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Industry news

Accountancy sector improving Last Update - 28/12/2009

The overall economic picture for this year - hardly the disaster that many had feared - was mirrored fairly closely in the fortunes of many companies, including those in the accountancy industry.

As the clouds started to clear in the latter part of the year, pay cuts instituted when things looked diabolical were reviewed, with pay being restored or at least partially restored to original levels at companies ranging from smaller outfits such as property consultancies to listed firms such as SIA Engineering.

The accounting industry was no different with Big Four firm KPMG restoring pay to original levels. The cuts mainly affected those at management level. All the lost pay has been paid back to staff.

But it is not just these more senior staff members who are ending this year on a high note. Others at KPMG have been handed shopping, dining and hotel as well as travel vouchers.

This was to 'recognise the loyalty of all staff for helping stay the course during the downturn', said KPMG's managing partner, Mr Danny Teoh.

Ms Ong Ying Ni, a senior associate with the firm, told The Straits Times: 'My colleagues and I were all surprised that the management would take this step to reward us. We definitely did not expect this. Given the past year where there had been a lot of uncertainty, this move has given us more confidence and reassurance about the prospects for the firm as well
as the industry.'

While junior staff received shopping and dining vouchers, senior managers even received cash vouchers which can be used when purchasing airline tickets.

KPMG employs more than 2,000 staff in Singapore.

Mr Teoh said that being a 'professional services firm, people are our greatest asset. It is therefore important to take the long- term view to recruiting, motivating and retaining our staff'.

The Big Four accounting firms are no different from those in other sectors which have had to act nimbly amid the improving jobs market.

KPMG, for example, will grant pay rises next month - over and above the annual pay review which takes place in the middle of the year.

Mr Teoh said: 'This one-off pay revision... represents a continuing investment in our future.

'It seeks to balance the need to manage shorter-term uncertainty with the need to attract and retain experienced and qualified staff for the longer term.'

Come next month, another Big Four firm will also be giving a boost to morale. PricewaterhouseCoopers (PwC) will give a special half-month's bonus to all staff.

Human capital partner Deborah Ong said the payout is 'in recognition of their contributions to the firm through what has been a challenging time for most'.

The improving jobs market has put employers in a difficult position.
Ms Ong said: 'As the economy recovers, it is important that as a firm, we respond to the positive market sentiment and explore ways on how we can reward our people through increases in monthly salaries or variable bonuses.'

The other two Big Four firms - Ernst & Young and Deloitte & Touche - told The Straits Times that they are not planning any special payments. However, they pointed out that they had not instituted any pay cuts this year.

Both Ernst & Young and Deloitte & Touche said that they had continued to award increments and bonuses to deserving staff during the annual review.

Ernst & You-ng added that it is the only Big Four firm that continues to give staff time off in lieu, known by its quirky acronym Toil.

It has been a long-standing tradition that staff get time off, for example for the extra hours they put in during the peak season in the early part of every year, where companies which have a Dec 31 year-end rush to get their financial statements ready.

Still, while staff face the New Year in a more upbeat mood, the Big Four firms still face difficulties.

On the one hand, even though the recession is over, many companies are still struggling and may not be able to cope with higher audit fees.

On the other hand, with the better jobs market, the Big Four firms are having to make sure that they reward staff to retain them, especially with the upcoming busy audit season looming.
As a result, the Big Four firms will continue to see their profit margins squeezed.

An audit partner with a Big Four firm noted that the critical issue for accountancy firms is how to ensure that there is a steady supply of experienced accountants for future growth.

Singapore aims to be accountancy hub Last Update - 20/11/2009

Feedback wanted on key proposals such as post-grad professional qualification

A post-graduate accountancy qualification that can be a passport to finance jobs worldwide has been proposed by a committee set up by the Ministry of Finance to look at ways of transforming Singapore into a global accountancy hub.

The proposal was announced by Minister in the Prime Minister's Office and Second Minister for Finance and Transport, Mrs Lim Hwee Hua, at the Ernst & Young Entrepreneur of the Year award ceremony yesterday. It is part of a raft of recommendations contained in a consultation paper from the Committee to Develop the Accountancy Sector (CDAS).

