to pursue their ambition of a successful career in finance, accounting and taxation and become world class professional accountants”. Mr Wali Zahid emphasised on achieving student excellence through motivation not only towards academic endeavours but also towards professional life.

Courtesy By ACCA

The training of tomorrow’s business professionals requires a radical overhaul

2009-08-18T03:23:00.001-07:00

The speed of business in the 21^st century means that management training and development will have to alter drastically according to The future of professional development, the latest report in ACCA’s (the Association of Chartered Certified Accountants) Insight Series.

According to the report, if continuous professional development programmes are to be fit for purpose, keep up with regulatory change and provide acceptable returns on the hundreds of millions of dollars invested each year, then a radical overhaul is needed.

Tony Osude, acting director of professional development at ACCA said: “The set piece ‘talk and chalk’ lectures cannot survive. Business professionals need immediate access to good quality information, and they need to know how to apply it to their work.

Mr Arif Masud Mirza, Head of ACCA Paksitan said that “Accountants are operating in a very different environment and we believe all professional development programmes should reflect this. Although there will always be a place for traditional classroom learning, the way they are taught is going to fundamentally change. The generation entering the profession now is far more technologically adept, and the business benefits of using technology to teach are compelling – it’s really about organisations getting the training blend right.”

Courtesy By ACCA

ACCA Global Economic Confidence Survey

2009-08-11T03:22:00.001-07:00

Latest findings reveal renewed optimism and confidence

According to ACCA's latest global survey of finance professionals, economic recovery should be possible within the next 18 months.

The ACCA Global Economic Confidence Conditions Survey for the second quarter of 2009 reveal tentative signs that panic is no longer a major driver of the economy.

Optimism continues to depend substantially on the actions of national governments, but the reliance on state assistance has dissipated since the survey for the first quarter of 2009, and business confidence is now more clearly linked to expectations of future growth. Morale in key regions such as Asia Pacific is much higher, with small and medium-sized enterprises and large financial firms in particular increasingly buoyant about the future.

According to the survey, 64% of finance professionals feel the global economy has bottomed out – twice the number of those in the Q1 survey. More than a third even expect a recovery within the next 12 months.

However, 10% of respondents are far less optimistic, saying they expected the downturn to remain for three years or longer – a view that is twice as common among public sector accountants.

As far as regional expectations are concerned, the survey reveals that Western European financial professionals the least optimistic about a recovery, while those in Africa are more likely to believe conditions are improving. Respondents in Asia Pacific, however, are generally the most optimistic and consider that the worst is behind them, with expectations of a speedier recovery.

Despite this largely positive shift in perceptions, the survey of 546 ACCA members in 77 countries found only a marginal improvement in trading conditions in the three months to May 2009.

'While there is little evidence of economic recovery, there is renewed confidence and optimism,' said Dr Steve Priddy, ACCA director of technical policy and research. 'Our next quarterly survey will look for real changes in trading conditions which support that viewpoint and whether the private sector is backing its confidence by investing in people and capital – or whether public sector finance professionals are right to think that the global economy has some way to go before recovery begins.'

Click Here For More information

Courtesy By ACCA

World leaders: action still required

2009-08-10T05:41:00.001-07:00

In spite of the embryonic signs of recovery, there are still many challenges facing world leaders. The first is to ensure that they are not too optimistic. The IMF and World Bank are still predicting declining growth and contracting output around the world, and the outlook according other indicators such as unemployment will remain gloomy. Although the steps taken so far may be beginning to yield results, much more work is still needed to ensure the recovery.

Any optimism may actually go further than stopping the recovery in its tracks - it could reignite the financial crisis. Leaders and economic policy makers will need to ensure that they balance their approach: large government deficits could generate inflation and make it more expensive to borrow on international markets. But implementing a shift towards policy restraint too early will impact with considerable force on the fragile recovery.

A further challenge facing world leaders is the waning momentum for change. As some indicators begin to pick up, public and political pressure to push through reforms is decreasing and there is a danger now that the impetus for radical and necessary change will be lost. The result of this would be - except for a few cosmetic changes - the global economy will emerge from this recession looking much as it did before, only smaller and with more people unemployed and angry.

Reform, for example, of the Bretton Woods institutions is something that is not only important - it is something that has to be implemented more quickly. The Western powers need to face up to political reality and offer a reform of governance that properly reflects the distribution of power in the new global economy. Without these reforms, developing economies, particularly countries such as China and Brazil, may begin to reject the institutions on the basis that they are not representative enough to efficiently pursue their primary objectives, ie. stability of the international financial system and the fight against poverty.

The scale of the current crisis has been associated with inadequate regulation and supervision of banks and financial markets. But rushing through new financial regulation in a purely reactive response to the financial crisis would be a mistake. The priority should be to ensure that existing regulation is enforced thoroughly.

There have also been many political criticisms relating to fair value accounting rules, alleging that they caused some of the market volatility and may have been a factor in the financial crisis. Fair value did not cause the financial crisis, and world leaders should use this crisis to show commitment to the principle of an accountable, transparent and sound system of international regulatory cooperation, maintaining full support for the move towards a single set of high quality international accounting standards. The globalisation of business means that one set of reporting standards, the principles-based IFRS, is essential.

In addition to bigger businesses, SMEs are vital to driving economic recovery through the role they play in creating jobs, innovation, and macroeconomic growth. It is crucial that leaders recognise the importance of SMEs and find more ways to collaborate and partner with business, civil society and governments in encouraging institutional changes to help improve the operating environment for SMEs.

Finally, while politicians struggle to retain votes and work economies out of recession, it is crucial that they acknowledge the climate crisis as well. Acting early, as key policy documents, economic forecasts and project proposals are urging, will raise our chances of diverting catastrophe at a reduced financial and environmental cost, while building a strong green economy.

Courtesy By ACCA

Shocking Accounting Scandal at Huron Consulting Group

2009-08-06T21:40:00.001-07:00

Just after market close on Friday July 31st, 2009, Huron Consulting Group dropped a bombshell on investors by announcing an intention to restate its 2006 to 2009 financial statements due to incorrect accounting of “non-cash charges relating to how payments received by the sellers of certain acquired businesses were subsequently redistributed among themselves and to other select Huron employees”. Shell shocked investors immediately sold HURN stock, causing the stock to fall by an astounding 70% from close of market on Friday at $45 to open at a paltry $12 per share at open of market on Monday August 3rd, 2009, and leading to an instant shareholder value disappearance of almost $700 million.

It is now apparent that Huron had agreements to pay some employees at four of its recent acquisitions “earn-out” compensations based on their unit performance after the transaction was completed. These agreements were on their own quite legal, but their accounting was not quite done right. Instead of charging these compensations to P&L expenses as non-cash charges with negative impact on Huron’s net income, they were booked as purchase price goodwill on the balance sheet, thus with no impact on net income and EPS.

Thus, net income and EPS were overstated for these years, and the restatement has the effect of reducing net income by these incorrectly accounted charges. These restatements are not insignificant, in 2006 net income would have decreased by $4 million from $27 million to $23 million; in 2007, net income would have decreased by $18 million from $42 million to $24 million; in 2008, net income would have decreased by $31 million from $41 million to $10 million; in Q1-2009, net income would have decreased by $4 million from $10 million to $6 million. Cumulatively, the total restated amount was $57 million over these four years.

Upon disclosure, the market reduced Huron’s shareholder value by 12 times the fictitious additional earnings of $57 million. Just before this announcement Huron’s P/E ratio was $44 share price divided by estimated EPS of $3.16 or about 14x. Which kind of makes sense.

Huron started as a spinoff from Andersen in March 2002 with about 25 partners and about 200 consultants, principally from Chicago and some pockets in New York, Houston and other parts of the US. The heart of Huron was the Litigation consulting group from the Midwest offices at 33 West Monroe, Chicago downtown. In a matter of weeks while Andersen was crumbling, Huron was able to pull together its core partners, and with financial backing from Lake Partners and Gary Holdren and Dan Broadhurst in the lead, quickly set up its own operating structure and separate offices. Since the core partners had strong and profitable individual practices, they were able to move their clients and personnel to Huron, and given the imminent collapse of Andersen, this was an appropriate move, though with always the inherent risk of a startup entity. Paul Charnetzki, Jim Rojas, Michael Kennelly, Jim Roth, Lisa Snow, Susan Gallagher, Gerald Richardson, Mukesh Gangwal, Michael O’Connor, Robert Wentland, Timothy Zeldenrust among others formed the core team of Chicago partners who launched Huron. Interestingly, this group was a purely consulting practice and had no connection with the Enron audit which caused the downfall of Andersen.

Even at its inception Huron had strong and profitable practices, and notched up annual revenues of $35 million. It focused on litigation services, forensic accounting, bankruptcy, education and healthcare consulting, all services in good demand. Over the years, it grew with amazing rapidity adding new services, new experts, new consultants and new offices both in the US and abroad. Revenues surged to $100 million in 2003. Huron went public in October 2004 (Nasdaq: HURN) with revenues of $150 million and 600 employees, providing an early and financially rewarding exit for Lake Capital and making the initial core partners quite wealthy independent shareholders. Huron continued to grow to $600 million in revenue in 2008 and with 2,000 employees, bucking the economic downturn with services that were quite recession-proof over the last few years. Huron also made a number of acquisitions during this time extending its service depth and international footprint. In 2009, Huron was expecting revenues of about $700 million and about $65 million in net income.

So what happened?

The media and blogs are conveniently pinning the Huron debacle on its Andersen roots, and hinting that the Enron malfeasance bled into Huron. We don’t fully subscribe to this theory, while Huron’s senior management team certainly was from the core of Andersen Chicago, it was hardly involved with Enron’s audit and was quite angry with the way things turned out for the Andersen firm taking the hit for the bad actions of a few employees.

Rather than jumping on the Andersen bandwagon, we think that what transpired here was the result of simple universal human emotions - fear and greed - playing themselves out. Fear of reporting less than satisfactory results to Wall Street which had very high expectations and the financial greed associated with an increasing stock price were in our opinion the key underlying factors for this debacle.

Put yourself in the shoes of Gary Holdren, Huron’s CEO in 2008. Would you rather report to a tough Wall Street crowd a stupendous 23% increase in sales from 2007 and a nearly flat change in net income OR would you report a robust sales growth and a precipitous decline in net income from 2007 to 2008. While we may never find out if Gary Holdren senior management knew of this accounting treatment, our guess is that they preferred the former position and continued to report false numbers in the fervent hope they never get found out. In the battle of truth versus falsehood, truth unfortunately got trampled by greed.

And ironically it is really not senior management which came out with this revelation. According to Huron’s statement, it came to the attention of the Audit Committee of the Board of Directors that there was something amiss when selling shareholders of an acquisition had an agreement among themselves to reallocate a portion to a Huron employee who was not a shareholder, upon which it launched an inquiry to see if other similar situations existed, and further engaged legal and financial advisors and notified PricewaterhouseCoopers, Huron’s auditors who were apparently unaware of this situation. Reading between the lines, it appears that the Audit Committee stumbled upon something and had the guts to chase it independently, senior management never seemed to be quite ready to disclose its errors.

With all this in the background, we are ready to hand out our kudos and shame awards:

First, kudos to the Audit Committee (John McCartney, Dubose Ausley and James Edwards) for unearthing this issue and pursuing it fearlessly to its terrible end.

Second, shame on senior management to succumb to greed and not complying strictly with accounting standards

Third, shame also on the auditor, PricewaterhouseCoopers for failing to spot this issue, especially in 2008, when the amount of money kept in goodwill was $31 million, three times the true net income of Huron of only $10 million

Fourth, shame on Huron itself for providing accounting, internal audit, internal controls, Sarbanes, and similar advice to its corporate clients, while following shady accounting practices. Physician, heal thyself first.

Finally, our sympathies for all the hard working and honest Huron consultants who had nothing to do with acquisitions or their accounting, and are likely as mad as anyone that this could happen to them.

The Chicago Tribune and Crains Chicago are already asking whether Huron will survive this scandal and continue as a company, given the impacts on its standing and potential large scale departures. We think that while this is a devastating hit on the company’s reputation and stock price, it is not a body blow and (unlike BearingPoint) the business will survive over the long term as its consulting service is quite healthy and utilization % quite reasonable. The first steps to announce the restatement, take the full market hit, fire the CEO and CFO, are all in the right direction. It will be tough going for a while (3 shareholder lawsuits already filed), but mass exodus of consultants seems rather unlikely (really, who’s hiring nowadays), and if the new management team which has already survived the Andersen crisis has the right attitudes and goals, (we hope) will make the move to a reputable consulting firm.

We’ll watch and see how things shape up, but the stock seems to be slightly on the upswing with a 6% move up today, which indicates to us that the market move down was perhaps a touch overdone, considering that core operations are still presumably fine.

It’s not fun to see another offspring of the Big4 firm take a nosedive, but its better to take the hit now and find a road to survival, then continue festering longer and be completely wiped off the map. Having seen what transpired at Andersen in 2002, this seems like déjà vu all over again.

Courtesy By bigfouralumni

Climate change: what the UK needs to do to get results

2009-08-05T04:02:00.001-07:00

Despite its potentially strong position in the renewable energy market, the UK must do more if it is to achieve climate change targets, says ACCA (the Association of Chartered Certified Accountants) in a new report called The future of renewable energy, which follows up a recent ACCA ‘Friday Forum’ event.

Vicky McAllister, ACCA’s sustainability adviser, explains: “In terms of its investment potential in renewable energy, the UK needs to do more if it is to achieve EU ‘202020’ targets. Investment in renewable energy and low carbon technology is key if the UK is to meet its share of the commitments.”

The main points of the paper are:

• The UK is not taking advantage of investment potential in renewable energy technology, despite having good resources and a number of strengths in the industry
• The UK, along with other EU countries, has committed to meeting its share of the ‘202020’ commitments
• One part of meeting targets is increasing the proportion of renewable energy in the energy mix
• Key elements of a global policy framework for a ‘green new deal’ include effectiveness, efficiency and equity: ‘the three E’s’

Dimitri Zenghelis, climate change economist for Cisco and senior visiting fellow at the LSE’s Grantham Research Institute on Climate, who was one of the speakers at the event, said:

“More needs to done by the Government and businesses in the UK to ensure that the UK’s renewable energy opportunities are properly utilized. Currently, the UK is not taking full advantage of investment potential in renewable energy technology”.

For more information about ACCA’s ‘Friday Forum’ events, and for further information on ACCA’s work on sustainability, please go to: www.accaglobal.com/sustainability

- ends -

Notes to Editors
1. ACCA is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We have 362,000 students and 131,500 members in 170 countries worldwide.
2. ACCA has worked with governments, national organisations and development agencies in emerging economies- for over 20 years- promoting the accounting profession, to create value for the communities, businesses and individuals it serves.
3. ACCA believes that globalisation of business means that one set of reporting standards is essential. We favour the principles-based IFRS.
4. ACCA understands the real issues facing small businesses as 63,000 of our members work in SMEs or small partnerships worldwide.
5. ACCA’s next Friday Forum is on ‘USA Climate Change Policy’ and is being held on 17 July 2009.

Courtesy By ACCA

Glaxo to Face Suit over AIDS Drugs

2009-07-27T04:01:00.001-07:00

AIDS Healthcare Foundation (AHF), the largest non-government provider of health care services for US patients with HIV/AIDS, is expected to file suit against the US arm of GlaxoSmithKline alleging that several patents for its AIDS drugs are invalid, and that it has abused a monopoly in pricing those drugs. The lawsuit, expected to be filed in the US District Court for the Central Division of California, Western Division, alleges that Glaxo's prices for AIDS drugs such as Ziagen, Epivir, AZT and Retrovir "exorbitantly exceed its costs of licensing, manufacturing and distributing," and so "present a formidable obstacle for proper treatment of the AIDS epidemic in the [United States]," according to a draft copy of the lawsuit.

"We believe we have valid patents for our products," said a Glaxo spokesperson. Glaxo and other makers of AIDS drugs have cut prices by 90 percent or more to many poor nations. Now, AIDS activists are aggressively pursuing similar price cuts for the US market. Glaxo is one of the biggest manufacturers of AIDS medicines. Last year the British company said sales of its AIDS drugs rose 14 percent to $1.76 billion. Activists targeted Glaxo especially because the prices of some of its AIDS drugs in developing countries are twice the prices charged by rivals such as Merck and Bristol Myers-Squibb. Glaxo has said it makes no profit on those sales and that its prices reflect the cost of manufacturing.

AHF, which operates AIDS clinics and pharmacies that provide drugs to patients in the United States, Uganda and South Africa, said that it would seek triple damages of $66 million from Glaxo, based on AHF's drug purchases from Glaxo totaling $22 million over about four years. The group said its recent negotiations to persuade Glaxo to lower its prices in the United States faltered. Glaxo also declined to fund a program to provide free AIDS drugs in Uganda, South Africa and elsewhere, said AHF.

AHF claims that AZT, Epivir and Ziagen were developed with significant amounts of US government funding and, under US law, should be sold at more reasonable rates. Glaxo "didn't discover these drugs, and they are charging too much money for them," said Michael Weinstein, founder and president of the foundation.

Allders hits Alexon for £3m

2009-07-27T04:00:00.001-07:00

Clothing retailer Alexon has admitted that £3m will be knocked off its profits this year as a result of the collapse of Allders, the stores where it ran 118 concessions.

The admission came as the company announced disappointing results and said current trading had worsened.

Group sales in the past nine weeks have fallen 3pc, with sales at its high street stores down about 6pc. The group has been particularly hit by poor sales at its youth fashion chain Bay Trading.

The company refused to blame the weather. Robin Piggott, finance director, said: "We were trimming the value of our garments, making them cheaper and cheaper but less interesting."

John Osborn, chief executive, said: "I've stood up Japanese-style and apologised for the sales fall but I'm not going to be slitting my wrists."

Analysts expressed surprise at the size of the hit from Allders. John Stevenson at Shore Capital said: "Alexon has over 1,000 concessions, with only 118 of those at Allders.''

Mr Piggot said the £3m related in part to making redundant 250 Alexon staff who worked at Allders. Group pre-tax profits fell 8pc to £26.9m on sales up 2pc to £424m. A final dividend of 5.67p will be paid on June 30.

AIG staff tried to destroy documents

2009-07-27T03:58:00.001-07:00

New chief admits AIG staff tried to destroy documents By David Litterick in New York Published: 12:01AM BST 05 Apr 2005 The new chief executive of embattled insurer American International Group yesterday admitted that employees of the company had been found trying to destroy documents as he sought to allay concerns over the ever-expanding inquiries into the business. In a letter to shareholders, British-born Martin Sullivan said: "AIG recently became aware of efforts to remove documents and information from its Bermuda building without permission. AIG immediately brought these incidents to the attention of the relevant authorities. One individual in Bermuda was terminated for failure to co-operate with AIG's review and several other employees have resigned." Related Articles Civilian police employee shot during 'gun awareness' training Sir David Walker to shake up bank boards MPs' expenses: Sir Alan Haselhurst in angry exchanges with fees office Exporters given help to increase trade in Budget 2009 Sunsail abandons Turkey over visa rowHe said the company was working with regulators in New York, Bermuda and Ireland to ensure documents that could shed light on the company's transactions are secure. Regulators have been particularly interested in some of the deals AIG did with off-shore companies. Irish regulators confirmed yesterday that they had been looking into deals involving AIG and Cologne Re, a division of Berkshire Hathaway's General Re that has an office in Dublin. Irish Financial Services Regulatory Authority chief Liam O'Reilly said he was "actively engaged" with Cologne Re and was working to ensure all "necessary corrective actions are taken". Mr Sullivan wrote: "We are working round the clock to complete our internal review as quickly and thoroughly as possible. AIG will continue to co-operate fully with all relevant authorities in their investigations. He added it was "unfortunate that current circumstances have obscured the reality that AIG's unique global franchise is sound, our financial position is solid and cash flow remains strong." The shares have fallen nearly 30pc since regulators issued subpoenas in February. News that some at AIG in Bermuda had been attempting to remove documents a week ago is thought to have infuriated New York attorney general Eliot Spitzer, whose investigation into the entire insurance industry sparked the current problems at AIG. It is understood that he had threatened to indict the whole company if action wasn't taken - a warning that led to the resignation of Maurice Greenberg as non-executive chairman. Meanwhile, Starr International, a private company that controls about 12pc of AIG's shares, has ousted a number of AIG executives, including Mr Sullivan and AIG chief operating officer Donald Kanak.

