13 july 2011

making sense financial know-how technical articles support for acca qualification papers

asking for help

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editors choice
Welcome to the latest issue of Student Accountant. This issue takes a look at how asking for help in the workplace could benefit your career. We also illustrate how accountants can add value in the workplace by helping non-financial colleagues understand the importance of numbers and figures. New technical content includes advice on how to approach a case study-type question in Paper P2, the impact of changes to the Paper P3, Business Analysis and Paper P5, Advanced Performance Management syllabuses, and the first part of an article on economic value added versus profit-based measures of performance relevant to Paper P5 candidates. Were always keen to have your stories in the magazine. Were particularly on the lookout for your ideas on how to get the practical experience requirement for ACCA membership and your job-hunting tips too. Also, if you have a story to share about any charity work you do outside of your studies, or information about any study groups you take part in, please let us know. Email your contact details to studentaccountant@accaglobal.com and well be in touch. I hope you enjoy this issue. If you have any feedback about the magazine please email us at studentaccountant@ Ard forW accaglobal.com. rES Victoria Morgan Editor, Student Accountant magazine

fEAtu dEnt in Stu tAnt n Accou WhATs ouT fINd N To g soo CoMIN of gEs NT ThE PA ouNTA NT ACC Is IssuE TudE s of Th gE 22 oN pA

4 cOntents
dispatch
06 GraPhic news top ceOs need finance flair, firms feel the squeeze, replace Frsse with iFrs say accountants 08 news rOunduP Global finance and accounting news

features
18 heLP is at hand the need to be self-sufficient is a limiting and potentially dangerous mantra. iwona tokc-wilde finds out how to break it and ask for help 20 the MaGic nuMbers we bring you a guide to presenting that all-important financial information to non-accountants. alex Miller reports 22 student accOuntant Feature archive we highlight important careers-focused articles from recent issues
do do you take part in any charitable activities? eMaiL us with yOur detaiLs and stOry and yOu cOuLd be Featured in student accOuntant

learning centre
12 where are they nOw George cocu, romania 13 webwatch how to get organised 14 student in 60 secOnds Jeremy daniel Mungaldeen 16 Per suPPOrt Online resources

Balancing act

how do you manage the work/study balance? Let us know your top tips and you could be in a forthcoming sa feature. email us at studentaccountant@accaglobal.com

download article pdfs

wherever you see the download icon , click on it to download a PdF file of the article which can be read offline and printed off to help you with your studies

welcome to issue 14/2011 of student accOuntant

Please email studentaccountant@accaglobal.com with your feedback on this issue
Mark Gold president dean westcott deputy president barry cooper vice president
making sense financial know-how technical articles support for acca qualification papers
13 july 2011

technical
25 technicaL articLes cOrPOrate rePOrtinG case study questiOns relevant to acca qualification Paper P2 ecOnOMic vaLue added versus PrOFit-based Measures OF PerFOrMance: Part 1 relevant to acca qualification Paper P5 iMPact OF chanGes tO the P3, business anaLysis and P5, advanced PerFOrMance ManaGeMent syLLabuses relevant to acca qualification Papers P3 and P5 FOundatiOns in accOuntancy Learn more about accas suite of entry-level qualifications at www.accaglobal. com/fia acca resOurces www.accaglobal.com/ students/acca

helen brand chief executive editorial team victoria Morgan editor Glen Patterson deputy editor Jackie dollar design manager richard Gooding designer robert Mills Junior designer

asking for help

workplace advice

www.accaglobal.com Jamie ambler digital editor 29 Lincolns inn Fields London wc2a 3ee united Kingdom tel: +44 (0)20 7059 5700 email: info@accaglobal.com www.accaglobal.com publishing and advertising adam williams head of publishing and commercial anthony Kay production manager For all advertising-related matters please contact Lisa Peake: tel: +44 (0)20 7902 1224 email: lisa@educate-direct.com
Published by the certified accountants educational trust in cooperation with acca. the council of acca and the publishers do not guarantee the accuracy of statements made by contributors or advertisers, or accept any responsibility for any statement which they may make in this publication. no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without prior written permission of the publishers. caet 2011 issn 1473-0979

resources
27 nOticebOard essentiaL inFOrMatiOn abOut acca and yOur studies acca connect contact details, changes to exam entry, new exam timetable dates, exam exemptions, and Obu bsc (hons) degree in applied accounting

whats your story?