Mrs Lim said: 'Ultimately, we want to build up a body of accountancy professionals with the breadth of relevant experience and skills...and the integrity to uphold the high standards that would be crucial to Singapore's reputation as a trusted hub.'

The minister said that Singapore was home to many businesses and companies with regional and international headquarter responsibilities.

'Accountants, including chief financial officers (CFOs) and internal auditors, play a key role in helping entrepreneurs grow and expand their enterprises,' she added.

Last December, the Ministry of Finance appointed CDAS - chaired by Mr Bobby Chin, the ex-managing partner of Big Four firm KPMG - to review the Singapore accountancy sector and profession.

Since then the committee has held more than 70 meetings with various parties including the universities, students, companies and government agencies.

CDAS is asking for feedback on three areas:

�Making Singapore a leading centre for accountancy talent, education and professional development.
�Developing Singapore into a centre for high value-adding professional accountancy services; and
�Enhancing the sector's institutions and infrastructure.

The committee is also looking for comments on the 10 key proposals it has drafted to make this vision a reality.

Mrs Lim highlighted three of them at the awards event last night, one of them being the development of a post-graduate professional accountancy qualification.

The committee said that in Australia, Britain and the United States, professional bodies have their own accountancy qualification programmes.

Having a similar accountancy qualification will help Singapore develop as a centre for accountancy education. The qualification should be globally recognised and be internationally portable, meaning that it opens up access to work in global capital markets.

Gaining the qualification can also allow non-accounting trained professionals a chance at a second career.

Another proposal Mrs Lim drew attention to was developing a CFO certification programme that takes on board the evolving role of the chief financial officer.

No longer is he just a 'scorekeeper' who keeps track of the company's results.

Many in the industry say a CFO now needs to go further and implement financial strategy which is in line with the business strategy.

The ideal CFO should have a broad base of knowledge, encompassing the business, the industry, financial markets and internal functions, the committee said.

What a CFO needs are programmes to equip him to do his job better, it added.

Singapore Exchange-listed Changjiang Fertilizer's chief financial officer Joel Leong told The Straits Times: 'The experience of Singapore CFOs are varied and their capabilities need to be enhanced. Those from smaller companies need to be exposed to how larger companies tackle different situations.'

The third proposal Mrs Lim disclosed was the setting up of an accountancy sector development fund to help the sector grow.

The fund could assist local accountancy firms expand regionally or help implement technology that would make the sector more efficient. It could also attract global accounting conferences to Singapore.

The consultation paper is available on ACRA website and the deadline for feedback is Dec 31.

Face Who? Last Update - 09/09/2009

Thinking about �friending� your boss on Facebook? You may want to reconsider. According to a recent US survey, nearly half of the executives polled are uncomfortable with being �friended� by the employees they manage (48 percent) or their bosses (47 percent).

Developed by Robert Half, the survey was conducted by an independent research firm and is based on telephone interviews with 150 randomly selected senior executives at the top 1,000 largest companies in the United States.

Executives were asked, �How comfortable would you feel about being �friended� by the following individuals on Facebook?�

The reply - individuals are not comfortable in adding their bosses (47%), co-workers (41%), people they manage (48%), clients (50%) and vendors (62%) as their "friends" on Facebook. However there are also those who are comfortable with having their bosses (47%), co-workers (51%), people they manage (44%), clients (41%) and vendors (29%) as their "friends" on Facebook.

Commented Mr Tim Hird, Managing Director of Robert Half Singapore, �As more and more people around the world use social networking websites for personal and business purposes, the line between personal and professional life is increasingly blurring. While not everyone is comfortable using social networking sites such as Facebook to connect with professional contacts, it is wise to be prepared for these types of requests.�

Mr Hird advises employees on Facebook to familiarise themselves with privacy settings and create different friend lists to control how and with whom information is shared. �Individuals should classify their professional contacts into a �work� list and limit what personal details this group can view,� he said.