MG Rover For £10 in May 2000

2009-07-27T03:55:00.001-07:00

BMW dashed hopes that MG Rover would get additional funding yesterday, claiming its troubled former British subsidiary would get nothing more than the £500m loan agreed when the Phoenix Consortium bought Rover for £10 in May.

Werner Samann, a BMW board director and former head of Rover, speaking at the Birmingham International Motor Show, said: "The balance sheet will not change dramatically from the £740m of transfer assets agreed on May 9.

"All the risks are with the new owners. Some circumstances may have changed - the 'rip-off Britain' campaign and the fuel crisis. But this is the risk of the entrepreneur. That's the responsibility of the new owner."
The two companies are due to agree on "completion accounts" (Rover's final balance sheet) by the end of the year. MG Rover's new chairman, John Towers, is understood to have been pressing the German company for more cash on the back of falling car prices, plummeting sales and the weakening euro.

The "rip-off Britain" campaign has hit the value of the 50,000 Rover cars the Phoenix Consortium inherited from BMW. These stocks were valued at £740m in May. Since then, Rover has cut its new car prices twice and seen its sales drop by as much as 44pc in a single month. At the same time,the euro has plunged to new depths versus the pound, further hurting MG Rover's business.

A spokesman for BMW later said that if Mr Towers contested the completion accounts, BMW and MG Rover could end up in court. The two companies would first attempt to reach agreement via an independent arbitration process. However, if this fails they would go to court to settle the final accounts.

MG Rover said: "The terms of the Rover BMW deal are confidential but Rover is not expecting any more money than that provided for in the May agreement."

Since the sale of Rover and Land Rover, Professor Samann has been responsible for disentangling the two businesses from BMW. He said MG Rover's recent claim in a regional newspaper report that it would buy BMW's British power train operation, which makes engines and gearboxes for Land Rover and Rover, was "wishful thinking".

He said: "There are several international companies which are interested in the power train business. MG Rover is one of those businesses." Land Rover's new owner, Ford, is understood to be keen not to see the power train operation pass into MG Rover's hands.

The comments by BMW come at a difficult time for MG Rover. Two of the company's non-executive directors, David Bowes and Terry Whitmore, announced earlier this week they would form their own car venture, separate from the Rover project, suggesting dissatisfaction with Rover.

MG Rover said yesterday the venture between Mr Bowes, who heads the sports car maker Lola, and Mr Whitmore, of Mayflower Vehicle Systems, was not a "rival venture" to MG Rover but just "an extension of their existing businesses".

Since selling Rover and Land Rover, BMW's British operation has been reduced to the Mini and two new factories, an engine plant in Hamshall, which begins production at the end of next year, and the new Rolls-Royce factory near Chichester, which will open in 2003.

Courtesy By Telegraphe

ACCA to launch ICFE Qualification

2009-07-21T04:47:00.001-07:00

ACCA to launch International Certificate in Financial English (ICFE) Qualification

ACCA Pakistan is launching International Certificate in Financial English (ICFE) Qualification in Pakistan this week (20 – 27 July 2009). During the week, ACCA will undertake a series of activities including presentations to well-known organisations in the IT, telecom, banking and FMGG sector and educational institutions.
Other activities include radio show, free pre-testing for ICFE exams and seminars at ICFE tuition providers including School of Business Studies, College of Accounting & Management Sciences, Centre for Financial Training & Research and Berlitz in Karachi. These institutions are offering ICFE tuitions and test preparatory classes for students and professionals.
The ICFE Qualification is jointly developed by ACCA (the Association of Chartered Certified Accountants) and University of Cambridge ESOL (English for Speakers of Other Languages) Examinations. It comprehensively develops ability across the four skill areas of reading, writing, listening and speaking. ICFE is particularly relevant for finance and accountancy professionals needing to perfect their financial English skills or for finance and accountancy students preparing for professional exams or individuals required to present and interpret financial information. ICFE exams will be conducted by British Council Pakistan.
We take pride in sharing with you that Cambridge ESOL examinations are recognised by over 50 well reputed organizations in UK including Pricewaterhouse Cooper, World Bank, KPMG and Procter & Gamble. In Pakistan, ICFE has been endorsed by ICI Pakistan, PTCL, Packages Ltd and Khushhali Bank.
Arif Masud Mirza, Head of ACCA Pakistan says: "Being the international language of finance and accountancy, it is vital for professionals to have first-rate financial English language skills and the ability to communicate confidently with colleagues from the international business community".

Courtesy of ACCA Pakistan

Soaring Executive Pay Attacked by Shareholder Activists

2009-07-18T02:58:00.001-07:00

Peter Rose, a Seattle-based corporate chief executive offficer, took home $4.7
million last year. He thinks that’s quite enough.

“There's only so much crap you can buy,” he told his hometown newspaper.

His colleagues in corporate America seem not to agree.

Last year, the CEOs of the 500 biggest U.S. companies averaged $15.2 million in total annual compensation, according to Forbes business magazine’s annual executive pay survey. The top eight CEOs on the Forbes list each pocketed over $100 million.

Larry Ellison, CEO of business software giant Oracle, was not in the top eight. But
as the 11th richest man in the world, who ended last year worth more than $16 billion, he is not doing badly.

University of Chicago economist Austan Goolsbee points out that a CEO like Ellison literally cannot spend enough on personal consumption to stop his fortune from growing. Goolsbee calculates that Ellison would have to spend over “$183,000 an hour on things that can’t be resold, like parties or meals, just to avoid increasing his wealth.”

Stunning numbers like these have moved executive pay onto America’s political radar screen. In a “state of the economy” address earlier this year, even President George W. Bush took note.

“America’s corporate boardrooms must step up to their responsibilities,” the President proclaimed to a business audience. “You need to pay attention to the executive compensation packages that you approve.”

At corporate annual shareholder meetings held across the U.S., activist individual and institutional investors have tried to encourage the process. They introduced resolutions designed to curb executive pay excess and, at one annual meeting after another, directly challenged presiding CEOs.

In May, at the annual meeting of the Denver-based telecom Qwest, high school teacher Linda Baggus — annual salary: $55,000 — wanted to know how CEO Dick Notebaert could justify his annual earnings, estimated at $33 million by one Midwest daily newspaper.

“How is the service that you render so much more valuable than the service I render?” she asked.

Notebaert gave the standard corporate defense for American CEO pay levels.

Life at the Top: Consuming Interest

How do CEOs spend their paychecks? In a way, just like everyone else, except more so. Quite a bit more so. Take housing, the largest single expenditure households make. Dwight Schar, the CEO of construction industry giant NVR, shelled out $70 million three years ago for his new home in Florida's Palm Beach. His beachfront manse features 18 bathrooms, a movie theater, and a walk-in humidor for cigars. The most expensive private home sold in the United States last year went to Richard Kurtz, the CEO of Advanced Photonix, a telecom supplier, for $58 million.

Last year Rich Zannino, CEO of publisher Dow Jones, spent $173,441 getting to work. Dow Jones reimbursed him, on top of his $4 million-plus salary. That didn’t please the war correspondents on the Wall Street Journal, a Dow Jones property. In a protest letter they said their CEO “gets far more just to sit in the back of a limo on his way to work than we get to go into combat.”

CEOs, naturally, also need bling. A recent study by Prince & Associates says banking industry executives who took home over $5 million in bonuses last year spent 16 percent of their good fortune on $31,000 Patek Philippe watches and other fine baubles. One Wall Street bling shop sits conveniently near financial powerhouse Goldman Sachs, whose CEO, Lloyd Blankfein, last year took home $53.4 million. The shop stocks $700 cigar lighters and a $320 cigar clipper.

His pay, he explained, depends on his “performance” and reflects the realities of a “very competitive market” for executive talent.

His defense carried the day. Four shareholder resolutions designed to clamp down on CEO pay excess failed to win majorities at the Qwest meeting.

In early June, activists figured they would do better at the annual meeting of Yahoo, the global Internet giant headquartered in California’s Silicon Valley. The situation appeared to offer reformers all they needed: a CEO at the top of the pay charts; lackluster corporate performance; many angry shareholders.

In 2006, Yahoo shares had sunk 35 percent, or about $20 billion, in value. Top talent, according to press reports, was jumping ship. A leaked internal Yahoo memo -- known in tech sector circles as the “Peanut Butter Manifesto” – said that, like peanut butter on toast, Yahoo management was spreading the company dangerously thin.

Thinner, certainly, than the bulging wallet of CEO Terry Semel. Last year Semel pocketed $71.7 million, over twice the take-home of any other chief executive in Silicon Valley. Since 2001, the year he left Hollywood to take Yahoo’s top slot, Semel has cashed out an additional $450 million in personal stock option profits.

By early June, three major shareholder advisory companies – which advise large investors how to vote at corporate annual meetings – had had enough. They urged a “no” vote on the re-election of three Yahoo board members who had served on the company’s executive pay committee.

One of the three companies, Proxy Governance Inc., noted that Semel’s compensation was running 926 percent “above the median paid to CEOs at peer companies.”

Semel walked into Yahoo’s June 12 annual meeting prepared to counterattack. “Yahoo has staked out a strong competitive position and we are better positioned than we have ever been before,” he pronounced.

Activist shareholders disagreed. “I am surprised you did not apologize to Yahoo shareholders for the last three years of performance,” said one, Florida money manager Eric Jackson.

There were no apologies. Instead, Semel and his management team prevailed in every executive pay-related vote they faced. Only a third of the Yahoo shareholder vote opposed the re-election of the targeted board members.

Performance: Games Executives Play

CEOs who “perform” deserve their rewards, corporate boards in the United States like to point out when asked to justify current levels of executive pay. But almost all the measurements — or “metrics” — used to determine who’s performing well can be adjusted to create phantom successes.

What sort of games do savvy executives play? Here’s some samples.

Stock Buybacks

IBM and many other major companies use “earnings per share” to measure performance — and pay. The quickest way to hike earnings per share: a company merely “buys back” shares of the company’s own stock on the open stock market. With fewer company shares outstanding in the marketplace, a company’s “earnings per share” can jump, even if overall company earnings stay flat.

IBM's corporate board authorized $15 billion in new buyback spending this spring. That's “two and a half times what IBM spends annually on research and development,” the Associated Press reported.

Channel Stuffing

Some companies rate performance by sales totals. Executives who need to hit a particular sales target by the end of a fiscal quarter can inflate sales by giving retailers incentives to buy more than they are likely to sell. The retailers later return the unsold products — after the executive has personally profited from the inflated sales.

Drugmaker Bristol-Myers Squibb inflated earnings for nearly three years by getting wholesalers to keep placing big orders. This "channel stuffing" kept sales booming and the company's share price rising. CEO Charles Heimbold parlayed this inflated share price into a stock sale that fetched him $23.6 million.

Option Expensing

Many companies measure performance by profit margin, a company’s earnings after deduction of expenses and taxes. Companies routinely push up this profit margin, a U.S. Senate hearing revealed in June, by manipulating executive pay to lower
corporate tax bills.

Under current U.S. law, corporations that award executives stock options can deduct from their taxes far more money than the options cost them. In 2004, says Senator Carl Levin from Michigan, top U.S. companies used this maneuver to save as much as $15 billion in taxes. Since 1993, Occidental Petroleum has claimed $353 million in tax deductions for stock options that went to the company’s CEO. The total that would have been deducted if reforms sought by Levin had been law: $29 million.

A resolution seeking to tie Yahoo executive pay to a more competitive performance standard lost by the same two-to-one margin.

A crushing setback for shareholder activism? Not exactly. The week after the annual meeting, the Yahoo corporate board announced Semel’s resignation.

Had shareholder activists triumphed over executive pay excess? Well, Semel may be out, but CEO pay remains on the rise. If Yahoo’s next CEO takes home the same half-billion over six years as Semel, will Americans concerned about executive pay have reason to cheer?

Margaret Covert doesn’t think so. Covert coordinates shareholder activism for NorthStar Asset Management, a Boston-based wealth management company. “It comes down to having a company share its bounty with all its workers,” she told CorpWatch. “All workers have contributed to company success. They should all share in the rewards, not just the top tier.”

NorthStar asked shareholders of ExxonMobil, the world’s most profitable corporation, to call on the company to prepare a study that compares the “total compensation package of our CEO and our company’s lowest paid U.S. workers in September 1995 and September 2005.

“As shareholders,” the proposed NorthStar resolution read, “we are concerned that the over-compensation of top executives has a negative effect on employee morale and customer trust.”

NorthStar president Julie Goodridge carried the resolution to the May 30 ExxonMobil annual meeting at the Morton H. Meyerson Symphony Center in Dallas, reminding the thousand or so shareholders present that CEO Rex Tillerson took home just over $22 million in 2006.

“Our resolution asks shareholders to join us in questioning why it takes our lowest-paid employees a full year to earn what Mr. Tillerson earns for an hour on the job,” Goodridge said, “… because we believe it is fiscally irresponsible for a company to put so much of its resources into a single individual.

“High company profits do not justify outrageous CEO compensation.”

No shareholders spoke in favor of Goodridge’s resolution. She claims ExxonMobil officials structured the annual meeting so that they could not do so.

“At ExxonMobil’s meeting last year, people could get up and make statements on behalf of resolutions they supported,” she explains. “The mikes were set up in the audience, and you could just line up at a mike and have your say.” This year, she says, Exxon allowed only the sponsors of a resolution to make a statement: “It felt like a much more hostile meeting than last year.”

The NorthStar resolution gained just under 12 percent of the shareholder vote.

A resolution in a similar vein also made little headway at the annual meeting of retail giant Wal-Mart. The resolution asked why the company’s top five officers, who make up 0.000003 percent of the company’s workforce, were pulling in 18.2 percent of the total stock options Wal-Mart granted each year.

“If options are a good incentive to get people to do a good job,” says Mike Lapham, director of Responsible Wealth, a national group that links affluent individuals from across the U.S. and which introduced the resolution, “why not use them for employees on the store floor, too, and help the women and people of color who work at Wal-Mart build their assets?”

The environment at the annual meeting didn’t encourage serious debate on such a deep question. Lapham describes the meeting as more like a pep rally than a business gathering, with 15,000 of Wal-Mart’s most enthusiastic employees — “associates,” to use the official company term — packed into the University of Arkansas basketball arena for a four-hour entertainment extravaganza that featured the comedian Sinbad.

“The shareholders resolutions come up when the employees take a bathroom break,” says Lapham.

Top Wal-Mart officials never came forward to debate the Responsible Wealth resolution — or any of the other three resolutions that sought to challenge the company’s executive pay practices.

They left their defense of pay arrangements to the explanations of corporate policy in the official annual meeting documents.

“Our associates respect that Wal-Mart has a well-recognized culture of opportunity,” the documents stated. “They are proud that their CEO started as a manager in the trucking division and has stayed with the company for 28 years.”

The Responsible Wealth resolution collected about the same support as the NorthStar initiative at ExxonMobil. However, executive pay resolutions at other corporate annual meetings in recent months have fared better.

U.S. trade unions pushed particularly hard this spring for “say on pay” resolutions designed to give shareholders the right to take annual advisory votes on executive pay packages. This right is now enshrined in law in Australia, Sweden and the UK. In the Netherlands and Norway, shareholders have the right to take a binding executive pay vote.

CEO Pay: Defense is the Best Form of Attack

Corporate boards in the United States have evolved a consistent, all-purpose defense of the executive pay status quo.

In an explanation that chimed with other statements throughout Corporate America, the executive compensation committee at Toll Brothers, Inc., a major residential construction company, said earlier this year that it had based executive pay “on the principles that compensation should reflect the financial performance of the company and the performance of the executive, and that long-term incentives should be a significant factor in the determination of executive officers’ compensation.”

On top of that, the company “sets executive compensation at levels that are sufficiently competitive so that the company will attract, motivate, and retain the highest quality individuals to contribute to the company’s goals, objectives, and overall financial success.”

How does that work in practice?

Toll Brothers CEO Robert Toll earned $29.3 million in 2006. Was that a suitable reward for performance? The company's net income last year fell 15 percent.

Or was the $29.3 million intended as an incentive that would stimulate Toll to do better in the future? Toll owns nearly a fifth of the 5,500-employee company's outstanding shares of stock, so seems already to have enough incentive to want the
company to do well.

Or is $29.3 million the “sufficiently competitive” going rate for CEOs in homebuilding? It doesn’t seem so. Over the past three years, Robert Toll has taken home almost seven times more than his CEO counterparts in the homebuilding industry.

Last year only a half-dozen advisory “say on pay” resolutions were tabled at annual meetings. This year, “say on pay” debates have erupted at nearly ten times that number of annual meetings, and most have attracted 40 percent or more of shareholder votes. Four even won majorities — at Blockbuster, Ingersoll-Rand, Motorola and Verizon.

Shareholder activists hail the results as significant.

Until recently, explains veteran shareholder organizer Tim Smith, only church groups and labor and public employee pension funds seemed willing to challenge management on executive pay. That’s changed, says Smith, a senior vice president at Walden Investment Management and chair of the Social Investment Forum, the top U.S. trade association for social investors: “You don’t get 35 percent of a shareholder vote without some big institutional investors saying no.”

Major institutional investors, such as the T. Rowe Price mutual fund family, are now eager to give shareholders “the tools they need to hold corporate boards of directors accountable,” adds Dan Pedrotty, director of the AFL-CIO’s office of investment, the coordinating center of American labor’s shareholder activism.

“We’re becoming more of a critical mass,” agrees NorthStar Asset’s Julie Goodridge. “It’s one thing when an investor with a few thousand shares objects - quite another when an investor with millions of shares stands up.”

In Plano, Texas, some of those investors stood up at the May 18 annual meeting of retail giant J. C. Penney, which last year handed $10.2 million in severance pay to an executive who had spent only six months in the job.

Shareholders passed a resolution, sponsored by the Bricklayers Union, asking company management to secure shareholder approval in advance for any future severance package that exceeds an executive’s regular annual salary and bonus by 2.99 times or more.

The J. C. Penney corporate board is not obliged to implement the resolution, because shareholder resolutions at U.S. annual meetings typically function only as
recommendations.

Reformers acknowledge that corporate boards already ignore public frustration over rising executive paychecks. “We’re disappointed to see packages continuing to spiral upward,” Service Employees Union corporate activist Tracey Rembert told CorpWatch. “The lump sum numbers now public under the new SEC disclosure rules have been shocking.”

Last summer the SEC (the federal Securities and Exchange Commission) promulgated regulations requiring publicly traded companies in the U.S. to reveal previously largely hidden categories of executive compensation.

Among the surprises the new SEC regulations have helped bring to light: the $415.5 million in 2006 take-home for Occidental Petroleum CEO Ray Irani. He pocketed $52.1 million in salary, bonus, perks and stock awards and cleared another $270.1 million cashing out stock options awarded in previous years. And he withdrew another $93.3 million from his Occidental “deferred pay” account.