why did you want to become an accountant, and what do you hope to be in the future? email your story to us at studentaccountant@accaglobal.com

6 dispatch
Finance skills continue to be vital to top CEOs, according to the annual Robert Half FTSE 100 CEO Tracker. Almost half (49%) of FTSE 100 CEOs have finance backgrounds compared with 31% in 2008 as have seven of the 10 most recent recruits.

top ceos need finance flair

31%

51%

51%

49%

graphic news

2008

2009

2010

2011

firms feel the squeeze

UK accountancy firms are coming under pressure to lower fees against a backdrop of increased competition, says a new report. Most respondents to Carnaby Cos Fighting for Fees felt that the weak economy was having a negative effect on business, and 82% of firms are discounting prices. Haggling is seen by many as simply part of life, said the report.

51%

62% 33% 4%
decreased increased

12%
increased

38% 2%
no change all

66% 24% 8%
some few

increased greatly

no change

most

how has competition how have changed over the past your fees changed three years between firms over the past offering similar services? three years?

how many in your client base are pushing for lower fees?

Most UK accountants (84%) think that the Financial Reporting Standard for Smaller Entities (FRSSE) should be replaced with International Financial Reporting Standards (IFRS) for SMEs, according to an ACCA survey. Almost 700 members were surveyed in order to help ACCA respond to the Accounting Standards Boards consultation on convergence of standards.

replace frsse with ifrs, say accountants

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8 dispatch

news roundup

reform favours smaller firms

The European Parliaments Legal Affairs Committee has backed last years Commission green paper on audit reform. The Commission is expected to finalise new audit reform proposals in November. If these are ratified, public bodies will be expected to increasingly use firms outside the Big Four, with benchmarked targets for use of medium and small-sized firms. At least two non-Big Four firms would be included in each public sector tendering opportunity. The Commission may conduct an impact assessment to consider mandatory rotation of auditors and voluntary joint audits for private sector clients. But according to the Conservative Partys lead negotiator, Dr Syed Kamall MEP: Mandatory audit rotation would be expensive for companies as audits are always priciest in the first year. Evidence shows that making firms change auditors all the time just creates more concentration in the Big Four.

Chinas finance sector is facing a severe talent shortage amid strong economic growth and Shanghais rapid ascension as an international financial hub. According to the latest eFinancialCareers China Talent Survey, 95% of finance professionals in China believe that there is a skills shortage, with 28% reporting this as chronic. Respondents indicated lack of development opportunities as the main reason, followed by staff moving to better paid jobs or leaving the industry. George McFerran, head of Asia Pacific at eFinancialCareers, urged companies to improve employees skills. An investment in employee training and development now is an investment in the companys future success, he said.

03 talent shortage looms

04 cfos prepare for growth

01 no to audit/ nonaudit split

UK businesses do not support moves by regulators to prevent audit firms from also providing non-audit services, according to a survey conducted for Baker Tilly. Only a quarter of the 117 businesses with a turnover above 5m surveyed said they did not value the option to buy consultancy services from their auditors. Some 81% said they like dealing with consultants who already understand their business 70% said this saved them time and 48% reported that this saved them money.

02 first woman wins ey award

Olivia Lum of Singapore firm Hyflux has trumped 48 other prominent business innovators from around the world to clinch this years Ernst & Young World Entrepreneur of the Year (WEOY) award. Lum, 50, is the first woman to win the prestigious award. She was recognised for her role in turning Hyflux from a small water-treatment start-up, with just S$20,000 initial capital, into one of the worlds leading desalination suppliers. Hyflux has a market capitalisation of about S$1.8bn and is listed on the Singapore Exchange.