Following are some tricky Facebook situations professionals commonly encounter, and tips on how to handle them:

� You are tagged in an embarrassing photo. Un-tag yourself and change your privacy settings so photos are viewable only by your close friends.

� You are �friended� by someone you do not want to connect with. It might be best to accept friend requests from colleagues to avoid slighting them, but add them to a �work� list and adjust your privacy settings so you can effectively separate your job from your personal life.

� You are considering �friending� your boss. It may seem like a natural extension of amiable office small talk, but think twice before proactively �friending� your boss. It could become awkward for both of you.

� You want to join various groups. You should join groups that interest you. But if you have colleagues in your network and do not want them to see the groups you join, remember to adjust your application settings.

� You would like to be a fan of certain pages. Becoming a fan of pages on Facebook is visible to anyone who can view your profile, so you should avoid becoming a fan of any page you are uncomfortable sharing with colleagues or business contacts in your network.

� You love quizzes. Stop and think for a moment before taking online quizzes and posting the results to your Facebook page -- unless you want professional contacts to find out which �Lost� character you most resemble or personal traits that you would rather them not know.

�Although the results are based on a US survey, the Facebook phenomenon and its accompanying side effects are global. In Singapore, there are already more than 500,000 people who are Facebook members1. While the majority uses it for social networking, an increasing number are using it as a tool to engage in business-related activities including sales, marketing and promotion, product research, recruitment, etc. There is a fine line to draw between friendliness and being too close for comfort. It is important that employees are educated on the code of conduct in social media in order to avoid misunderstandings or situations that could affect working relationships or one�s professionalism, and effectively utilise this medium in both the social and business contexts,� Mr Hird said.

Companies seeking delisting must provide reasonable exit offer to shareholders Last Update - 04/09/2009

A company may seek to delist from the Exchange. The Company�s Directors are obligated to ensure the delisting complies with listing rules. Delisting is a major corporate decision that impacts the interests of shareholders.

The Exchange would only consider a delisting application if (i) it is approved by at least 75% of shareholders present and voting on a poll for the delisting resolution with not more than 10% voting on a poll against the resolution; and (ii) a reasonable exit alternative, which should normally be in cash, is offered to shareholders; and (iii) an independent financial adviser (�IFA�) is appointed to advise on the exit offer. This Regulator�s Column piece elaborates on the delisting requirements.

The Board should take into account the interests of shareholders, and ensure that the exit alternative is not prejudicial to shareholders as a whole. In making the recommendation for a delisting of a company, the Board of Directors is responsible for ensuring that the exit alternative for the delisting proposal is reasonable to all
shareholders. The Board is required to appoint financial advisers to provide an independent view on the reasonableness of the exit alternative.

In doing so, the Board of Directors should satisfy itself that the appointed IFA has the requisite experience and expertise, and that the IFA applies its professional expertise and judgement in the assessment of all relevant factors. The Board is required to make sure that the IFA�s opinion is clear and unequivocal. For example, opinions qualified by diverse investment horizons do not meet the requirements of the rules.

The IFA�s opinion on the reasonableness of the exit offer must be included in the Company�s submission to the Exchange and clearly disclosed in the shareholders�
circular. The IFA�s advice should be given to shareholders as early as possible in order to provide them sufficient time to make an informed decision on the delisting
proposal.

The listing rules stipulate that the exit offer should normally be in cash. If an exit offer is in the form of securities or assets, a cash alternative is required and that cash offer must be reasonable as attested by the IFA. The purpose of a cash alternative is to allow shareholders to exit their investment without incurring additional costs or bearing additional risks.

Shareholders� approval is not required for exit offers made under directed delistings. However, such exit offers are required to meet the same standards as voluntary delistings including providing a reasonable cash alternative.

Misaligned and fragmented risk functions jeopardising organisations’ performance Last Update - 19/08/2009

Ninety-six percent of organisations believe they have an opportunity to improve their risk management functions. Furthermore, nearly half say committing additional resources to risk management could create a competitive advantage, according to Ernst & Young�s Future of Risk survey, which examined organisations� attitudes toward risk management.