Some observers had predicted that the SEC regulations would help curb executive
compensation increases. Certainly, shareholders have more information than ever before. Nevertheless, executives and corporate boards still enjoy a huge advantage in the ongoing debate because both they and the critics share an assumption that executives who perform well deserve to be rewarded.

“Pay should be linked to performance, that’s the common denominator,” says Walden Investment Management’s Tim Smith. “Nothing will raise investor ire more than if pay does not seem to be linked to performance.”

Executives have learned how to spin performance statistics to deflect attacks.

Angelo Mozilo, for instance, has collected over $285 million in the last 11 years as
CEO of Countrywide Financial, the largest U.S. home mortgage lender. At
Countrywide’s annual meeting in May, Mozilo presented a list showing that
Countrywide was 12th in a list of U.S. companies that had generated the greatest
returns for shareholders. That placed it ahead of corporate giants Dell and Berkshire Hathaway whose top guns, Michael Dell and Warren Buffett, he noted, had both become “multibillionaires.”

Mozilo’s not-so-subtle message to shareholders: At $285 million, I’m a bargain.

Executives usually have little difficulty finding some “metric” that proves they have performed well and richly deserve generous rewards. Corporate board executive compensation committees make metric cherry-picking easy. They will often cite, Tim Smith notes, a long list of metrics that guide their determination of performance, but leave unclear which performance measurements matter most.

In this spring’s round of corporate annual meetings, the Carpenters Union led an effort to clamp down on performance metric gamesmanship. The Carpenters and allied groups pushed a resolution asking corporate boards to benchmark their performance standards against competing firms. The goal: no windfalls for executives whose companies fail to beat their competitors.

The approach proved a hard sell. The failure of every “pay for superior performance” resolution to gain a majority in shareholder voting has become a basic fact of life for corporate activists. So what keeps these activists coming back to shareholder meetings, year after year, when they usually have so little to show for their efforts?

Scott Klinger, research director of Corporate Accountability International and a veteran of the annual meeting scene since the mid-1980s, emphasizes that annual shareholder meetings play a unique role. Every other day of the year, Klinger says, CEOs live in their own separate universe.

“Corporations now require their top executives to fly on corporate aircraft for security reasons,” he explains. “They never even get to meet first-class passengers. They come to believe they’re special. They never see real life.”

Activists like Responsible Wealth’s Mike Lapham are working to bring that real life into annual meetings. Earlier this year, deep-pocketed members of Responsible Wealth joined TIGRA (the Transnational Institute for Grassroots Research and Action) in a campaign to press Western Union to lower the fees the company charges immigrants to send remittances home.

Activists at the Western Union annual meeting accompanied immigrants with troubling stories to tell about how remittance fees were squeezing their families. Lapham says Western Union executives came face-to-face with people they would never otherwise encounter.

“Moments like that,” he observes, “are one of the rare times executives ever get to hear the downside of how they’re making their money.”

Activists at this spring’s corporate annual meetings weren’t able to accomplish anything that will immediately staunch the flow of money into executive pockets. But they will return next year. The tide, most seem convinced, may be turning — and now’s no time to turn back.

Courtesy By Sam Pizzigati

How Technology Has Changed Accounting

2009-07-18T02:49:00.001-07:00

The history of accounting is as aged as civilization and this history also is powerful base to develop the accounting of the next generation.

One of the most fundamental concepts in accounting is double-entry bookkeeping, developed in medieval times and first documented by Luca Pacioli, an Italian friar, in 1494. During the time, the bookkeeping methods are involved in making business financial transactions records and preparation of statements concerning the assets, liabilities, and operating results of a business.

Accounting records were often the only reliable records of such historical transactions. Imagine all the records are done by manual papers, thus this is not easy to translate all data into readable report.

How Technology Has Changed Accounting today?

The more recent history of accounting reached a milestone in the 1980s when new technology improved the speed and ease of transmitting information among different computers and systems.

The introduction of computer technology into accounting systems changed the way data was stored, retrieved and controlled. Today, a global real-time integrated information system is a near reality, suggesting new accounting paradigms. Most large sized companies have invested dozens to hundreds of ancillary systems that feed into their general ledger and consolidation systems.

On the other hand, accounting has been a leader of the Information Revolution. In fact, much like language, many countries have different and unique accounting, banking, and financial systems

ACCA welcomes new IFRS for SMEs

2009-07-18T02:38:00.001-07:00

Many companies to benefit from completion of IASB's 'most important project'

ACCA has welcomed the IASB's new standard for small and medium-sized enterprises, saying that it will have a significant impact on millions of companies around the world.
Despite concerns by many that the new simplified standard, which still runs to more than 200 pages, would be too complex for small businesses to use, ACCA's own research shows little concern in this area.
'We are delighted that the IASB has completed its most important project after five years' work,' said Richard Martin, ACCA head of financial reporting. 'It comes at a critical time because it will mean that countries will be able to apply IFRS to companies of all sizes and not need to operate two systems of financial reporting, with one for large listed companies and another for smaller or unlisted privately owned companies. ACCA has always supported IFRS as a global accounting language for listed companies - now this has been opened up for smaller businesses too.
'The use of international standards across the board should add credibility to the financial statements of unlisted companies, at a time when potential users of accounts want to be able to rely on the figures they see.
'There has been concern from some quarters that despite attempting to simplify standards for SMEs the IASB had produced something which was still far too complex. However, when we field-tested the exposure draft in the UK, we found that small companies and their accountants were able to apply this without significant difficulty.
'We look forward to a widespread take up over the next few years as countries assess its usefulness in their context. ACCA is pleased that IASB as a global standard setter has recognised its obligation to make available the standard and related educational material to download for free to users.'
ACCA president Brendan Murtagh, who is a partner in an accounting practice, said: 'In my firm, we imagine this will be warmly accepted as best practice by our clients very quickly. A set of standards which is more easily understood by smaller businesses, their potential investors, customers and suppliers can only help organisations to survive in these tough trading conditions and to potentially thrive when the current situation eases.

Courtesy by ACCA

Pakistan’s economic recovery

2009-07-18T02:35:00.001-07:00

Donors’ US$20 billion support will speed up Pakistan’s economic recovery

KARACHI — After the approval of more than US$20 million in credit and grants by donors, the economy of Pakistan is showing strong signs of recovery, economists said on July 9.

“Foreign exchange reserves, the balance of payment position, inflation and mark-up rates have shown a significant improvement in last few months, and that will help to pull the economy of Pakistan out of recession and put it on the path towards growth,” economist A.B. Shahid said. Reserves have improved to $12 billion this month from $7 billion in January. The current account deficit shrunk to $340 million in the last quarter, down from $3.5 billion in preceding quarter.

Inflation in July declined to an annual rate of 10 percent, down from 21 percent in January, and the Karachi Inter-Bank Operations Rate fell to 12.5 percent from a high of 16 percent over the first half of this year, Shahid added.

“The International Monetary Fund [IMF], World Bank [WB], Asian Development Bank [ADB] and major donor countries such as the U.S., the UK, Japan, China, Germany and France have approved more than $20 billion in economic assistance for Pakistan over the next five years. That has revived the business confidence and averted the threat of default,” economist Dr Ashfaque Hasan Khan said.

Last November, Pakistan faced the threat of default when State Bank of Pakistan foreign exchange reserves fell to $3.2 billion, barely enough to pay for one month of imports, Khan said. The IMF approved a $7.6 billion bailout package that month, and also disbursed another $3.1 billion on an emergency basis, which eliminated the immediate danger of default and revived the confidence of the investors and the businessmen, he added.

Khan said that despite the global and domestic economic crisis, Pakistan's economy grew 2.0 percent in FY 2008-09. During FY 2009-10 the country is expected to achieve growth of 3.5 percent.

“FY 2009-10 could be a year of fast economic recovery, as some key economic indicators reflect encouraging improvements over FY 2008-09,” economist Dr Shahid Siddiqui said. To ensure that is the case, the government should further trim inflation, mark-up rates, overcome the energy crisis and enhance exports and the tax-to-GDP ratio to stimulate recovery and growth even further, he asserted.

Courtesy Central Asia Online

Pakistan Real GDP growth @ 8%

2009-07-17T04:11:00.001-07:00

Real GDP growth should be sustained at eight percent per year: ADB advises Pakistan

Asian Development Bank advised the Pakistan government that Real GDP growth, remained sustained at 8% per year, over 2010-2020, while credit to the private sector, from the banking sector, expanded to 42% of GDP by 2018. The manufacturing sector's share of the GDP increased by 30%, by 2020. High value-added output share of exports increased to 40% of GDP by 2020.
An update review of the Asian Development Bank on "Macroeconomic Developments and Prospects" revealed that the crisis had a major impact on financial markets, with the Karachi stock index plunging by 57% in 2008. To halt the steep decline, the Karachi Stock Exchange Board imposed a floor on stock prices in August 2008. This was eliminated in December.
To revive the market after the floor was lifted, the National Investment Trust (the government-owned and largest money manager in Pakistan) invested about Rs 7 billion in the Rs 20 billion State Enterprise Fund, which is investing in the stock market. The market subsequently rallied and bounced back to pre-crisis levels. Increased confidence and improved terms of trade helped stabilise the rupee at around Rs 80, to the dollar, since October 2008 and enabled the SBP to rebuild its gross international reserves.
According to the ADB report, the banking system remains relatively well capitalised, but gross nonperforming loans have increased from 7% in 2007 to about 9.1% of all loans and banks' profitability has declined by about 24%, from the previous year, (reflecting, in part, the mounting provisioning requirements in response to the rise in nonperforming loans).
Domestic pressures and the global financial crisis have led to greater dollarisation and a continued outflow from the system, which contributes to deteriorating liquidity conditions. In response to liquidity pressures, in October 2008, the SBP reduced the reserve requirement by 4 percentage points and eased liquidity requirements.
To ease the strains on banks and other deposit institutions, the SBP slowed a mandated rise in paid-in capital, for 2013, from a planned Rs 23 billion to Rs 10 billion (with an annual increase of Rs 1 billion per year from 2009 through 2013). The capital adequacy requirement of 10% has not been affected. According to an ADB report, Real GDP growth dropped to 4.1% in FY2008, after 5 years of averaging near 7%.
Significant factors constraining growth have been a sharp decline in the growth of private investment, due to political uncertainty, a worsening security situation, and the impact of high international oil prices and frequent power shortages. The contribution of investment to growth fell to just 0.7 percentage points in FY2008, compared to 2.7 percentage points in the preceding fiscal year.
The contribution of net exports to growth turned negative, especially due to the oil price hike and the continued slowdown in textile exports, and the manufacturing sector's contribution was expected to turn negative for the current fiscal year. When combined with the failure to align domestic prices with international prices, the oil price shock and high wheat import price led to a massive build up of unbudgeted and untargeted subsidies and resulted in a fiscal deficit for FY2008 of 7.6% of GDP-the highest in 9 years.
Also, interest payments on Defence Savings Certificates, which were issued in the 1990s with high interest rates, steeply increased interest costs and contributed to the larger deficit. In the absence of additional foreign inflows (eg, investments and remittances), the deficit had to be financed, mainly through domestic borrowing from the SBP.
Development spending was compressed, relative to that planned in the budget, to offset some of the impact from the untargeted subsidies. The tax-to-GDP ratio came in at 10.6%, more than half a percentage point lower than projected in the budget.
Subsidies on oil, food, fertiliser, and power contributed to the budget deficit, but failed to contain inflation, as food prices soared and the price of fuel was adjusted upward in the last 4 months of FY2008. Steep rupee depreciation stoked inflationary pressures, as did financing of the expanding deficit through borrowing from the SBP.
The consumer price index, on a year-on year basis, climbed to 21.5% in June 2008 and to 25.3% in August, which was the highest in 30 years. Core inflation also increased. As food prices rose sharply (by 32% in June 2008 year-on year), the poorest groups in society were hardest hit. With declining international commodity prices and a slowing domestic economy, the year-on-year consumer price index fell to 20.5% and food inflation to 21.6% in January 2009.
Domestic inflation would have fallen by more had the rupee not depreciated by 15.9% against the dollar in the first 7 months of FY2009, the ADB report added. Reacting to the rising inflation and the sharp increase in imports, the ADB review pointed out, that the SBP tightened monetary policy three times in FY2008 for a cumulative rise in its discount rate of 250 basis points.
That rate climbed by another 300 basis points to 15% (the highest in South Asia) by November 2008, under the IMF program as inflation persisted, the drain on reserves continued, and the Government sought to reduce its SBP borrowings by making treasury bills more attractive to commercial banks. By April 2009, inflation had slowed to less than 17.2%, compared with the record 25% level in the last quarter of 2008. This enabled the SBP to reduce the discount rate by 100 basis points.
The fiscal deficit is expected to decline to 4.3% of GDP in FY2009, as the Government has removed or reduced subsidies and rationalised development expenditure. It already has fully eliminated the subsidy on petroleum products and is undertaking a phased reduction in the electricity subsidy, with the target to terminate this subsidy by the end of FY2009.
A reprioritisation of projects is expected to lead to a slashing of the development budget by over Rs 100 billion for FY2009. The Government has also frozen supplementary grants to various departments to infuse greater fiscal discipline. Fiscal performance for June 2008-March 2009 suggests that the annual target is achievable.
While the slowdown in economic activity, in response to the global financial crisis, has reduced revenue growth below earlier projections, reflecting in part lower sales tax revenues with the decline in imports, revenue from the petroleum development levy and compressed expenditures will hold the deficit to the targeted 4.3% for FY2009.
Growth is expected to slow to 2.0% in FY2009 due to the global slowdown, the Government's tight demand management policies, and infrastructure deficits. GDP growth could rise to about 3.0% in FY2010. But there are considerable downside risks, including the worsening security situation, the ADB report mentioned.
Highlighting the "Prospects for FY2010", the ADB mentioned that the strains on the fiscal deficit for FY2009 have been reduced. The reduction in international commodity prices (especially for wheat and oil) will generate considerable fiscal space. Additional factors, important for the 2010 fiscal outlook, include:
(i) Measures will be introduced, for FY2010, to strengthen revenue collections, including improvements to both policies and administration.
(ii) The Government has undertaken a rationalisation and review of development spending.
(iii) The fiscal space generated by recent policy changes has to be viewed in the context of the substantially increased risk to Pakistan's economic performance appearing in the recent months. Social safety net requirements can be expected to expand considerably.
Not only has unemployment increased, but a substantial number of citizens have been displaced as a result of intensified internal conflict. Security and defence spending will necessarily rise. Real growth could be further reduced, particularly if intensified conflict substantially impacts on agricultural activity.
(iv) The donor meeting in April 2009 resulted in commitments for additional support to shore up development activity and to reflect the increase in social support that would be needed. The original deficit target for FY2010 of 3.4% has been loosened to accommodate up to 1.2% of GDP in additional donor support.

Courtesy: Business Recoder

Public Sector Development

2009-07-17T03:53:00.001-07:00

Highlights of Pakistan Public Sector Development Programme 2009-10

ISLAMABAD, Jun 13 (APP): Following are the highlights of Public Sector Development Programme (PSDP), 2009-10, released here on Saturday. Total amount of Rs.646 billion has been allocated in PSDP-2009-10 for various ongoing and new schemes. The PSDP allocations for the year 2009-10 are the highest-ever in the country’s history.

Out of total PSDP, the federal share is Rs.421 billion, provincial share Rs.200 billion where as Rs.25 billion would be spent for Reconstruction and Rehabilitation of Earthquake-hit areas.

Following are the main allocations:

Rs.47255.6 for Water and Power Division (Water Sector)

Rs.20335 for Water and Power Division (Power Sector).

Rs.19534 for Pakistan Atomic Energy Commission.

Rs.4597.2 for the Communication Division (NHA).

Rs.12681.2 for the Railways Division.

Rs.35000 for special programmes.

Rs.45599.3 for Finance Division

Rs.17968.2 for Planning and Development Division.

Rs.5582 for Housing and Works Division.

Rs.1128.5 for Information Technology and Telecommunication Division.

Rs.3265.2 for Science and Technological Research Division.

Rs.7583.7 for Defence Division (Including SUPARCO).

Rs.8551.3 for Education Division.

Rs.22500 for Higher Education Commission.

Rs.23154.1 for Health Division.

Rs.5250.9 for Population Welfare Division.

Rs.25521.4 for KA and NA Division.

Rs.12865 for States and Frontier Regions Division.

Rs.1874.3 for Petroleum and Natural Resources Division.

Rs.2253.9 for Environment Division.

Rs.4918.9 for Cabinet Division.

Rs.1677 for Defence Production Division.

Rs.17962 for Food and Agriculture Division.

Rs.2586.4 for Livestock and Dairy Development Division.

Rs.7822.3 for Industries and Production Division.

Rs.2793.9 for Special Initiatives Division.

Rs.7031.1 for Interior Division.

Rs.839.2 for Commerce Division.

Rs.2051 for Law, Justice and Human Rights Division.

Rs.2448.3 for Revenue Division.

Rs.447.4 for Pakistan Nuclear Regulatory Authority.

Rs.828.8 for Ports and Shipping Division.

Rs.444 for Local Government and Rural Development Division.

Rs.195.5 for Tourism Division.

Rs.250 for Ministry of Foreign Affairs.

Rs.679.1 for Narcotics Control Division.

Rs.129.8 for Establishment Division.

Rs.343.7 for Women Development Division.

Rs.487.7 for Social Welfare and Special Education Division.

Rs. 135.4 for Labour and Manpower Division.

Rs.450 for Culture Division.

Rs.583.2 for Supports Division.

Rs.47.8 for Youth Affairs Division.

Rs.916.1 for Information and Broadcasting Division.

Rs.509.7 for Textile Industry Division.

Rs.180 for Statistics Division.

Rs.300 for Ministry of Postal Services.

Rs.50 for National Reconstruction Bureau.

Rs.15.8 for Economic Affairs Division.

Electronic based resources for ACCA students

2009-07-17T01:23:00.001-07:00

Useful Online and Electronic based resources for ACCA students

Here are some of the useful online resources that we found over the internet that will surely be helpful for the students attempting ACCA computer based exam (CBE) this year.

These are actually BPP i-pass cds which offer great insight on how to attempt ACCA CBE test and how to prepare for the F1 F2 and F3 exams. As first 3 papers of ACCA’s fundamental papers are multiple choices based and is taken on the computer, this software based, which is actually BPP exam kit also offers advices on each question you attempt so that you can have clear concept about every topic you prepare.

Instructions on how to download bpp i-pass cds

· Download the file using the link given with each Paper/subjects name.

· Clicking the link above, you will be redirected to “rapidshare” download page. Hit Free User button. Wait for the timer.

· After the timer ran out, click the “Download Icon”

· Unzip the files using WinRar or WinZip software

· Run setup

· Run the software by double clicking the icon on the desktop.

· Leave a comment if you have any issues with installation or using the software

Association of Chartered Certified Accountants BPP i-pass Cds

>> ACCA PAPER F1 ACCOUNTANT IN BUSINESS (AB) Download BPP i-pass cd for ACCA F1

>> ACCA PAPER F2 MANAGEMENT ACCOUNTING (MA) Download BPP i-pass cd for ACCA F2

>> ACCA PAPER F3 FINANCIAL ACCOUNTING (FA) Download BPP i-pass cd for ACCA F3

||DISCLAIMER: We by no mean selling these softwares or intend any monetary benefit in sharing these. These are just the links that we found on the internet and we are offering to the students for their convenience. We do respect Copyrights and discourage the piracy actions||

Paper F7 Financial Reporting [FR]

2009-07-17T01:22:00.001-07:00

Useful Resources for ACCA paper F7 Financial Reporting [FR]

ACCA exam papers professional courses' paper F7 which is Financial Reporting [FR] has an extensive syllabus. To cover every aspect of the syllabus we can take help from technology.