Three in four CFOs in Hong Kong expect economic growth to accelerate in the second and third quarters of 2011, respondents told the latest American Express/ CFO Research Global Business & Spending Monitor. The survey found optimism about economic expansion being on the rise both around the world and in Hong Kong, reaching its highest level in four years. It also revealed many companies sitting on large cash surpluses and preparing to spend. Finance executives are finally moving away from budget cuts and opening up the company coffers to drive growth, said Lisa Vehrenkamp, senior vice president and general manager, Global Commercial Card of American Express in Japan, Asia Pacific and Australia. We will see a thriving deal-making environment and greater spending to win and retain customers as businesses jockey for position in a recovering economy.

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10 dispatch

news roundup

Malaysias Audit Oversight Board (AOB) has shortened the tenure of registration for three partners of two major accountancy firms from the usual one year to six months. The move, which The Star described as the AOB flexing its regulatory muscles, came after an inspection last year of the six biggest audit firms. Two partners are from Crowe Horwath, while the third is from Ernst & Young. The AOB found certain shortcomings while reviewing the jobs in which the trio were involved. AOB executive chairman Nik Mohd Hasyudeen Yusoff said: We feel that we need to send a signal that the auditors must improve themselves. We want the firms to be very serious about maintaining audit quality.

05 aob flexes its muscles

said that IFRS does not require financial institutions to adopt a prudent approach to financial reporting. He wants more explicit recognition in accounts of likely future losses and write-downs, which, he said, were a feature of GAAP .

08 iaasb to revamp audit reports

06 millionaires on the rise

The ranks of millionaires expanded by 12% in 2010, led by Singapore, as gains in financial markets lifted global wealth for a second straight year, the Boston Consulting Group said. The number of millionaire households increased to about 12.5 million, with Singapore millionaires rising by almost 33% after jumping 40% a year earlier. The US had the most million-plus households, with 5.2 million, followed by Japan and China.

The International Auditing and Assurance Standards Board (IAASB) is seeking improvements to audit reports to make them more useful to stakeholders. A consultation has been launched, asking respondents to identify audit report information gaps, which they would like filled. Options for change are identified, but the IAASB recognises that some of these may require changes to national and international accounting standards. The IAASB believes that now is the time for a more fundamental review of auditor reporting to ensure, in the public interest, that it can meet the information needs of financial statement users in a global business environment with increasingly complex financial reporting requirements, said IAASB chairman Professor Arnold Schilder.

malaysia could overtake brics

09 almond heads up deloitte

07 irish banks mind the gaap

Irish banks could be required to comply with UK and Irish GAAP as well as International Financial Reporting Standards, if the Central Bank of Ireland finds it has the legal powers to require this. The Central Bank is discussing its options with legal and accountancy advisers. Bank governor Patrick Honohan

Stephen Almond is Deloittes new global chairman, succeeding John Connolly. Almond was previously deputy global chief executive and before that global managing director, audit, for four years. He has also been seconded to the Bank of England and was a lead auditor for RBS. Pensions consultants PIRC described Almonds appointment as disappointing, given his past role on the RBS audit.

Malaysia may benefit from greater investor interest as the shine comes off more established emerging markets, according to the Financial Times. The daily said more fund managers were shifting focus to the next level of emerging market countries over worries that inflation, poor corporate governance and devaluation will slash earnings in Brazil, Russia, India and China (the BRICs). Andy Parsons, advice manager of stockbroker The Share Centre, said that while Taiwan, South Korea, South Africa, Mexico and Turkey have already crossed the investment radar, countries like Malaysia, Indonesia, Thailand and Chile show the world is becoming a diverse and investable asset. Tim Clement-Jones of law firm DLA Piper said that Chinas five-year plan to slow growth made Malaysia, Indonesia and Vietnam credible targets for inbound investment.