The survey was conducted in June to July among more than 500 senior executives, predominately those at the C-suite and board level. Twenty-nine percent of the respondents were located in the Asia Pacific.

Norman Lonergan, Global Advisory Leader for Ernst & Young, said, �Although many organisations have boosted the size and reach of their risk management functions, this does not always equate to an increase in effectiveness. In fact, too few organisations can claim that shared reporting, data exchange and co-ordination consistently occurs among their various risk management functions. In the end, this only leaves the organisation more vulnerable to the threat of risk.�

Risk management has advanced but more needs to be done
Despite improvements in risk management over the past several years, organisations should continue to challenge their approach - especially now when most will be asked to do more with the same or limited additional resources. While only two percent plan to decrease investments in risk management, almost two-thirds (61%) of survey respondents said they do not plan to commit more resources to risk management over the next 12-24 months.

Gerry Dixon, Global Risk Leader, explained, �Recent events have forced a maturing of risk management and many companies can take pride in the progress they have made. However, now is not the time to become complacent. Leading organisations recognise the continuing opportunity to improve their risk assessments, enhance monitoring, reduce costs, and better integrate information technology.�

Lack of co-ordination among risk functions is a threat
The survey also revealed that the number of risk management functions has increased to keep up with compliance requirements. However, the coverage and focus of these multiple risks functions has become increasingly difficult to manage, and is compounded by a lack of alignment.

Seventy-three percent of respondents indicated they have seven or more risk functions. Furthermore, sixty-seven percent have overlapping coverage with two or more risk functions. Fifty percent of those surveyed reported gaps in coverage.

Dixon said, �Risk management functions within an organisation often exist in silos that are disconnected from one another and the wider business strategy. As a result, risks identified in one area may not be communicated or recognised by another. Moreover, different areas within an organisation may have different views on the severity or importance of certain risks.�

An improved future for risk management
The survey demonstrated that companies want improved risk coverage while decreasing costs and improving value. They also aspire to have their risk and control activities aligned and coordinated. The key to making this possible lies between the risk and control functions and the business units. This includes having an aligned mandate and scope, coordinated infrastructure and people, consistent methods and practices and common information and technology.

Survey respondents clearly recognise that risk management provides significant benefits to their organisations beyond better identification and understanding of key risks. Most respondents also report benefits from improved business performance (99%), protection of business value (98%), better decision making (98%) and improved compliance with regulations (98%).

Dixon concluded, �Leading companies are creating a competitive advantage by using the economic downturn as an opportunity to make practical yet valuable improvements to the way risk is managed. More than ever, organisations need to have a comprehensive and coordinated risk management approach with strong executive oversight and board of director governance. The opportunity to make those changes is now.�

Robert Half launches advisory websites for employers and job seekers Last Update - 04/08/2009

Global specialist recruitment firm Robert Half has launched two separate web portals designed to provide key advice to employers and candidates on coping with the current downturn, as well as to keep them abreast of the various challenges and opportunities in the ever-changing employment market.

The websites www.uncertaineconomy.com/employeradvice and www.uncertaineconomy.com/jobseekeradvice currently host a comprehensive range of material, including podcasts, videos, e-books, as well as Robert Half�s surveys and financial salary guides. These sites effectively serve as a tool for Robert Half to share the knowledge and insights that the company has gained over its 61 years in business and its dealings with millions of candidates and employers over the years.

Mr Tim Hird, Managing Director of Robert Half Singapore, said, �We are pleased to launch another platform for businesses and job seekers to further equip themselves with valuable information and advice that will help them maximise their opportunities during these uncertain times. This portal follows our launch of WebTV portal RHiWatch in May 2009, which has received overwhelming response from both employers and job seekers. Both websites aim to cater to the fast-growing online community that seeks relevant and up-to-date information resulting from current market conditions.�

One of the websites is targeted at employers,
http://www.uncertaineconomy.com/employeradvice while the other at job seekers,
http://www.uncertaineconomy.com/jobseekeradvice. The employer site currently hosts the 2 featured booklet 7 Hidden Business Opportunities in a Challenging Economy, in which Robert Half shares success stories from multinational corporations such as Microsoft, FedEx, and Visicom. The job seeker site presently hosts a factsheet providing valuable tips on how to manage one�s career in a downturn, as well as a podcast offering advice on landing a job in a tough economy.