Following are the links provided that we found over the internet (rapidshare), these are actually the audio lectures in respect of each topic to be covered under ACCA courses' F7 exam.

Click on the link provided to download the audio lectures.

>> BPP F7- Financial Reporting audio lectures CD <<

Lecture 1: THE REGULATORY FRAMEWORK

Lecture 2: THE CONSTITUTION OF A GROUP AND THE CONSOLIDATED BALANCE SHEET

Lecture 3: FAIR VALUES AND THE CONSOLIDATED INCOME STATEMENT

Lecture 4: ACCOUNTING FOR ASSOCIATES

Lecture 5: CASH FLOW STATEMENTS

Lecture 6: TANGIBLE NON-CURRENT ASSETS

Lecture 7: INTANGIBLE NON-CURRENT ASSETS

Lecture 8: INVENTORIES AND CONSTRUCTION CONTRACTS

Lecture 9: LEASES

Lecture 10: OFF BALANCE SHEET FINANCE AND REVENUE RECOGNITION

Lecture 11: DEFERRED TAX

Lecture 12: EVENTS AFTER THE BALANCE SHEET DATE AND PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Lecture 13: FINANCIAL INSTRUMENTS

Lecture 14: IAS 33 EARNINGS PER SHARE

Lecture 15: ACCOUNTS PREPARATION QUESTIONS AND RELATED STANDARDS

Lecture 16: INTERPRETATION OF ACCOUNTS

Lecture 17: ALTERNATIVE MODELS AND PRACTICES AND NOT-FOR-PROFIT AND PUBLIC SECTOR

Instructions on how to download BPP Audio CD lectures for F7-Financial Reporting

Click the links you want to download
Clicking the link above, you will be redirected to "rapidshare" download page. Hit Free User button. Wait for the timer.
After the timer ran out, click the "Download Icon"
Open the files using any media player.
Leave a comment if you have any issues regarding downloading and hearing the file

||DISCLAIMER: We by no mean selling these resources or intend any monetary benefit in sharing these. These are just the links that we found on the internet and we are offering to the students for their convenience. We do respect Copyrights and discourage the piracy actions||

Paper F8 Audit and Assurance [AA] (Int)

2009-07-17T01:20:00.001-07:00

Useful Resources for ACCA course Paper F8 Audit and Assurance [AA] (Int)

Following are some useful links that we came across the web that we think will be of great help for students of ACCA preparing for their June 2009 exam attempt.

ACCA Paper F8 Audit and Assurance (International) Pass cards

Description: BPP pass cards are actually a text based learning medium. In this, chapters are covered in pictorial form and using the tables, graphs, and flow diagrams for easy understanding and memorizing. It’s great for revision of the whole course as you can just skim through the whole topic in first glance. It supplements the standard ACCA exam kits from BPP or Kaplan and can be used for quick guidance in ACCA exams preparation.

Have a look at the following screenshots to gain some idea about BPP pass cards

Screenshot 1: Code of Ethics presented in tabular form

(Screenshot of the CODE of ETHICS presented in tabular form for easy remebering)

Screenshot 2: All types of Risks defined in flow diagram

(All types of Risks defined and how they are associated with each other)

>>DOWNLOAD BPP PASS CARDS<<

Instructions on how to download BPP Pass Cards

· Click “Download BPP Pass Cards” link

· Clicking the link above, you will be redirected to “rapidshare” download page. Hit Free User button. Wait for the timer.

· After the timer ran out, click the “Download Icon”

· You will need Adobe Acrobat Reader to read the file

Paper P2 Corporate Reporting [CR]

2009-07-17T01:18:00.001-07:00

Here are some of the useful links that we found over the internet after hard searching. Hope they will benefit all the students of ACCA P2.

Download BPP audio lectures CD for ACCA professional level paper P2 Corporate Reporting. These lectures contain useful material regarding preparation and key areas needed to prepare ACCA paper P2 in good way. Download these audio lecture files directly from Rapidshare.

Lecture 1: THE FINANCIAL REPORTING FRAMEWORK

Lecture 2: THE PROFESSIONAL AND ETHICAL DUTY OF THE ACCOUNTANT

Lecture 3: NON-CURRENT ASSETS

Lecture 4: EMPLOYEE BENEFITS

Lecture 5: INCOME TAXES

Lecture 6: FINANCIAL INSTRUMENTS

Lecture 7: PROVISIONS, CONTINGENCIES AND EVENTS AFTER THE BALANCE SHEET DATE

Lecture 8: IAS 17: LEASES

Lecture 9: REVENUE RECOGNITION

Lecture 10: SHARE-BASED PAYMENT

Lecture 11: PERFORMANCE REPORTING

Lecture 12: CONSOLIDATED ACCOUNTS, BASIC GROUPS, ASSOCIATES AND JOINT VENTURES

Lecture 13: COMPLEX GROUPS

Lecture 14: CHANGES IN GROUP STRUCTURES

Lecture 15: CONTINUING AND DISCONTINUED INTERESTS

Lecture 16: FOREIGN SUBSIDIARIES

Lecture 17: CASH FLOW STATEMENTS

Lecture 18: REPORTING FOR SPECIALIZED ENTITIES

Lecture 19: INTERNATIONAL ISSUES

Lecture 20: CURRENT DEVELOPMENTS

Lecture 21: IMPLICATIONS OF CHANGES IN ACCOUNTING REGULATION ON FINANCIAL REPORTING

Lecture 22: PREPARATION OF REPORTS

Instructions on how to download BPP Audio CD lectures for P2-Corporate Reporting

· Click the links you want to download

· Clicking the link above, you will be redirected to “rapidshare” download page. Hit Free User button. Wait for the timer.

· After the timer ran out, click the “Download Icon”

· Open the files using any media player.

· Leave a comment if you have any issues regarding downloading and hearing the file

Paper P3 Business Analysis [BA]

2009-07-17T01:17:00.001-07:00

After a very daunting search we get a progress and found some of the useful links over the internet. Hope they will benefit all the students of ACCA P3.

Download BPP audio lectures CD for ACCA professional level paper P3 Business analysis. These lectures contain useful material regarding preparation and key areas needed to prepare ACCA paper P3 in a good way. Download these audio lecture files directly from Rapidshare.

To download Whole BPP ACCA P3 audio lectures CD CLICK HERE

To download selected tracks click the lecture name to download:

Lecture 1: WHAT IS STRATEGY?

Lecture 2: ENVIRONMENTAL ISSUES

Lecture 3: COMPETITORS AND CUSTOMERS

Lecture 4: STRATEGIC CAPABILITY

Lecture 5: STAKEHOLDERS, ETHICS AND CULTURE

Lecture 6: STRATEGIC OPTIONS FOR THE CORPORATE PARENT

Lecture 7: BUSINESS UNIT STRATEGIES

Lecture 8: IMPROVING BUSINESS PROCESSES

Lecture 9: E - BUSINESS

Lecture 10: QUALITY

Lecture 11: PROJECT MANAGEMENT

Lecture 12: HUMAN RESOURCE MANAGEMENT

Lecture 13: STRATEGIC CHANGE

Instructions on how to download BPP Audio CD lectures for P3-Business Analysis

Click the links you want to download
Clicking the link above, you will be redirected to “rapidshare” download page. Hit Free User button. Wait for the timer.
After the timer ran out, click the “Download Icon”
Open the files using any media player.

Leave a comment if you have any issues regarding downloading and hearing the file

Paper P1 – Professional Accountant

2009-07-17T01:02:00.001-07:00

ACCA exam papers professional courses’ paper P1 which Professional Accountant (PA) has extensive syllabus. To cover every aspect of the syllabus we can take help from technology.

Following are the links

provided that we found over the internet (rapidshare), these are actually the audio lectures in respect of each topic to be covered under ACCA courses’ P1 exam.

Click on the link provided to download the audio lectures.

>> BPP P1- Professional Accountant audio lectures CD <<

Lecture 1: CORPORATE GOVERNANCE AIMS AND PRINCIPLES

Lecture 2: SHAREHOLDERS AND STAKEHOLDERS

Lecture 3: GOVERNANCE CODES AND LEGISLATION

Lecture 4: CORPORATE SOCIAL RESPONSIBILITY

Lecture 5: CORPORATE GOVERNANCE PRACTICE

Lecture 6: COMMUNICATON POLICIES

Lecture 7: INTERNAL CONTROL SYSTEMS

Lecture 8: INTERNAL AUDIT

Lecture 9: BUSINESS RISKS

Lecture 10: RISK ASSESSMENT

Lecture 11: RISK ATTITUDES AND CULTURE

Lecture 12: RISK MANAGEMENT

Lecture 13: RISK REPSONSES

Lecture 14: INFORMATION REQUIREMENTS AND REPORTING

Lecture 15: ETHICS AND THE PUBLIC INTEREST

Lecture 16: ETHICS AND PROFESSIONAL PRACTICE

Lecture 17: SOCIAL AND ENVIRONMENTAL ISSUES

Instructions on how to download BPP Audio CD lectures for P1-Professional Accountant

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>> BPP P1- Professional Accountant i-pass (i-assess) CD <<

Following are the links that we found over the internet regarding ACCA P1-Professional Accountant Course. As we know P1 paper is paper based and not CBE this software will help you identify key areas that need your attention more. This software is actually Computer Based Examination from BPP named as i-assess (i-pass) and covers the whole syllabus in a very good manner.

Download BPP P1 – Professional Accountant i-assess (i-pass) CD

Instructions on how to download BPP i-assess CD for P1-Professional Accountant

· Click the links “Download BPP P1 – Professional Accountant i-assess CD”

· Clicking the link above, you will be redirected to “Rapidshare” download page. Hit Free User button. Wait for the timer.

· After the timer ran out, click the “Download Icon”

· Mount the file using virtual drive manager e.g. “Power Iso”.

· Install the software and click on the link placed on the desktop.

Examiners Recommended Reading

Solomon, J (2006). Corporate Governance and Accountability Chichester: John Wiley and Sons.

Monks, A. G. and Minow, N Corporate Governance Third edition. Malden MA: Blackwell.

Crane, A. & Matten, D. (2003).Business Ethics Oxford: Oxford University Press.

Gray, R, Owen, D and Adams C (1996). Accounting and Accountability Prentice Hall, London

Annual Risk Management Conference 2009

2009-07-16T23:48:00.001-07:00

EMESAP International Management Announces Annual Risk Management Conference 2009. Register now with your nominations to attend the Conference as Limited seats are available.
Karachi, Pakistan, 7th 8th August 2009 As the economic downturn has driven up collective needs to make Risk Management a critical task for banks and other financial institutions, it spurs an intellectual gathering which will be a watershed event in the growing movement to use Risk Management strategies as an answer to banking challenges. The premier Conference will bring together leaders in the field of Risk Management for a comprehensive overview of this rapidly expanding area of banking and finance.
In uncertain times like these, staying abreast of changes is essential. And participating in a forum like EMESAPs Annual Risk Management Conference, gives the unique opportunity to connect and collaborate with the peers and industry experts. The mastermind convention is a chance to share your thoughts and concerns about your workflow practice
The two days Conference is creatively harmonized with the presentations and discussions of the intellectual minds and the industry leaders and is supported by the leading business television channel in Pakistan and other media partners across the globe.
Venue: Pearl Continental Hotel, Karachi - Pakistan
Time: 9:00 am - 6:00 pm (7th & 8th August)
Brochure: http://www.emesap.com/events/arm/request-brochure/ (Click here to download)
Seats: Limited to 150 seats, (50 % seats are already confirmed)
Visit www.emesap.com or send a query at risk@emesap.com in order to unveil the prospect.
EMESAP International Management offers a comprehensive array of services like conferences, trainings and workshops which consist of contemporary research, market trends and challenges to help your business succeed.

Taking Stock

2009-07-14T05:06:00.001-07:00

Taking Stock: What do PEFA Assessments Tell Us About PFM Systems Across Countries?

Assessments based on the Public Financial Management (PFM) Performance Measurement Framework, developed by the Public Expenditure and Financial Accountability (PEFA) initiative, provide detailed accounts of the performance of PFM systems along various dimensions. A recent working paper published by the Overseas Development Institute (http://www.odi.org.uk/resources/download/3333.pdf) brings together the results of 57 PEFA assessments completed until August 2007. It looks at comparative cross-country PFM performance, overall and across the different budget dimensions defined by the PEFA methodology (out-turns, cross-cutting features, budget cycle), and analyses differences linked to certain country characteristics which might have an influence over PFM system performance, using both bivariate and multivariate analysis. It is based on a numerical conversion of the letter-scores used in the assessments, a methodology which can be considered controversial but which nevertheless yields some interesting results.

Two overall findings become immediately evident. First of all, there is a large variation in overall average scores, ranging from Norway’s maximum score of 3.44 (roughly equivalent to a B+) to a minimum score of 1.46 (roughly equivalent to a D+). There are 14 countries that fall below the 2.00 mark (i.e. whose average score is below C), including countries from a range of regions and with different levels of income. The second immediate interesting finding is that average scores tend to deteriorate the further one moves down the various phases of the budget cycle. Given the large number of countries and dimensions involved, overall comparisons are not very useful in terms of detecting specific issues and trends. Instead, the paper compares PEFA scores looking at different country characteristics, including region, population size, and level of income, degree of dependency on foreign aid or natural resources, and strength of democratic institutions.

Taken one by one, these dimensions show some interesting trends, with countries in certain categories showing a better performance than others. However, such binary associations are not necessarily significant from a statistical point of view, and can therefore be potentially misleading. Multivariate regression analysis results highlight that the main factors which are correlated to variations in the overall PEFA score in a statistically significant way are the level of income, country size as measured by the log of the total population, and the degree of aid dependency. Regarding income levels, as expected an increase in per capita income is associated with an increase in overall average PEFA scores. Aid dependency levels are also significant in all models shown, with a positive coefficient but associated with very small changes in PEFA scores, meaning that higher aid dependency levels are associated with marginal improvements in PEFA scores. Finally, as far as population size is concerned, results seem to indicate that larger country size is generally associated with better PFM system performance.

Despite the limitations of the existing data, the analysis highlights some of the interesting comparisons that the existence of such data allows. PEFA assessments are a unique source of information which sheds light on an aspect of governance which until very recently had been mostly overlooked. As more and more assessments are carried out, and repeated in various countries, the availability of more data will allow for a more significant and robust analysis of the determinants and consequences of improvements in PFM system performance, with the potential to generate firmer and more nuanced conclusions. Such analysis could be complemented with a structured comparison of country case studies, in order to allow for a deeper investigation of the large number of factors that are likely to affect the quality of PFM systems and its evolution over time.

A Computerized Pacific

2009-07-14T05:05:00.001-07:00

Three countries, the Cook Islands, Tuvalu, and Vanuatu, requested IMF Pacific technical assistance center (PFTAC) to assess, analyze and audit their existing financial management information systems (FMISs). In all three countries, the host nation governments were operating relatively sophisticated off-the-shelf financial software products which had been in successful operation for over 5 years. The purpose of the mission, conducted by PFM regional advisor Suhas Joshi and a consultant, John Moore, was to determine what enhancements or changes might be needed in order to develop and implement an Integrated Financial Management Information System in each of these countries.

The World Bank (1) describes an "Integrated" FMIS, with the emphasis on "Integrated", as having four essential characteristics:

1. A standard data classification for recording events,

2. Common processes for similar transactions,

3. Internal controls over data entry, transaction processing, and reporting applied consistently, and

4. A design that eliminates unnecessary duplication of transaction entry.

These four general characteristics listed above were identified as hallmarks of an IFMIS and the three countries studied were assessed against these.

The mission assessed the maturity levels of the systems to be good. All three systems have some degree of regular backup with off-site backup storage, potential recoverability from routine failures is good, and the systems are being maintained at current release levels, including current vendor licenses and maintenance agreements. Sustainability is well demonstrated for all three systems.

But several of the government systems in the region have developed along a path where different line ministries have their own Financial Management Information Systems (FMISs) with the attendant problems of the inability of these different systems to communicate with each other. And, in two of the three countries examined, the systems were functioning with limited capacity and only as basic accounting systems. The systems will require significant changes before they can function as full fledged IFMIS. Therefore, the mission developed time tables for each of the three countries to move towards a full IFMIS.

The Cook Islands government is planning to standardize the accounting system and to integrate information from all ministries so that one single financial information system can comprehensively track the activities of all Government Departments and Ministries. Issues include the remoteness of the Outer Islands, secure electronic consolidation of financial information, and the expansion of the accounting function in MFEM to manage greater volumes of data.

In Tuvalu, the Government has used a COTS package, ACCPAC as its financial management information system for over ten years, but the full capabilities of the system are not exploited at present. The mission therefore examined the capabilities of the system against the Government’s needs, identified appropriate upgrades where required, and assessed reporting and training requirements so that the full capabilities of the system can be utilized. The need for other, more modern and capable systems, if required, was also assessed. An important observation was the need to improve existing systems, rather than devote resources to installing ever new and more sophisticated systems, which could drain resources without significant improvement in PFM.

In Vanuatu, an IFMIS has been in place since 2002 and further developments are underway. The system is reported to have helped move Vanuatu from cash to a quasi-accrual accounting system capturing all transactions across Government and to have contributed to improving and promoting accountability and transparency. Recent enhancements in the form of the Vanuatu Budget Management System (VBMS) have taken place. The VBMS is an integrated component of the FMIS, which enables government departments and Ministries to prepare and submit their respective annual budgets on-line.

PFTAC has also identified several common issues across the Pacific Island Countries (PICs) in this area. These include IT/ICT infrastructure capacities and staff availability for training in remote islands. More work is being planned to examine whether a common regional strategy and a lessons learnt document can be developed which could help countries plan IFMIS introduction and expansion

A ‘Discipline’ in Search of a Home

2009-07-14T05:03:00.001-07:00

Of which academic discipline is PFM a part of? Is it economics, public administration/policy, accounting, management, or law? Or, none or all of the above.

PFM, as the name indicates, should deal with the management of both revenues and expenditures. But it does not. It deals only with public expenditures. Thus to begin with, the name itself is a bit of a misnomer.

The changing name of the division dealing with this subject within the IMF (Fund) is one indicator of how the subject has evolved. The Fiscal Affairs Department of the Fund has dealt with the subject almost since the beginning of the department. Initially, it was called the Budget Division (BD) and it covered all aspects of budget preparation and execution. After the breakup of the Soviet Union, one of the main activities of the BD was to provide technical assistance to the new member countries in moving them towards budget systems in market based economies. One of the main forms of TA provided during this period was in helping these countries establish a Treasury along the lines of the French or the UK Treasury. Around this time the name of BD underwent a change and it became Public Expenditure Management (PEM) Division.

The main focus of the division remained support of the Fund’s surveillance or financing work in all its aspects. Thus, gradually PEM’s involvement in other areas of fiscal policy and management increased. And over time, and it has come to include areas of fiscal decentralization, debt management, fiscal rules, accrual accounting and information technology based budget management solutions. The name of the division was changed again to Public Financial Management, perhaps because it was more comprehensive than expenditure management. There are however many skeptics who do not buy this argument regarding this name change.

Even as its interaction with other disciplines has increased, at its core, PFM has remained divided between public administration, accounting, management, and more ambitiously, economics. Indeed some of the most prominent academics come from public administration, although some significant work has been done especially in institutional aspects of budgeting by some economists. Thus, even as it evolves, it remains a discipline in search both of academic respectability and home.

Financial Regulation

2009-07-14T03:55:00.001-07:00

Financial regulation - what should the future look like?

Financial regulation is now one of the hot topics of the economic downturn. World leaders devoted much of the April G20 summit to it and since then, proposals have sprung forward in the US, Brussels and, today, the UK.
Why the huge interest in a subject traditionally regarded as dry? Partly because of politicians' natural desire to be seen 'doing something' in response to a crisis. Though given the scale of taxpayers' money shovelled into propping up the banks they can hardly be blamed for wanting to reassure their electorates that lessons have been learned - and stronger regulation is a visible way of proving that point.
But the key question is - are the right lessons being taken on board?
ACCA has just issued a major report 'The Future of Financial Regulation' examining the crisis and setting out some principles for sound regulation. We spoke to CFOs, regulators, auditors and other players from the world's major financial centres to ensure we had genuinely international viewpoints.
So what is our conclusion? Most important of all is that governments should remember the lessons of Enron - which landed us with the Sarbanes-Oxley legislation. A rush to introduce heavy-handed 'solutions' tend to produce no solutions at all. Dubai Financial Services Authority came up with an excellent point: "Associating 'light-touch' regulation with principles-based, and intrusive or close monitoring with 'rules-based' is misleading. Those terms are not mutually exclusive'.
Quite so. We must not let the apparent failure of light-touch regulation become synonymous with a victory for rules over principles.

The UK government's proposals from yesterday are encouraging to the degree that they are not a knee-jerk over-reaction. The emphasis on reforming governance is spot-on given that failings in that area were central in creating the crisis. The focus on improving consumer and depositor protection is also good as this is key in restoring public confidence in the system.

Not so good is a half-hearted view on the importance of competition - we must disagree with the Chancellor's dismissal of the Glass-Steagall principles of splitting retail and investment banking as 'too simplistic'. Accepting that some institutions are now too big to fail is anathema to good regulation.

But what of our own profession? We have to rise to the occasion and re-examine whether the fundamentals of financial reporting and auditing are still 'fit for purpose'. Better reporting on risk is essential. And are part-time NEDs still a realistic check on executives in huge international banks?

So many questions to consider. I urge you read our report and come back to us with your views. ACCA wants this paper to be just part of our contribution to the debate - we want to examine further the key issues raised over the next few months. Your input will be crucial in that process

Courtesy of ACCA

Strategic Fiscal Policy

2009-07-12T21:54:00.001-07:00

One wonders about the news item appearing in the newspapers in which World Bank issued a report stating the fact that corruption has increased in last eight years. However, people were surprised about the good governance bang during the same tenure. I reiterate my earlier year’s submission whereby I suggested that Government should be bound to present Financial Statements in line with International Public Sector Accounting Standard Board’s exposure draft 27 – Presentation of Budget Information in Financial Statements. It was suggested that Financial Statements of the Government issued on the event of budget speech must include the following.

Macro economic assumptions including the estimates of following
- Aggregate Growth
- Inflation
- Exchange Rate
Fiscal Deficit or Surplus
Deficit Financing describing anticipated composition
Debt Stock including details at least for the beginning of the current year
Financial Assets including details at least for the beginning of the current year
Prior year budget out turn presented in the same format as the budget proposal
Current Year Budget either the revised budget or the estimated out turn
Summarized budget data for both revenue and expenditure according to the main head classification including data from current and previous year
Explanation of Budget Implication of new policy initiatives with estimates of the budget of all major revenue policy change or some major changes in expenditure programs

Financial statements possessing the above referred details would serve as a barometer for the citizens against which the performance of any government can be measured and judged while people need not wait for eight years for the revelation of World Bank. However, one still wonders about the earlier statements made by the World Bank and waiting for the reasons of contrary earlier reports.

On the contrary, FBR’s image had been over shadowed with the enthusiasm to collect targets, internal HRM improvement, IT infrastructure development and image development. Consequently, contrary to its performance remarks are almost absent owing to its continual improvement policy.

The continual improvement policy were experienced by the taxpayer themselves with little deviation owing to non-standardization of behavior. It is also felt that deviation on the straight path is within tolerable limits and FBR is self adjusting itself by incorporating the suggestions. However, this article is an endeavor to suggest a strategic policy instead of operational and tactical policies.

LEGAL AND FINANCIAL REPORTING BY FBR
We cannot wait for another eight year, Allah Forbid, to issue a report in respect of FBR by World Bank. Consequently, it is suggested that FBR should file monthly and annual statement to Auditor General of Pakistan on 10 of following month and on or before 31 August every year. This will increase the transparency in the transactions of FBR and high ups will be able to view the expenses of their field offices.

Moreover, it is also suggested that FBR should also present a Financial Statement in line with the standards issued by the International Public Sector Accounting Standard Board and specifically include the revenues bifurcation, apart from others, as follows.

Quantum appealed before Quasi Judicial Forum
Quantum appealed before Judicial Forums
Quantum collected as Advance Tax of Direct Taxes
Quantum collected as Final Tax of Direct Taxes
Quantum collected but refundable
Quantum collected as Final Tax of Indirect Taxes – Other tan Sales and Excise
Quantum collected from Indirect Taxes
Quantum collected from Indirect Taxes but refundable because of Section 8B

The Liabilities section of Financial Statement should be duly segregated into two parts – Liabilities taken directly from Donor Agencies and Liabilities taken through Ministry of Finance. On the expense sideSuch a statement would be truly representative of actual performance of FBR.

AGRICULTURE INCOME
Prior to jumping over the conclusion of taxability of agriculture income, let us first grasp the ground realities. Firstly, agriculture land is owned either by feudalist or farmers. Secondly, the land ownership data is now almost computerized.

It is suggested that small farmers can easily be segregated either through land ownership data or through PIU exemption basis. It is worthwhile here to note that Taxability of agriculture income is the domain of provincial governments as was the services sales tax. Consequently, agriculture income can also be taxed in the similar fashion as was dealt by FBR in case of harmonization of Provincial Sales Tax Ordinances and Sales Tax Act, 1990 - services and goods sales tax.

FOREIGN BRANCH Vs SUBSIDIARY
The concept is available in section 101 of Income Tax Ordinance, 2001 for normal tax regime while in section 153 read with clause (3) of Part II of Second Schedule for final tax regime.

However, more incentives need to be provided for branch offices apart from Foreign Tax Credit and Foreign Losses. This would become an important source of foreign exchange inflow in future. Consequently, a branch needs to be dealt on priority basis than a subsidiary as branch remits the net profit while a corporate entity’s subsidiary just remits the dividend.

CAPITAL GAIN ON SHARES
Capital Gain on Shares is the hottest topic not only in the town but in whole country. However, prior to jumping over the conclusion of taxability one must understand the difference between primary and secondary stock market apart from overall corporate law framework.

Primary stock market represents the new enlistment either through privatization or floating of shares by a new company while secondary stock market represents movement in prices in existing share including profitability resulting in more dividend, insider information etc.

It is worthwhile here to note that section 224 of the companies’ ordinance, 1984 provides for some restriction over trading by directors, officers and principal shareholders over a period of less than six months.

Consequently, any move to tax the capital gain on trading of shares in secondary stock market should consider the holding period, holding period by officers mentioned in section 224 of Companies Ordinance, 1984 and equitable allowance of adjustment of capital loss against capital gain accrued during the period.

It is worthwhile here to note that holding period for investment in shares of primary market has already been embodied in section 62 of the Income Tax Ordinance, 2001 for certain class of taxpayers.
HIGHER DIRECT TAX INCIDENCE
It is worthwhile here to note that Tax Rate have a significant impact over compliance. Moreover, I am not advocating any reduction in Salaried Individual, Sole Proprietorship and Partnership but for corporate entities. Pakistan’s Tax Rates are still higher in the region which puts us on competitive disadvantage.

Listing or De Listing
Currently, there is 1% reduction in tax rate for new enlistment and the result of this policy is evident from new enlistment analysis at stock exchanges. It is suggested that there must be at least 10% difference in tax rates between a listed and non listed company. This would have a significant impact over reduction in concentration of wealth in few hands.

Small Companies Vs. Non incorporated
Currently, the rates of new small companies are 20% while the tax rates of a non incorporated entity increases gradually. This is a major impediment in incorporation and ought to be removed. FBR understands the fact that documentation is increased when a business is incorporated; hence, it should align these two tax rates to induce.

SAVINGS TAX CREDIT
At the moment, section 62 of the Income Tax Ordinance, 2001 is only restricted to Investment in new Share while section 63 is related to Retirement Annuity Schemes. It is high time that consumerism behavior of taxpayer be curtailed by either extending the tax credit on investment in shares with other saving options duly restricted through a holding period. Such a tax credit would be helpful in changing the mindset of consumerist of luxuries to necessities.

Consumerist behavior has its drawback and affects the society as a whole. The seven perils of consumerism over the behavior of a person and society. Consuming is far from harmless. A lifestyle focused on consumption does the following:

Wastes your time
When you flip flyers, search aisles and wait in checkout lines, you lose precious time. When you own a bigger house, an extra car and more appliances, you organize more, clean more, repair moreand lose more precious time. Consumerism steals your time to relax with family, engage in worship or help the community.

Distracts you from your goal
Our routines absorb us each day as we earn, buy, store, clean, organize and discard stuff. We have little time to contemplate why we perform these tasks and possess these items. Slogans of Buy now! Enjoy now! emphasize instant gratification and obscure the deeper purpose and priorities of our lives. We rarely remember to show gratitude for what God gave us. The more we consume, the more consumerism distracts us from our goal of pleasing God [Quran 102: 1-2].

Increases your needs
As you own more, your needs increase. A bigger house requires more furniture, more curtains, more decorations and more cleaning supplies (maybe even a maid!). Now you need to work longer hours to maintain your bigger house. When you work longer hours, you have less time so your needs increase againyou now need outside food, more childcare, a dishwasher, and a vacation to escape the stress! Consumerism traps us in a cycle of own more, need more, work more.

Enslaves you
The fashion industry, with the medias help, creates, sells and alters styles to keep you spending. If you follow the latest trends, wear whats in and avoid whats out, ask yourself why. Are you letting wealthy fashion and media leaders control your wardrobe and your wallet?

Creates more responsibilities
Are you ready to account for everything you consumehow you bought it, how you used it, how you shared it? [Quran 102:8] As you own more, you increase your burden of responsibility.

Weakens your health
Juliet Schor, in Born to Buy, shows that children who lead a consumeristic lifestyle, spending more time watching television and shopping, face greater health problems such as obesity, depression, and low self esteem. Even adults who are responsible for more financial and physical wealth suffer greater stress and stress-related diseases. A simple lifestyle, with meaningful physical and mental activities, can protect your health.

Destroys our Environment
An individual in a developed nation consumes three times as much meat, nine times as much paper, and eleven times as much gasoline as an individual in a developing nation. This materialistic lifestyle sucks up natural resources and dumps tonnes of waste on the planet. Where does our garbage go? Many toys, electronics, and household items North Americans consume and discard ends in piles on landfill sites in developing countries where the toxic chemicals seep into water and soil. Each item we consume involves consequences we rarely consider.

DEBIT/CREDIT CARD TRANSACTIONS AND TAX CREDIT
It is evident that Pakistan is a less documented economy and any move towards documenting the economy should not be appreciated but also be facilitated. It is suggested that a tax credit of 5% be announced for the quantum of expenditure incurred through credit or debit cards. Such step would increase the documentation of economy and may be coupled with WHT deduction obligation.

RECONCILING PRINCIPLES - FINANCIAL AND TAX ACCOUNTING
The IASB is developing a financial reporting matrix whereby the various components of a company’s result are split broadly into two categories – Operating income which comprises cash or near-cash items and valuation adjustments, leading to a total performance column described as comprehensive income. This future format of profit and loss account needs to be incorporated into section 34 of the Income Tax Ordinance, 2001.

I believe that items falling into operating income should form a reasonable basis for tax reporting and assessment. Items included as valuation adjustments need to be considered in more detail. They may include items such as provisions for doubtful debts and obsolete stock etc, they may form a normal part of taxable income according to the provisions of Income Tax Ordinance, 2001 and various precedence.

However, valuation adjustments are of more subjective and volatile nature and do not therefore posses the features which have traditionally been seen necessary of costs having been incurred or income having been realized, or certainty as to amount to be appropriate to utilized for tax purposes.

There needs to be a detailed review of the items falling into the valuation adjustment category and principles must be developed in the common rules chapter of Income Tax Ordinance, 2001 in dealing with these items and any other items that may arise in future.

The main principles should revolve around the distinction between assets readily convertible into cash where adjustments would be taxed or allowed and other assets which would be dealt with on a realization basis for tax purposes. Moreover, plethora of precedence relating of principles of capital and revenue expenditure/income and realized and unrealized income needs to be immediately considered in the common rules chapter of Income Tax Ordinance, 2001.

COMPLIANCE DATES
The compliance dates mentioned in Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise Act, 2005 and Companies Ordinance, 1984 needs to be aligned at least in respect of corporate entities. It is suggested that the quarterly tax compliance date should be corroborated with quarterly finalization of accounts date mentioned under Companies Ordinance, 1984, at least for corporate entities.

In furtherance, the return filing dates should be changed from specific dates to after six and nine months instead of September and December. This would align the law with section 74 of the Income Tax Ordinance, 2001. Moreover, the monthly sales tax return and monthly WHT statement dates should be changed from 10th and 15th to 20th and 25th. This would help the taxpayers to file accurate data instead of revising it every time.

PRINCIPLE BASED INDIRECT TAX
FBR is moving in the right direction by aligning the Federal Excise Act, 2005, Sales Tax Act, 1990 and Provincial Sales Tax Ordinances. However, provisions like section 8B in Sales Tax Act, 1990 are the black spot and do not match with image and grace of FBR. It is suggested that the 90% restriction should be replaced with closing stock restriction.

Moreover, it is highly understandable that indirect tax laws are normally different from direct tax laws because they cater and considers the processes of business. Consequently, there are separate rules for specific business sectors. However, confusion is created where these rules becomes principles and clash with the main enactment. Such anomalies need to be separated and alignment ought to be made.

ROBUST TAX BASE
A narrow tax base is still contributing to our budget deficit. Prolonged budget deficit has deterred the governments from adopting effective measures such as reduction of direct taxes to revitalize the economy and undermine our ability to meet our social and infrastructural needs. However, the question is of perception about taxes.

Firstly, this Income Tax was introduced in 1860 after the Ghadar or Battle of Freedom for five years and then there was a three years gap in order to subsidize the loss of this battle. It was again imposed in 1868 till 1873 and then again imposed in 1886 for around 30 years. Then in 1918 a new enactment was enacted which was renamed as 1922 after some amendments which was then changed into Income Tax Ordinance, 1979 and currently available in the shape Income Tax Ordinance, 2001.

However, in Pakistan there were and are many perceptions regarding the applicability of Income Tax being Un-Islamic as people believe that zakat, khiraj, fai and Jazia are the only prescribed taxes. You would appreciate that taxes are not limited to that but you may be surprised to note that import tax – chungi was first imposed during the period of first four Caliphs as this is a need of the society.

However, still the wrong perception about tax has not been corrected, although corrective measure has been taken by reducing tax rate, etc, still owing to the following reasons they remain intact.

Name based exemptions instead of industry or principle based exemptions
Social welfare schemes are not normally undertaken owing to non-availability of principle based exemptions for donations and deduction for the taxpayer
In Islam there is a concept of donation, left hand should not know when the right hand donates and one must help their poor relative, however, no such concept is recognized in Income Tax Ordinance, 2001
Zakat is a deductible allowance but it is not allowed to be deducted from tax payable – this strengthens the concept that Income Tax is Un-Islamic.
A person earning 200K required to feed a family of three member while another person earning the same income are required to feed not only his family but parents and small sister and brother – Both are taxed in the same way!
Concept of one’s deduction and other’s income is absent - as this may bring new taxpayers on verification.

As stated earlier, taxpayer’s need to know how their taxes are spent and I would like to quote on small part of history.

“At times, Syria (Sham) was attacked by Tatars, the King decided to take judicial decree from the Islamic Scholars for imposing a tax to meet the expenses. When the issue came before Imam Noovi [Rahmat ullah Alah], he opined

The King lives a lavish life and has a lot of wealth, he also spends a lot of money but his wealth, income and perquisites are not taxable, let him start first by donating his wealth and then the treasury has the right to tax over the common people.”

However, these issues cannot be resolved unilaterally; hence, FBR and Taxpayer both have following obligations.

Federal Board of Revenue

Consider tax reform which takes into account all taxes borne and collected by businesses as well as the cost of tax compliance – Total Tax Contribution
Increase governments accountability and communicate with taxpayers as to how taxes are spent
Consider clear tax education campaigns to explain the taxes, how to pay them and the benefits to all stakeholders
Consider how simplification of tax legislation, the ease of compliance burden, and the consolidation of taxes might generate benefits for both governments and taxpayers.
Consider consultation with taxpayers when developing ideas for tax changes

Taxpayers

Gather information on the total tax contribution including all taxes borne and collected, as well as the cost of tax compliance.
Ensure that information around the total tax contribution is made accessible to governments and tax authorities to help inform their decisions over reform.
Communicate the total tax contribution to the wider stakeholder groups to demonstrate the extent to which they are supporting public finances through taxes.
Engage in regular dialogue with Central Board of Revenue over the need for reform and specific areas of concern.

This problem is also linked with the literacy rate of our country and will be worsened if the proportion of allocation of budget towards education is not increased and used economically, efficiently and effectively. It is good to see the news item that FBR is now concentrating over WHT data collected from WHT Agents. However, this would not be suffice and must be complemented with incorporation of taxation into maths from early stages to create a civic sense.

REGIONAL HUB
Government should not concentrate over its ports rather use of ports as facilitation for import of raw material by new manufacturing set ups which will ultimately be exported into the region. In the past Government normally develops a zone and makes it open for investor, however, this time it is suggested that the policy should encompass Pakistan instead of any specific geographical location.

Let the provincial governments compete with each other and start a new era of healthier competition. Such strategy would help the governors to identify the areas requiring primary infrastructure which will result in infrastructure development. In furtherance, the investors normally consider the area having primary infrastructure by themselves.

In order to become the ultimate choice of multinational companies, Pakistan’s financial infrastructure needs to be sustainable and for this very purpose we need a stringent supervisory and regulatory system. Other pre-requisites include an effective legal system, transparency, certainty and consistency in government policies including interpretation of laws, lowering of tax rates and favourable tax environment, low transaction cost, pool of talented professionals and an environment that facilitates qualitative life.

Rules and regulation contributes to be ranked as one of the top problems for business today and in World Bank survey our ranking is much below as compared to regional averages. There must be a comprehensive programme of measures to address regulation which should include the commitment to significantly improve the impressions of our regulation and requires continuous assessment. We must harmonize our laws as currently there is a book available in the market which contains just the names of our laws.

A favorable tax environment provides appropriate tax incentives for businesses, transparent and predictable assessment of tax liabilities, and simple tax administration. It also includes measures to facilitate cross border economic activities. These are essential features in attracting multinational companies and foreign investors to establish businesses in Pakistan.

Currently, tax incentives for regional headquarters are provided by many jurisdictions including Singapore, Malaysia, the Philippines as well as China. For instance, in order to attract more regional headquarters to establish in the Pudong area of Shanghai, generous subsidies will be offered to new regional headquarters in the coming five years. The subsidies are calculated with reference to the local revenue retained by the Pudong government in respect of the Enterprise Income Tax, Business Tax and Individual Income Tax paid by these newly set up regional headquarters.

To further strengthen Pakistan’s edge in attracting foreign investors to establish regional headquarters or holding companies, I reiterate my proposal to provide concessionary tax rates (e.g. half rate) for regional headquarters’ activities which are of a substantial scale and are of the nature of investment, general management, financial management, and marketing with a broad geographic coverage.

Hong Kong has recently introduced the Revenue (Profits Tax Exemption for Offshore Funds) Bill 2005 to reinforce the status of Hong Kong as an international financial centre. However, the proposed legislation of Hong Kong was only meant for the benefits of overseas investors. In Singapore, tax incentives are also given to encourage fund managers’ set-up. To promote the setting up of service centers in Pakistan to manage overseas funds, I propose that concessionary tax rates, e.g. half rate as currently enjoyed by offshore reinsurance business, be given to those approved fund managers who manage overseas funds in Pakistan.

AUDIT
A section is not enough and a chapter needs to be devoted for Audit. Moreover, the existing audit section needs to be rephrased under one chapter which may include audit management, taxpayers’ obligation, authorized representative obligation, modus operandi of audit, modus operandi of audit decision, postulates of an audit order and time frame to conduct & complete the audit.

STANDARDIZATION OF ORDERS
Current practice is that good orders are awarded; however, this exercise is not cashed yet by finalizing a standard format of order. There seems to be a dire need to finalize a standard format of orders for assessment, amendment in orders, revision, appeal effect and audit.

Moreover, a standard format of order is also required for CIT Appeals and ITAT, however, when I use the word standard this means that basic principle based postulates needs to be prescribed, for instance for appellate forums transaction nature, sections applied, sections not considered, beneficial circulars, accounting and tax principles applicable, department’s argument, taxpayer’s argument, precedence available, reasons of not considering any of the afore mentioned point, argument or precedence and finally the decision itself. A good speaking order normally reflects this but we must strive to make all order speaking!

TRANSFER PRICING
Internationally, the horizon is much bigger than pharmaceuticals and time has come to bring certainty in businesses. I would suggest that Chapter VI – Transfer Pricing needs to include what State Administration of Taxation of China has done in line with OECD guidelines. They have included a principle set of documentation and includes

Business and Industry Analysis, that is, description of the industry in which the company operates
Functional Analysis, that is, description of the functions carried out, the assets used and the risks borne by the company in question
Identification and quantification of the related party transactions
Selection of the most appropriate transfer pricing methodology to analyze arm’s length nature of the related party transactions and
Application of the most appropriate methodology, with conclusions on arm’s length nature of the pricing of the related party transaction

This documentation should be prepared before the tax return for the year in question is submitted but there will no requirement to submit the report to the Income Tax at the time of return just a box ticking, however, no time will be given when the report is required to be submitted through a special notice.

However, I would like to go beyond this and would like to suggest about the Advance Pricing Arrangements [APA], although my detailed article was published on this three years back, suggested in OECD Transfer Pricing Guidelines.

APA is an arrangement that determines, in advance of controlled transactions, an appropriate set of criteria for the determination of the transfer pricing for those transactions over a fixed period of time. An APA is formally initiated by a taxpayer and requires negotiations between taxpayer, one or more associated enterprises and one or more tax administrations, hence, can be unilateral, bilateral and multilateral.

TAKAFUL INSURANCE
It is suggested that fourth schedule of Income Tax Ordinance, 2001 should be amended to include the concept of Takaful Insurance. This suggestion is based on the same principles and reasons which led to incorporation of Islamic Banking concept in Seventh Schedule.

SEVENTH SCHEDULE AND ISLAMIC BANKS’ DONATION
A heavy non-performing portfolio and default on part of clients is a serious problem confronted by the Islamic Banks. This problem could be threat to success of Shariah compliant financial product service provider. If clients do not honor their commitment in respect of timely payment in respect of a Shariah compliant financial product, it could cause irreparable loss to the system.

In Islam, it is permissible to penalize a financially debtor but delays payment of debt without any genuine reason. Last Prophet (PBUH) said, “A rich debtor who delays payment of debt commits zulm”. Hence, the jurists allow the punishment (Taazir) to such borrower in the form of fine. In the opinion of some Maliki jurists, a delaying borrower would be obliged to pay for charitable activities.

In view of the severity of the problem, all Shariah bodies including Shariah bench of the Supreme Court of Pakistan have approved the provision of penalty clause in the contractual agreements that keeps a balance between the requirement in view of severity of the problem and that of the Shariah conditions/principles to keep the fine difference between interest and profit on Shariah compliant financial product intact.

However, the penalty proceeds would be used for charity because penalty on default in repayment cannot become an automatic source of income for the creditor. Hence, it is imperative that a new sub-section needs to be introduced in section 20, whereby all such penalties are donated and amounts are reflected in the tax returns of such not for profit making organizations having NTN.

CORPORATE LAW REFORM
An exercise to rewrite the Companies Ordinance, 1984 was started couple of years back and currently have no clue. Following is the crux of some deficient concepts in companies’ ordinance, 1984.

Compliance Approach
At the very outset, the regulators must see whether the new piece of legislation is based on voluntary compliance or legally binding approach. The focus of company law initiative must be on the protection of stakeholders apart from redressing the balance in favour of promoting business activity. However, one cannot compromise over the essential nature of the company law – concept of limited liability.

Policies and Procedure for Risk
There is a dire need to strengthen corporate governance arrangements at legislative level instead of listing regulation level apart from the preparation of best practice guidance which needs to be incorporated into legislation. Guidance should, in particular, encourage listed companies to disclose more information on their policies and practices with regard to risk.

Information on Web
The new law should ensure that provisions to ensure that company information published under the terms of the company law and is fully and easily available to searchers from anywhere in the world through website. There should also be minimum rules governing shareholder rights and moves to harmonize insolvency procedures and creditor rights.

Rights of Auditor
The new legislation must strengthen the rights of auditors to obtain information on their client companies’ affairs. This will extend the auditor’s current statutory right to demand information from a company’s directors to all the company’s employees. Further, directors who fail to volunteer information to their company’s auditor when they know that the information concerned is material to the audit will be subject to criminal penalties. By presenting directors with the prospect of jail if they wilfully mislead auditors, the new legislation should emphasise to directors of all companies the importance of full and transparent disclosure of information.

Resignation of Auditor
In furtherance, any research would reveal the fact that resignation statements are uncommon and even when such statements are made they tend to be relatively uninformative and unhelpful to the members and creditors of the company whom they are intend to assist. A copy of resignation statement needs to be sent to appropriate authority like ACCA, ICAP or ICMAP. Where the auditors appointment being terminated concerns a listed company or where there is a major public interest in the company’s financial condition, the concerned need to pass this information no sooner it receives on the ceasing to hold office. A significant amendment is required in this area on the basis of which the court should judge the auditor’s conduct when filing a resignation statement. The courts must consider the fact that whether the auditor is abusing the rights conferred to auditor.

The key reason why resignation statements have either not been filed or have contained limited information is largely due to the concerns that auditors have had about being drawn into potential lengthy and expensive litigation with their formal client. This is exactly what happened in Jarvis Plc & Ors Vs Price water House Coopers [2000]. The company applied to court to prevent PWC filing its resignation statement with the registrar. The proceedings took a considerable time to resolve and by the time the proceedings had been resolved, the resignation statement was out of date. Whilst the application to court was being made, the content of resignation statement was prevented from coming to the attention of members and creditors at the appropriate time.

Any provision regarding auditors’ resignation needs to persuade the auditor to prepare and file informative resignation statement rather than encourage them. The provision must consider the concept that whether the auditor is using the statement to secure needless publicity for defamatory matter. The test must be based on auditor’s motive and the threshold needs to be placed at a relatively high level. In such Judiciary matters, not only the company show the material in the statement is defamatory but it must also prove bad faith on the part of the auditor. Serious consideration should be given as to how the procedure for dealing with these applications can be improved so that the wheels of justice turn a bit quicker.

Accountant
The term accountant is not defined and protected by law. This enables anyone to set him or herself up as an accountant without professional training. Normally people assume that when they deal with accountants they assume they are qualified. In case, the new companies law contain the provision that all companies are required to file its accounts then Securities and Exchange Commission of Pakistan would have ample records of many inaccurate and poor quality sets of accounts produced by unqualified accountants like the FBR.

As we know that companies are ultimately liable for the accuracy of their final accounts and it is the companies that are subject to fines. Poorly prepared accounts leave independent shareholders and creditors at risk and can make fraud harder to detect. The gulf between qualified and unqualified accountants is widening day by day as all professionally qualified accountants are now obliged to undertake continuing professional development [CPD].

Government must realize the fact that individuals must be able to state that they are tax advisors or book-keepers, but, in the way that the term advocate means a client will have the services of a qualified advocate. The term accountant should denote the services are provided by a fully qualified accountant. This is high time that currently there are four bodies running five different qualifications. ACCA itself and its accounting technician scheme of CAT, ICAP, ICMAP and PIPFA.

Operating and Financial Review
SECP should require public and large private companies to prepare an Operating & Financial Review (OFR). This new document will require companies to report to their members on the key issues which have affected their past performance and the factors which are likely to affect their future prospects. The OFR is also a great step forward for the cause of ‘inclusive’ company reporting because it will provide a statutory platform for companies to report on how they have accommodated the concerns and interests of the wider group of stakeholders who are interested in their activities.

There must be an onus on company directors to include, in their OFRs, information which is relevant to a broadly based understanding of their companies’ performances and prospects, for instance, social and environmental issues which are of great concern to other stakeholders and country regulators. These might also include issues such as child labor, bribery and corruption or localized environmental damage. There are also wider issues such as climate change and carbon risk which need to be addressed by many large companies.

SRO Mechanism
However, issuance of SRO’s and adoption of Accounting standard need a close review and I think that SECP should consider the use of alternative mechanisms, other than circulars, directives and regulations, in future company law-related initiatives. SRO’s in particular takes too long to approve and implement and are not always suitable for highly technical measures. I think that SECP in a new Action Plan on Better Regulation, where appropriate, should regulate by means of industry standards and best practice guidance. Any delegation of authority in these matters will, however, need to be subject to governmental scrutiny and backed up by remedial powers.

Small and Big Company Approach
The associated provisions need to be grouped together as far as possible. In furtherance, any decision regarding two separate statutory requirements for smaller companies and larger companies is a welcomed approach because company law must provide scope for small companies to grow and thereby become subject to the rules applicable to larger companies not merely a 1% reduction in tax rate.

Veil of Incorporation
The veil of incorporation is here to stay and should only be lifted in the most exceptional circumstances. It may be relatively easy to say with clarity when the veil should be lifted in those instances where statute allows. However, where there are no statutory guidelines the courts are becoming increasingly reluctant to do so. I think that the new company law must contain some statutory guidelines in respect of lifting of corporate veil.

Currently, one of the issues which businesses and practitioners find particularly difficult to cope with at the moment is that so many piecemeal changes have been made to the CO1984 over the past 20 years that it now lacks coherence. The company law rewrite will offer the opportunity for new legislation to be drafted afresh which is more accessible to small companies and which is sufficiently flexible to adapt to changing business conditions.

INTANGIBLE ASSET OF HUMAN RESOURCE
Talent is the key to knowledge based economy. Our tax system should create best conditions for evolving knowledge based economy. To encourage our businesses to upgrade the skills of their employees and to build up their human capital, it is suggested that 150% deduction be provided for qualifying cost of staff and training. People will support the government for providing adequate resources on education to prepare our young generation for a knowledge-intensive economy.

Government must consider the concept of important person for the foreign exchange earners. This may allow the nationals working abroad to be dealt on priority basis at the airport etc.

INTELLECTUAL PROPERTY
Intellectual capital is the key feature for an innovation driven and high value added economy. Our tax system should provide generous tax treatment for expenditure on creation of intellectual property and intangible assets. Government must subscribe the comments of world economic forum that encouraging research and development is our main policy to strive for success.

It is suggested that Government should allow a 200% deduction for research and development expenditure, incurred locally, to promote the development of brand name, high tech products and product with significant intellectual property content. Only providing amortization for intangible asset is not sufficed in this globalization.

TOURISM
Tourism is one of the fast growing sectors of our economy. In order to be consistent with the principle of supporting core industries it is suggested that Government should introduce an incentive for new investment and upgrade of service quality in tourism. It is further suggested that a one off deduction for refurbishment cost and 150% deduction for a marketing campaign on international news channels solely for Pakistan tourism purpose by the business.

FAIR SHARE OF ENVIRONMENTAL COST
On the environmental side I am of the opinion that economic loss caused by the pollution should not be borne by the society as a whole. Tax measures should be an integral part of strategy to tackle environmental pollution and polluters should share the tax burden. Many companies re locate their operation where environment is more attractive as pollution brings adverse economic impacts causing higher rate of absenteeism, higher medical bills, reduction in revenue from tourism and re-location of highly skilled person. In the past, government initiatives to tackle pollution issues were in the form of legislative restrictions. People will welcome tax measures to encourage innovation on anti-pollution technologies and equipment.

Green taxes
People will support the introduction of green taxes. Without a tax on environmental protection, costs incurred by the environmental damage are borne by the society not by the environmental polluter.

The principle of green tax is that polluter pays because those who contribute to the environmental damage should shoulder the tax burden. Green taxes will also induce the polluters to develop less polluting technologies. This will also become a new source of government revenue and can be utilized to further tackle the environmental issues or to reduce the direct taxes further.

Although green taxes are environmentally and socially justifiable but given its practical difficulties, a public consultation on the detailed proposal be conducted. The consultation should cover the types of green taxes suggested, approaches to determine the level at which the taxes are set and a study of the effect on our economy.

STABLE PROVISION FOR THE SOCIETY’S NEED
On the social side, our society has become increasingly demanding for the provisions of social welfare, healthcare and education. The capability of our government to meet these needs depends on our fiscal situation, which in turn depends upon our success in economic restructuring, broadening our tax base and efficient utilization of public resources.

The success lies in a concept similar to privatization! People will support a small government with outsourcing of public services for a better management. The capability of our government to continue to provide stable welfare and quality education depends to a great extent on our financial situation. With a structural budget deficit, we have experienced increasingly difficulties in meeting demands of different interests. This has led to public dissatisfaction with our administration and affected adversely our social stability.

Restoring our budget deficit and maintaining a sound fiscal reserve are the keys to addressing adequately the social bottom line of sustainability. The trend of increasing social needs runs parallel with the trend of global competition for capital and personnel, while against them is the trend of declining number of taxpayers. This brings about a great challenge in managing our public finance. A success in economic restructuring and broadening tax base would help meet this challenge.

As suggested, outsourcing of public services is an appropriate approach to enhance cost effectiveness and benchmarking to comparable services provided by the private sector. This will serve as a reference in order to determine whether outsourcing of certain services or projects is more cost effective! The efficiency of resource utilization in key policy areas should also be reviewed regularly and a mechanism should be put into place to conduct a full review of cost effectiveness of each policy bureau.

CONCLUSION
People believe that our major challenges are unemployment, sever competition, tax uncertainties, increased public expenditure and budget deficit. In transition towards a knowledge based and high tech economy, our society suffers a persistent and high unemployment rate apart from an enlarging gap between rich and poor. High mobility of capital and personnel resulting from globalization of economic activities subject Pakistan to worldwide competition and in particulars to our neighbours. The complicated indirect tax structure apart from the concept of afghan transit trade manipulation creates uncertainties in the interpretation of current tax legislation. There is a growing demand of increasing provision of health care, social welfare and education. A structural budget deficit continues to deplete our fiscal reserve and threatens Pakistan’s international credit rating.

As children’s do no grow within a year, hence, we must have a strategic budget not an operational or tactical one this year. This entails the fact that the theme our budget should be based on strategic fiscal policy. This theme must address our current needs without compromising the ability of our future generations to meet their own needs. A strategic look would help us to concentrate on three important aspects, that is, economic, environmental and social dimensions to achieve a sustainable development of our country – Pakistan. Global and domestic environment is changing. Our success in the future will depend upon the appropriate strategic steps now taken to address our current issues and lay down a solid foundation for future.

The writer is an International Tax Advisor and can be contacted through taxonomy.ashraf@gmail.com. The views expressed in the article are personal while no liability will be assumed unless specially agreed.

Article courtesy of Muhammad Ashraf [Via www.accountancy.com.pk]

ACCA welcomes completion of IASB’s 'most important project'

2009-07-10T23:39:00.001-07:00

KARACHI (July 10, 2009) - The International Accounting Standards Board’s (IASB) new standard for small and medium sized enterprises (SMEs) will have a significant impact on millions of companies around the world, says ACCA (the Association of Chartered Certified Accountants) in welcoming the announcement.

Despite concerns by many that the new simplified standard, which still runs to more than 200 pages would be too complex for small businesses to use, ACCA’s own research shows little concern in this area.

Richard Martin, Head of Financial Reporting at ACCA said: “We are delighted that the IASB has completed its most important project after five years’ work. It comes at a critical time, because it will mean that countries will be able to apply IFRS to companies of all sizes and not need to operate two systems of financial reporting, with one for large listed companies and another for smaller or unlisted privately owned companies. ACCA has always supported IFRS as a global accounting language for listed companies – now this has been opened up for smaller businesses too.

"The use of international standards across the board should add credibility to the financial statements of unlisted companies, at a time when potential users of accounts want to be able to rely on the figures they see," he said.

"There has been concern from some quarters that despite attempting to simplify standards for SMEs the IASB had produced something which was still far too complex. However, when we field tested the exposure draft in the UK we found that small companies and their accountants were able to apply this without significant difficulty. We look forward to a widespread take up over the next few years as countries assess its usefulness in their context. ACCA is pleased that IASB as a global standard setter has recognised its obligation to make available the standard and related educational material to download for free to users," added Richard Martin.

ACCA President Brendan Murtagh, who is a partner in an accounting practice, said: "In my practice we imagine this will be warmly accepted as best practice by our clients very quickly. A set of standards which is more easily understood by smaller businesses, their potential investors, customers and suppliers can only help organisations to survive in these tough trading conditions and to potentially thrive when the current situation eases."

Courtesy of ACCA Pakistan

Auditors asked to conduct income tax audit only for a year

2009-07-10T23:29:00.001-07:00

KARACHI (May 24 2009): Federal Board of Revenue (FBR) has directed its auditors to conduct income tax audit only for a year to facilitate the taxpayers, who are receiving audit notices for multiple years.

The board is of the view that issuing of audit notices for multiple years creates a sense of frustration amongst taxpayers, hence in order to rationalise the situation besides creating an atmosphere of compliance, it would be proper on the part of field formation to start audit proceedings for one year, a notification said.

The notification further said if the said audit results in substance then further may be taken up for audit under section 177 of the Income Tax Ordinance 2001. In the meanwhile except for one year, the audit notices issued under section 177 for other years may be suspended. When contacted, Abdul Qadir Memon, President Pakistan Tax Bar Association (PTBA) lauded the FBR move to facilitate taxpayers.

He said that board has taken serious notice of issuance of audit notices for multiple years by the concerned tax departments under section 177 of the Income Tax Ordinance, 2001. He said the instructions issued in this connection would definitely facilitate taxpayers at maximum besides encouraging others to induct in tax net.

He urged the FBR to eradicate human role in the selection of taxpayers for audit completely and added that the selection should be made through computerised random balloting to maintain transparency in the process.

Courtesy of Business Recorder

FBR introducing new registration form for all taxpayers

2009-07-10T23:28:00.001-07:00

ISLAMABAD (May 24 2009): The Federal Board of Revenue is introducing a new "Taxpayer Registration Form" for registration of income tax, sales tax, federal excise through a single form, simplifying registration process for business community.

The new form would be used by all categories of taxpayers including corporate taxpayers, business entities, companies as well as individuals.

Previously, corporate taxpayers and individuals had to fill separate forms for income tax registration. Now, companies, individuals, Association of Persons (AOPs) and other categories of taxpayers can use single form for both the registration of income tax as well as sales tax.

Another key feature of the new form is that the single "Taxpayer Registration Form" could be used for changes in particulars of registration and new registration. The FBR has proposed amendment in the Income Tax Rules 2002 through an SRO.403(I)/2009 issued here on Saturday.

Sources told Business Recorder that the FBR has issued the draft of the new "Taxpayer Registration Form". The new applicants would be allowed to use this single form for registration of income tax, sales tax and federal excise. Under this form, all kinds of registrations would be done including income tax withholding agents and sales tax withholding agents.

Secondly, the requirements for submission of documents for both income tax as well a sales tax have been combined under single "Taxpayer Registration Form". If a new applicant obtains income tax registration, he can also obtain sales tax registration number through single form.

Another unique feature of the new form is that the new taxpayer can submit the form electronically without physically going to central registration office or regional tax office. In this way, taxpayers can make online application for registration. The applicant can also monitor the status of the registration through online facility without physical interaction with the Board.

Sources said that a person applying for income tax registration would have to submit the copy of Computerised National Identity Card Number; copy of latest paid electricity bills and other documents as specified in the form. The FBR has given 15 days to all stakeholders to comment on the proposed "Taxpayer Registration Form". The board would notify the final form incorporating viewpoint of stakeholders.

Courtesy of Business Recorder

IFRS / IAS Summaries

2009-07-10T23:27:00.001-07:00

Courtesy of www.accountancy.com.pk

ACCA Pakistan Comments on Federal Budget 2009-10

2009-07-10T23:21:00.001-07:00

Karachi (June 16 2009) - The federal budget announced in the National Assembly on 13 June 2009 aspires to facilitate economic stabilization by mitigating poverty, revitalizing the industrial sector, advancing the agricultural sector, reducing price inflation, raising tax revenue by relying on indirect taxes and further taxing the existing tax payers.

As none of the four sectors for enhancing the tax revenue as identified by the government before the budget announcement has been taxed, the Federal Budget 2009-10 may not be able to address the prodigal challenge of increasing the tax base. There is not much evidence that the budget encourage savings and investment thus raising concerns about sustainable economic growth.

The current budget places heavy reliance on financial aid from the Friends of Pakistan and other donors. In case the foreign financial aid is not received, the government may obtain IMF funding or borrow from banks. This would ultimately result in inflation with the burden being borne by common man.

ACCA supports export efficiency and thus believes that the export encouragement benefits announced in the budget are steps in the right direction. There is also an increasing need to reduce reliance on imports. Innovative measures like exploring the option of growing tea leaves in the country and reducing the import expenditure on tea may be considered. ACCA believes that local industrial growth would result in employment creation, national productivity and economic growth. Thus the relief to automobile, mobile sector and cement sector is appreciated. Duties and taxes on import of luxury items may also have further stimulated local industrial growth.

The Budget proposes levy of carbon surcharge (carbon tax) on POL products. In its present form, carbon surcharge which would replace the Petroleum Development Levy (PDL) might inflate the POL prices consequently affecting small businesses and consumers. ACCA believes that a fair mechanism for the imposition of carbon taxes aligned with the principles of carbon taxes need to be devised. Carbon Tax is a means to achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Carbon Tax only intends to tax the carbon content of the fuel consumption rather than the entire fuel consumption as proposed by the Finance Bill. The carbon tax collected may be used to fund environmental related projects.

The proposed withdrawal of duties on wind power plants and initiatives for the water conservation are in line with ACCA Budget Proposals.

ACCA Budget Proposals advocate social equality thus we support the social welfare initiatives announced in the budget. The success of poverty alleviation measures announced in the budget for example Benazir Income Support Fund and the increase in micro-finance lending depends greatly upon transparency and effectiveness in implementation of these schemes. Against the background of reduced donor funding for micro-finance institutions and increasing inflation where the borrowers struggle to payback the principal amount and the interest, the announced increase in micro-finance lending may be an ambitious target.

The sustainable development of SMEs is essential for employment creation. ACCA Pakistan advocates convenient access to finance for SMEs through better resource allocation thus we hope that the Rs.10 billion fund created for SMEs would achieve the desired outcome of SME survival and subsequent growth.

ACCA appreciates FBR for introducing the accelerated depreciation for alternate energy projects, the measure being at par with the ACCA Pakistan budget proposals that suggested the tax relief in form of accelerated depreciation on capital equipment purchased to ensure the continuity of power supply.

Courtesy of ACCA Pakistan

ACCA Pakistan and WWF Hold Environmental Reporting Awards

2009-07-10T23:20:00.001-07:00

Islamabad (22 April 2009): The 7th Pakistan Environmental Reporting Awards (PERA) ceremony was held on Earth Day at the Serena Hotel Islamabad to award the winners of ACCA-WWF Pakistan Environmental Reporting Awards 2008.

Endorsed by the Ministry of Environment and IUCN Pakistan, the ACCA-WWF Pakistan Environmental Reporting Awards were launched in 2002 to recognise and reward companies that report corporate environmental, social and sustainability performance to a broad range of stakeholders.

A total of 44 entries were received for ACCA-WWF Pakistan Environmental Reporting Awards 2007-2008. The winners for 2008 were Attock Refinery Ltd. for Best Sustainability Report 2008; Pak Electron Ltd. for Best Environmental Report 2008 in the Local Listed Company Category; Hinopak Motors Ltd. for Best Environmental Report 2008 in the Multinational Category. Qarshi Industries Pvt. Ltd. was awarded commendation for showing their commitment and consistency to transparency in reporting.

The Chief Guest at the event, Mr Kamran Lashari, Federal Secretary Environment presented trophies to the winners . Speaking at the ceremony, Mr Lashari lauded the hard work of all the companies who participated in the Awards Scheme. He acknowledged the awards stating, "The government of Pakistan is very much supportive of private sector initiatives like the ACCA-WWF Pakistan Environmental Reporting Awards and is willing to work with ACCA and WWF to encourage greater buy in of the business community".

The evening commenced with welcome remarks by Dr Afra Sajjad, Head of Education Planning and Development, ACCA Pakistan who thanked the Ministry of Environment for their continued endorsement of Pakistan Environmental Reporting Awards and appreciated the fact that these awards form part of the National Year of Environment Activities of the Ministry of Environment. She said that, "ACCA is heartened by the achievement of our award winners, and it is fantastic to see how many organisations, large and small, recognise the importance of sustainability and environmental reporting".

Mr Hammad Naqi Khan, Director, Freshwater and Toxics Programme WWF Pakistan, gave an overview of the awards signifying the growing awareness of Corporate Social Responsibility amongst corporations. He said that the awards ensure that companies target improvements in the quality of information disclosed during the reporting process. Hence the awards help businesses streamline sustainable practices and development.

Also present on the occasion was Mr Ali Hassan Habib, Director General WWF Pakistan who in his closing remarks stated, "PERA has come a long way in increasing environmental awareness in the corporate sector and even after 7 years of presenting the awards, promoting sustainability will continue to be a key ACCA and WWF commitment".

Courtesy of ACCA Pakistan

ACCA awards Approved Employer status to Lahore Stock Exchange

2009-07-10T23:18:00.001-07:00

ACCA’s Approved Employer Scheme plays a pivotal role in the recruitment, development and retention of the ACCA trainees and members. As a benefit of being an approved employer, all ACCA trainees and members working for Lahore Stock Exchange will have an access to ACCA’s specialist resources customized for learning and development of finance and accountancy professionals. This close relationship will indeed attract talented human capital and demonstrate the organizations’ commitment towards development of employees –in turn leading to talent retention.

During the award presentation ceremony Mr Mian Shakeel Aslam, Managing Director, Lahore Stock Exchange, said that "The growing economy of our country is in dire need of appropriately skilled and qualified professionals who have high moral and ethical values. It is through organizations such as ACCA, that we expect to meet the rising need of accounting and finance professionals".

Speaking at the occasion Mr Arif Masud Mirza, Head of ACCA Pakistan said that, "The ACCA Approved Employer Programme supports organizations in reaching global best practice in the provision of learning and development opportunities for ACCA trainees and members. Employers like Lahore Stock Exchange have great impact on society and ACCA is proud to be associated with them."

Ch. Afzal Rahat – Member Director, Lahore Stock Exchange, Mr Jawwad Ahmad – Head of Internal Audit, Lahore Stock Exchange, Mr Shah Hussain – Head of Marketing and PR, Lahore Stock Exchange and Mr Muhammad Shahid Khan – Business Development Executive, ACCA Pakistan were also present at the ceremony.

Courtesy of ACCA Pakistan

ACCA Pakistan joins hands with Lahore Stock Exchange

2009-07-10T23:17:00.001-07:00

ACCA (Association of Chartered Certified Accountants) awarded Lahore Stock Pakistan Ltd with Platinum Approved Employer Status and Continuous Professional Development (CPD) Approved Employer Status in recognition of their commitment towards training and development of ACCA trainees and members. ACCA’s Approved Employer Scheme plays a pivotal role in the recruitment, development and retention of the ACCA trainees and members. As a benefit of being an approved employer, all ACCA trainees and members working for Lahore Stock Exchange will have an access to ACCA’s specialist resources customized for learning and development of finance and accountancy professionals. This close relationship will indeed attract talented human capital and demonstrate the organizations’ commitment towards development of employees –in turn leading to talent retention. During the award presentation ceremony Mr Mian Shakeel Aslam, Managing Director, Lahore Stock Exchange, said that “The growing economy of our country is in dire need of appropriately skilled and qualified professionals who have high moral and ethical values. It is through organizations such as ACCA, that we expect to meet the rising need of accounting and finance professionals”. Speaking at the occasion Mr Arif Masud Mirza, Head of ACCA Pakistan said that, “The ACCA Approved Employer Programme supports organizations in reaching global best practice in the provision of learning and development opportunities for ACCA trainees and members. Employers like Lahore Stock Exchange have great impact on society and ACCA is proud to be associated with them.Ch. Afzal Rahat – Member Director, Lahore Stock Exchange, Mr Jawwad Ahmad – Head of Internal Audit, Lahore Stock Exchange, Mr Shah Hussain – Head of Marketing and PR, Lahore Stock Exchange and Mr Muhammad Shahid Khan – Business Development Executive, ACCA Pakistan were also present at the ceremony. {PR}

Bank statements become harder to read

2009-07-10T00:30:00.001-07:00

Third of banks notch gains above €1bn on debt

European banks have made their financial statements longer and more complex despite the crisis, and it remains hard to judge risk and compare lenders, according to research from auditors KPMG.

KMPG's report, its third consecutive survey of transparency in 16 European banks' annual reports, found that the core sections of (financial statements, accounting policies and notes) increased by 20%. It said this was down to investors demanding more information amid the crisis.

The average length of annual reports increased by 3% to 317 pages.

As it is an auditor to some of the lenders in the study, KPMG stops short of actually forming opinions about the quality of individual bank reporting.

However, KPMG said it remained very tough for investors and analysts, whom it accused of relying on annual reports too heavily, to compare banks' accounts.

This was due to the disparity in the type of information provided, leeway offered by accounting rules and the complexity of both some standards and the nature of the banking industry.

Bill Michael, head of KPMG's UK financial services assurance, said: "If one considers the comparability of financial statements to be a primary goal, there is still some way to go."

Alluding to the UK Treasury Committee's call for annual reports to read more like histories and less like dictionaries, the foreword to the research said they remained too complex.

Five of the banks surveyed counterintuitively recorded gains of more than €1bn ($1.4bn) on their own debt when it fell in value. (This is because fair value accounting deems credit risk to fall when the value of debt falls.)

However, KPMG's research said while it was the case that many banks recorded such gains in 2007 and last year, it added: "Such gains will reverse in future years as it approaches maturity if the debt is not repurchased at the lower value."

Other highlights include:

• That liquidity, market and credit risk disclosures are difficult to interpret

• In spite of the perceived limitations of value-at-risk it remains the most common method to capture and control market risk exposure

• Loans on most banks' balance sheets have unexpectedly increased despite deleveraging across the industry. The research notes that this may be due to recent acquisitions and consolidation

• Five banks voluntarily disclosed a leverage ratio, although the definition and calculation methods are different

The 16 banks surveyed were: BNP Paribas, Société Générale (France); Commerzbank, Deutsche Bank (Germany); UniCredit (Italy); ING (Netherlands); BBVA, Santander (Spain); Nordea (Sweden); UBS (Switzerland); Barclays, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland, Standard Chartered (UK)

To read a full copy of the report, “Focus on Transparency 2009”, see www.kpmg.co.uk

DFSA's Paul Koster appointed to KIAS Setters

2009-07-10T00:27:00.001-07:00

DFSA's Paul Koster appointed to key International Accounting Standard setters

UAE. At its meeting in Washington last week the public interest oversight board approved the appointment of Paul Koster, Chief Executive of the Dubai Financial Services Authority (DFSA) as a member of an influential advisory board of two key international accounting bodies, the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board (IESB).

While the IAASB is responsible for setting standards for auditing, review, other assurance, quality control and related services, and facilitating the convergence of national and international standards; the IESB is responsible for setting ethical standards and providing guidance for the accounting profession

Recognising that the Gulf states were not represented on these boards, the International Federation of Accountants (IFAC), the parent body of the IAASB and the IESB, invited the DFSA and the Emirates Securities and Commodities Authority (SCA) to join the advisory groups as the Gulf States Regulatory Authorities. As a result, Mr Koster and SCA’s Director of Research & Awareness, Dr Obaid Saif Hamad Al Zaabi, will represent their respective authorities on the consultative advisory groups for a renewable three year term.

Paul Koster, Chief Executive of the DFSA said, “The role of the accounting and auditing standard setters is a critical one, and it is important for regulators, especially in the current environment, to be closely involved in the evolving standards for auditing.

I welcome the opportunity to participate in and contribute, with my SCA colleague, to the work of these two advisory groups.”

Disclosure Framework

2009-07-10T00:15:00.001-07:00

FASB Initiates "Disclosure Framework" Project Aimed at More Useful, Organized, and Consistent Disclosures

NORWALK, Conn.--(BUSINESS WIRE)-- Robert H. Herz, chairman of the Financial Accounting Standards Board (FASB), today announced the addition of a new FASB agenda project aimed at establishing an overarching framework intended to make financial statement disclosures more effective, coordinated, and less redundant.

The project was added in response to requests and recommendations received from several constituents, including the Investors Technical Advisory Committee (ITAC) and the SEC Advisory Committee on Improvements to Financial Reporting (CIFR).

"Many constituents have expressed concerns about so-called 'disclosure overload,'" said Chairman Herz. "While clear and robust disclosures are essential to informative and transparent financial reporting--a critical component in maintaining investor confidence in the markets--improving the way such disclosures are integrated can help decrease complexity. The Board will embark on this project to create a principles-based disclosure framework that will enable companies to communicate more effectively with investors and also help eliminate redundancy or otherwise outdated GAAP disclosure requirements."

Chairman Herz noted that the project objective is not intended to be "additive." Rather, it will focus on developing a framework for improved GAAP disclosures. It is envisioned that this framework would enable all entities to focus on making more coherent disclosures in their annual reporting package, move away from what some assert has become a compliance exercise, and perhaps facilitate XBRL electronic tagging of information.

Some specific financial reporting areas the project will evaluate and address include whether the disclosure framework should:

    --  Apply to all entities or perhaps exclude private or nonprofit entities
    --  Apply to interim reporting
    --  Focus only on high-level principles
    --  Focus only on notes to financial statements or extend to ways to better
        integrate information provided in financial statements, MD&A, and other
        parts of a company's public reporting package.

The FASB expects to begin deliberations this quarter and plans to issue a preliminary views document in the first half of 2010.

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.fasb.org&esheet=6002200&lan=en_US&anchor=www.fasb.org&index=1.

Source: Financial Accounting Standards Board

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Financial Accounting Standards Board
Neal McGarity203-956-5347

Your brilliant career

2009-07-09T23:22:00.001-07:00

As soon as you start studying for a career in finance, you are nudging open the door to a world of opportunity – though many students may be surprised at how wide the variety of options can be, and how far the ACCA Qualification can take you.

When Nairobi-based Edmund Bernard Mndolwa was offered a scholarship by East African Railways & Harbours to study for ACCA exams, he wasn’t even sure what accounting was. ‘I perceived it as an extension of mathematics,’ he recalls, ‘and I believed that if I could solve any mathematics problem, I could be an accountant.’

On starting his studies, the reality came as something of a shock, but he ‘opened his mind and studied hard’ to pass his exams, then went on to build an impressive finance career. Edmund, now an FCCA, rose to become a partner at PricewaterhouseCoopers in Tanzania, write a number of technical books, and hold a government post as commissioner of finance.

Natasha Winn’s finance career has also taken her to some places she did not anticipate. She trained with a small audit firm in Trinidad, and after qualifying, moved to another small venture, Trinidad Shell, where the skills she acquired enabled her to relocate to the US and work for much larger companies. ‘My US experience gave me a fantastic insight into all areas of operations,’ says Natasha. ‘It prepared me for my move to Shell Brunei, and my role as head of governance risk and assurance.’

Even so, Natasha believes she would not be where she is today without her ACCA Qualification. ‘It has really helped my career,’ she says, for a number of reasons. ‘There were so many benefits. Apart from the obvious academic knowledge and accreditation gained, I was approached for my Shell interview at the school where I was studying for my ACCA exams.’ Her contact with fellow members has also been important. ‘The social and business network you gain with ACCA can form lifetime bonds that continually grow,’ she adds.

An accountancy qualification will also give you a wide range of career options. ‘Finance professionals can work in any business sector, and there are lots of different specialist areas, so the possibilities are endless,’ says Beverly Cooper of Staffing Solutions. For example, Ilona Weiss FCCA is chief technology officer with the Polish software company Sage Symfonia; John Smith FCCA is chief executive of BBC Worldwide; Hassam Gaffar FCCA is chief operating officer with Botswana Life Insurance Ltd; and George Calinescu FCCA is deputy CFO at RBS Bank Romania.

Dare to dream
Your future career may be hard to imagine now, if you are struggling to pass your exams and survive on a tight budget, but if you work hard, one day you could be both professionally successful and financially secure. ‘From childhood I knew that I wanted to do something with numbers,’ recalls Angela Lee Loy FCCA. Although her parents could not afford to send her to university, she used her A-levels as a springboard into accounting.

‘The accessibility of the ACCA Qualification allowed me to start a successful career,’ she says, ‘and a qualification coupled with practical experience allows you to move up quickly.’ It was a combination that enabled her to become partner in a Big Four firm at just 33 years of age. ‘I’ve never looked back since,’ enthuses Angela, who now runs her own accounting outsourcing company, Aegis Business Solutions.

The ACCA members mentioned here have all followed many different career paths to get where they are today. But the variety of options they have each faced, and the choices they have made, only hint at the numerous possibilities that could be available to you. Cooper says: ‘Practice, the public sector, and industry and commerce are all open to ACCA qualified and part-qualified accountants who can demonstrate the right skills and experience.’ And these days, it’s increasingly easy to move between sectors.

Xia Xiao Yan started her finance career with a property management company, then moved into practice and worked in audit for a couple of years, before going back into industry as the finance and accounting manager for one of China’s largest computer producers. Vince Sloyan started in the public sector, at the UK National Health Service, but even after nine years there, he had no problem stepping sideways into business and a management accounting role with Reuters, the news service and financial market intermediary.

Who knows where you could be 10 or 20 years from now. As a student your brilliant career is only just beginning, but armed with the ACCA Qualification, there’s no limit to what you can achieve.

LOOK AND LEARN
As a student, it can be difficult to gain a broad view of the many career possibilities available to a qualified finance professional. But as long as you can get (even intermittent and occasional) access to the internet, there is a world of enlightenment at your fingertips. To find out about the possibilities in practice, visit the websites of the world’s largest firms:

Don’t forget to check the websites of small, medium and regional firms, too. To learn more about careers in business, commerce, or the public sector, visit the websites of leading recruitment agencies:

Looking through the advertisements for various finance roles, and reading about the skills and expertise they require, can broaden and deepen your understanding of the accountancy profession and the career opportunities it provides.

To get a greater insight into the experiences and achievements of ACCA members and students, visit the ACCA website, using the key words ‘member profiles’, you can read articles from the archives of ACCA’s magazines and publications. The more you know about the careers of others, the more you can do to shape your own future.

The lowdown

2009-07-09T23:21:00.001-07:00

Credit squeeze. Credit crunch. Global financial meltdown. Whatever you want to call it, the world is trying to come to terms with the impact, locally and internationally, of the economic downturn. And on personal and professional levels, even the most optimistic student accountant may struggle to see beyond the doom and gloom. But as with many apparently disastrous scenarios, the current crisis brings both bad news and good news.

Let’s start with the downside – things can only get better. The global financial services industry is going through a period of unprecedented change: it will be some time before it recovers, and by then, it may well have changed beyond all recognition.

Commercial and not-for-profit entities are reeling from the impact: sources of liquidity have evaporated, economic growth is slowing, entire industries are being decimated, and the financial jobs market is shrinking. But perspective is everything, and there is an upside.

Members of the accountancy profession are reassuringly well positioned to survive the downturn, and to thrive when the upturn emerges – as it inevitably will. The landscape of the financial job market may be changing, but while demand for some roles is declining, for others, it is rising, and smart students will position themselves to exploit the career opportunities this presents.

Bend in the wind
Finding a job with a new employer will be more difficult during 2009 than it was in 2008, but it is far from impossible. ‘Many organisations with positions to fill would consider recruiting a candidate who has the required qualifications but lacks practical experience, and then provide them with the necessary training on the job.’ reports Mark Thomas, associate director with the international recruiter WH Marks Sattin ‘Employers get the benefit of strong theoretical knowledge without so much practical experience, which is often more cost effective, and the candidate gets the chance to obtain the relevant experience. So it’s a win win situation.’

But there’s no getting away from the fact that there are fewer jobs on the market than there were a year or even six months ago. ‘Lots of good people who might otherwise be open to opportunities are staying where they are,’ says Thomas.

The economic uncertainty means people are placing a higher value on job security – and this has a knock-on effect. ‘Where people have jobs, they are staying put, so there are fewer openings for others to move into,’ says Abigail Stevens, managing director of the international recruiter Think Global Recruitment (TGR). The power has swung away from jobseekers towards employers. ‘The market now is employer-driven; not candidate-driven,’ she adds. This means finance professionals will have to work a lot harder to find the roles they’re looking for, to increase their chances of being selected, as Richard Park, head of international business with the financial recruiter Martin Ward Anderson, confirms: ‘A year ago, the market was totally candidate-driven, but employers now are being more picky about who they recruit.’

Rise to the challenge
This creates new challenges for students. ‘In a candidate-driven market, employers don’t expect to find someone who ticks all of the boxes on their wish list,’ explains Thomas, who says that until the downturn, organisations were happy to recruit somebody who could deliver on five or six out of 10 criteria. Now they have higher expectations: ‘They may want to see eight, nine, or even 10 out of 10 boxes ticked,’ he adds.

So if you want to appeal to a new employer in the current marketplace, what must you do to stand out against the competition? ‘At the moment, candidates need to be open minded, and present themselves more professionally,’ explains Park. Your CV will need tailoring to each employer’s needs much more closely than previously, and it should demonstrate your strengths and your ability to add value very clearly (see ‘How to sell yourself’, below).

And Park suggests that you focus your efforts on acquiring the sorts of skills and experience that are most transferable. This can be easier said than done, of course, until you know what those skills are. ‘It’s important to get any people management experience you can,’ he advises, ‘so that you can showcase your communications strengths, interpersonal skills and your organisational abilities.’ According to recruiters, employers will also be more impressed by professionals who have augmented their technical expertise with soft skills, in areas such as negotiation, networking and presentation, while language skills can also be a bonus.

‘European employers are still looking for candidates with language skills,’ says Stevens. If you can offer a European language, such as German, Spanish or French, you will dramatically improve your employability. ‘The big multinationals are still moving people between countries internally, but it will be six to 12 months before they need to do more external recruitment,’ she believes.

‘Some industrial sectors are naturally more resilient,’ says Park, citing drink, gambling and tobacco, and although the retail sector overall offers fewer career opportunities than usual, both nationally and internationally, many providers of fast food and low cost goods and services are thriving. Most countries can also expect their domestic tourist industries to improve during a recession, because people visit local tourist destinations rather than flying off to exotic locations, so there are possibilities in this area too.

It seems clear that what’s bad news for one individual, organisation, or industrial sector is often good news for another. So no matter what happens, try to stay positive, maintain a constructive and optimistic outlook, and be flexible.

HOW TO SELL YOURSELF
The ‘war for talent’ is over, and if you want to advance your career, you will need to sell yourself to potential employers. ‘Make sure that your CV lists your achievements, and shows what you have done to really add value,’ advises Claire Cuthbert, a manager at Euro London Appointments.

If you are applying for positions online, tailor your CV to each application and ensure you match the requirements and competencies needed for the role. Then, if the employer is using an automated screening process, you can be sure that your CV will at least get looked at.

Play to your strengths. If you are sociable and empathetic to other people’s views, this can show that you are a good team player who can liaise with people at different levels. If you pride yourself on never being late, this can demonstrate that you will go the extra mile to meet deadlines.

If you tend to be a bit forgetful and can only function if Microsoft Outlook provides a steady stream of reminders, use this to demonstrate that you are an organised worker with plans and deadlines – and show an employer that you are capable of developing a positive strategy to overcome your weaknesses.

‘At interview, focus on achievements in your last role rather than just responsibilities,’ suggests Cuthbert. Did you come up with any problem-solving ideas, save the company money, or streamline a process to make it more efficient? ‘Try to list at least two or three achievements for each position you have held,’ she adds, and always emphasise the positive.

Pakistan Job Market

2009-07-08T04:01:00.001-07:00

Current Scenario of Pakistan Job Market

Pakistan is always struggling with its Job market situation and creates employment opportunities never the same. An unforeseen situation in the country and Government polices always varied which effects seriously on job market.

Factors affecting the Job Market:

The deteriorating law and order situation in various parts of the country forced the investors to offload their investments. The news of bomb blasts and ever increasing threats of blasts in different cities kept the investors and business growth activities on the sideline. It affect as a serious stop mark on Pakistan job market.

Load shedding of electricity is disturbing economy, especially the industrial sector as it is one of the largest sectors of Pakistan’s economy. This sector should employ a large number of labors. But Due to electricity breakdown already established industry is deteriorating, resulting in the prevailing unemployment ratio. Due to less availability and high rates of basic inputs like electricity, gas and oil etc, many industries have been closed and many preparing to close. This uncertain situation of power failure is reducing the plans of the future Business expansion in the country and leaving an irremovable impact on Pakistan Job market.

Current international financial crisis is also one of the biggest reason of unemployment in Pakistan and in the whole world. This crisis originated from the banking sector of USA, UK and some European countries and is now a global phenomena.

Factors favorable to the Job Market

In current adverse market situation jobseekers are exploring new ways for employment activities and businessmen are trying almost everything to reduce the cost of production, it has opened the doors of opportunities of outsourcing and off shoring which were buzzwords a decade ago but unfortunately we couldn’t materialize the opportunity provided to us.

The recent global developments have made the internet a marketplace where you can work at home as a free lancer and safely make extra money. There are plenty of freelance sources available for freelancers who want to sell their time and skills in the global marketplace. Home office business is flourishing in the Pakistan and it is predicted to be the new ever increasing employment trend in the country.

Finding Jobs in Pakistan through online job portal like LineOwork is growing trend in Pakistan which has already benefited thousands of jobseekers and employers to connect each other in timely manner and savior over other traditional methods.

Economic conditions place CFOs in the spotlight

2009-07-08T03:54:00.001-07:00

The economic downturn has raised the senior finance executive’s profile in organisations worldwide, with more Chief Financial Officers (CFOs) involved in strategy development and prioritising risk management than this time last year, finds new research from CFO Research Services and ACCA (the Association of Chartered Certified Accountants) published today. Surveying more than 450 CFOs worldwide on how current global economic conditions are shaping the role and perceptions of today’s CFO, the research report, called “The CFO’s new environment”, reveals that: · Finance is in the spotlight – 83 per cent of respondents say the finance chief’s role is more important than a year ago, with 70 per cent agreeing that the finance function receives more boardroom backing now than a year ago. · The CFO is more involved in strategy – 72 per cent of survey respondents agree that finance now works more closely with business units in strategic planning, while two thirds agree that the CFO is now more involved in the creation of a medium and long term corporate strategy. · Communication levels have increased - 77 per cent say that they have either increased or plan to increase the amount of internal communication carried out by their company, while two thirds say they have increased or plan to increase the amount of external communications. · Risk management is now a priority for many CFOs – 4 out of 5 CFOs say they are taking a more active role in this field and two thirds of respondents say they plan more education for their teams in this area. Mr Arif Masud Mirza, Head of ACCA Pakistan says: “When we commissioned this report, we wanted to find out how the new economic environment is shaping the CFO’s role and affecting the perception of their organisational value. The results show that CFOs are rising to the challenges brought about by global economic conditions, even though some will not have experienced such a severe downturn in their careers so far. “Organisations are looking for CFOs to bring their knowledge to bear on the wider business, using their analytical ability to understand and deal with risk, and help shape long-term strategy. It is a tall order, but it seems from these findings, that CFOs are more than equal to the task. Despite the increasing demands on their time, we may well be witnessing a renaissance for the CFO, with their expertise extremely highly-valued and sought-after in these tough times.”

ACCA calls for future financial shocks

2009-07-08T03:46:00.001-07:00

ACCA calls for principles-based approach to avoiding future financial shocks

Financial regulation across major capital markets must be overhauled only after a comprehensive review of the factors which contributed to the global financial crisis, says ACCA (the Association of Chartered Certified Accountants) in an international policy paper published today. The report, The Future of Financial Regulation, urges global authorities not to rush to introduce heavy-handed regulation. Instead, it calls for joined-up action involving governments, regulators, companies and other stakeholders to ensure lasting improvements which will address both the current problems and anticipate future threats to the integrity of the financial systems and broader economy. Helen Brand, chief executive of ACCA, says: “We have spoken to chief financial officers, auditors and financial regulators from all the major capital markets and have produced a set of recommendations and principles which we hope will provide authorities across the world with a blueprint for regulation. It is important that governments co-ordinate their approach to restore confidence in the markets, though we are clear that this does not equate to a ‘one-size fits all’ policy. “It is vital that the apparent failure of ‘light-touch’ regulation does not become synonymous with a victory for rules over principles. The most important issue is not so much the description of the system, but that all parties understand and respect the purpose of regulation and that effective enforcement takes place. And those being regulated - banks and other businesses - have a crucial role to play in establishing a workable system.” Amongst the report’s conclusions are:· Competition: Governments and national authorities should regard the promotion of healthy competition in the market place as a top priority. Policy must be geared to preventing the creation of institutions which are ‘too big to fail’. This is anathema to effective regulation. Competition of ideas also benefits regulators and the welcome sharing of knowledge and best practice between countries should not extend to uniform requirements being adopted regardless of local market conditions. · Systemic approach: the regulatory system must take wider macro-economic factors into account and this should complement more effective monitoring of capital and leverage ratios of individual institutions. All relevant entities should be brought into the regulatory net. It is also crucial that regulators have sufficient numbers of staff with first-hand knowledge of their industries. · Governance: Financial institutions, encouraged by regulators, should adopt ethics-based corporate cultures on issues like remuneration which aim to ensure they act in the long-term interests of their stakeholders. The weaknesses in corporate governance and risk management practices shown up by the crisis must be addressed, with a specific review of whether the presence of non-executive directors on a company board remains an effective means of exerting supervision over the executive in large and complex institutions. · Accountability: The accountancy profession must consider ways of making the processes of financial reporting and auditing more useful to shareholders. Enhancing the quality of reporting on risk is key here. But accounts must continue to be geared principally to shareholders rather than regulators. Helen Brand concludes: “ACCA is encouraged that many of the ideas put forward in our paper coincide with recommendations being made elsewhere – the recent US Treasury White Paper Financial Regulatory Reform, published in 17 June 2009, stresses key causes of the crisis - the failure of risk management systems to keep pace with the complexity of new financial products and gaps and weaknesses in the supervision of firms by regulatory authorities. The US proposals recognise the need for a regulatory system which is simpler but more effectively enforced, and which is also able to adapt and evolve with changes in the financial market.”

Investors back flexible governance code

2009-07-08T03:41:00.001-07:00

FRC publishes responses to consultation on UK corporate governance system

Investors have strongly backed the flexibility of the UK’s corporate governance rules. Shareholder groups that responded to a consultation on the UK code are broadly happy with the existing comply-or-explain approach.

They voice concern, however, over the quality of corporate reporting and say companies should do more to explain their positions when they do not comply with the code.

‘The general tone of the comments we received from both companies and investors is that, by and large, they prefer the flexibility the comply-or-explain approach provides,’ says Chris Hodge, head of corporate governance at the Financial Reporting Council (FRC), which is conducting the review. ‘That’s not to say they think it’s working perfectly. Investors still have concerns about the quality of some of the disclosures companies make, which they think aren’t sufficiently informative.’

The UK’s governance rules – known as the Combined Code on corporate governance – have come under scrutiny following the failure of several of the country’s financial institutions.

Some have called for a radical overhaul of the system to prevent a repeat situation, including making parts of the code mandatory. The Association of Chartered Certified Accountants, the global accountancy body, says in its submission to the FRC that the comply-or-explain approach is ‘excessively flexible’ and ‘inadequate’.

But large investor groups tend to support the existing system in their responses, including the Association of British Insurers (ABI) and Hermes Equity Ownership Services (HEOS), which operates the UK’s largest pension fund. The ABI says the UK system ‘has served us well and we continue to support the code’, while HEOS observes that the ‘comply-or-explain principle continues, in our view, to have significant merit.’

Both add that corporate reporting and disclosure by companies need to improve in quality. ‘We believe that, for it to work properly, boards need to demonstrate better that their behavior is in tune with the spirit of the code,’ writes HEOS in its submission.

IFRS implementation on track says FRAB

2009-07-08T03:40:00.001-07:00

Society of Procurement Officers

The Financial Reporting Advisory Board (FRAB) published its 12th annual report, which highlights that satisfactory progress has been made to date by government departments in implementing the Treasury’s trigger point strategy for the application of EU adopted international financial reporting standards, from 2009-10.
The Financial Reporting Advisory Board (FRAB) today published its 12th annual report, which highlights that satisfactory progress has been made to date by government departments in implementing the Treasury’s trigger point strategy for the application of EU adopted international financial reporting standards, from 2009-10.
In its 2008 report the FRAB highlighted the need for government departments to ensure that they are prepared for the introduction of international financial reporting standards (IFRS), and warned that the implementation of IFRS, scheduled for 2009-10, should not be permitted to slip.
Commenting on the report, Chairman Elwyn Eilledge CBE, said:
“The implementation of IFRS is challenging, but the Board is pleased to note that the implementation of the Treasury’s trigger point strategy by departments is beginning to show satisfactory results. At this stage in preparations, satisfactory progress has been made in the first two trigger points, and the project remains on track for meeting the 2009-10 timetable. The production of ‘shadow’ IFRS based resource accounts for 2008-09 by departments represents the next key milestone in their preparation for the transition to IFRS. The shadow accounts will be subject to audit procedures.
The FRAB is particularly pleased to note that the Treasury has introduced additional corporate governance arrangements, involving Board representation, to oversee the final stages of the adoption of IFRS. The FRAB is encouraged by the progress made over the last year and will continue to monitor this project, offering its advice to the Treasury as required on any remaining IFRS issues, to ensure the 2009-10 timetable is achieved.”
The Board also reports that it has agreed the extension of its remit to include oversight of the Code of Practice on Local Authority Accounting in the United Kingdom, with effect from 2010-2011, when local authorities complete the move to IFRS-based financial reporting. The Board has made a number of changes to its terms of reference and membership to reflect this extension in the scope of its responsibilities.
The report acknowledges the Treasury’s efforts on ongoing issues of interest to the Board, in particular its work on the Alignment project.
The FRAB reports that the alignment proposals, agreed in principle by the Board, seek to improve the alignment of budgets, Estimates and resource accounts. These include a proposal to introduce changes to the departmental resource accounting boundary that will generally result in the consolidation of Executive non-departmental public bodies, which is something the Board has encouraged in previous reports.
Looking ahead, the Board expects to consider publications issued by the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board that may impact on future public sector accounting.

URL: http://nds.coi.gov.uk/

IT Risk, IFRS Transition Rank

2009-07-08T03:37:00.001-07:00

IT Risk, IFRS Transition Rank among Internal Auditors’ Biggest Concerns

Gaining a better understanding of IT risk, international financial reporting standards (IFRS) and extensible business reporting language (XBRL) top the “to do” list for internal audit executives this year, according to the 2009 Internal Audit Capabilities and Needs Survey conducted by Protiviti, a global business consulting and internal audit firm. The survey report also shows ISO 27000 (information security) rounding out the top five concerns list, but indicates that internal auditors are becoming more comfortable with the data security and privacy measures companies are implementing.

This is Protiviti’s third Internal Audit Capabilities and Needs Survey. The 2009 survey had more than 1,000 participants – chief audit executives, internal audit directors, and managers from publicly traded, private, government, educational and nonprofit organizations – who hailed from virtually every major business sector, including financial services, insurance, real estate, energy, utilities, manufacturing, distribution, healthcare, technology, biotechnology, hospitality, retail and telecommunications. The participants answered 100 questions in three categories: general technical knowledge; audit process knowledge; and personal skills and capabilities.

Additional survey findings include:

Enterprise Risk Management most pressing for hospitality and life sciences companies was among the top-five “need to improve” areas in the general technical knowledge category.
For the first time, four fraud-related activities ranked among the key areas that needed the most improvement, with healthcare organizations expressing the most concern.
When it comes to personal skills, dealing with confrontation an area added to the 2009 survey – ranked the second highest “need to improve” area, following the development of board of directors and audit committee relationships.

Despite changes in the business environment, some feedback has remained stable during the survey’s three-year history – most notably in the personal skills and capabilities section. Developing other board committee relationships has taken the top spot in the category’s “need to improve” section every year of the Protiviti survey, while presenting (public speaking), developing outside contacts/networking, and developing audit committee relationships have held relatively consistent positions among the section’s top five rankings.

The survey was designed to chart internal auditors’ evolving business priorities and their skill sets. This year’s survey, which launched at the 67th Annual Institute of Internal Auditors’ International Conference, was conducted during the summer of 2008 and captured the opinions of industry-leading professionals through in-person and online surveys.

A complimentary copy of Protiviti’s 2009 Internal Audit Capabilities and Needs Survey is available at: www.protiviti.com/go/iacn3.