IPO activity shows uplift but outlook remains uncertain Last Update - 07/07/2009

Q2 sees US$9.9bn in capital raised compared with US$1.4bn prior quarter, buoyed by Brazil�s largest ever IPO

Global IPO activity increased in Q2 with 76 IPOs worldwide compared with 52 the prior quarter, according to Ernst & Young�s second quarter Global IPO update. Deal value increased seven-fold to US$9.9 billion from just US$1.4 billion. However activity remains sharply down on 2008 levels when the second quarter saw 269 IPOs raise US$38.2 billion in capital.

This quarter�s figures were bolstered by Brazil�s VisaNet deal (US$3.7 billion), which is the largest IPO worldwide so far this year and Brazil's biggest ever; metals company China Zhongwang Holdings Ltd (US$1.3 billion); and Vodafone Qatar (US$0.95 billion). Together these deals accounted for 60% capital raised worldwide. Reflecting these IPOs, Brazil and China accounted for two-thirds of global capital raised for Q2.

As in Q1, the most active country this quarter was South Korea with 17 IPOs (8 IPOs, Q1). China and Canada followed, with 13 and 9 IPOs respectively. China�s nine month ban on IPOs at the Shenzhen exchange came to end this quarter with an offering by Guilin Sanjin Pharmaceutical. The United States also saw an uptick in activity rising from 1 IPO in Q1 to 8 in Q2, of which 6 made the top 20 globally DigitalGlobe Inc; SolarWinds Inc; Bridgepoint Education Inc; Rosetta Stone Inc, LogMeIn Inc and MediData Solutions Inc. Emerging markets accounted for 53 of the 76 global IPOs.

The threshold values for the top ten global IPOs has improved dramatically this quarter up from US$12.0 million to US$171.3 million, but still radically down year on year (US$848.6 million).

Max Loh, Singapore IPO Leader and Assurance Partner, Ernst & Young LLP, comments: �We have seen an increase in global activity in the second quarter but capital raised is at a fraction of the prior year. Early signs are that the wider economy has bottomed out but recovery is likely to take time and will vary by region. In terms of number of IPOs, the Asia Pacific region has been relatively more active and accounted for 60% of the global IPOs, with the South Korea and China/HK markets leading the pack.�

Loh adds: �The IPO market generally trends the macro-economy albeit with a time lag. Historically, markets have taken at least four to six quarters to recover from an economic downturn. However, there are examples of highly successful IPOs that emerge from post recession periods. These companies, having survived the ultimate stress test, are often leaner and have demonstrated the resilience of their business model. It�s a good time for dynamic entrepreneurial companies. And the high performance of stock exchanges around the globe in the second quarter has resulted in renewed interest in companies around the world to go public.�

The leading sectors by number of deals were Industrials (16); Materials (14); Financials (10) and High Technology (10). Due to the low value of funds raised, the top three sectors by capital raised mirror the top three IPOs. Financials (US$3.8 billion), Materials (US$1.8 billion), and telecommunications (US$1.2 billion) accounted for 70% of total capital raised.

For the year to 30 June 2009, the top three exchanges by number of IPOs are South Korea�s KOSDAQ (24); Hong Kong Stock Exchange (14) and New York Stock Exchange (7). By funds raised, the top three exchanges over the same period are the BOVESPA in Brazil with the one IPO (VisaNet at US$3.7 billion); Hong Kong Stock Exchange (US$2.5 billion) and the New York Stock Exchange (US$1.7 billion).

Follow-on offerings
The completion of follow-on offerings in established public companies is sometimes regarded as an indicator of IPO market revival. Between Q1 and Q2 there has been more than a 100% increase in the number of deals (up from 612 to 1,361) and capital raised (US$101.1 billion to US$284.2 billion). However, in terms of value, this has mainly been driven by financial institutions seeking to recapitalize and repair balance sheets.

In addition to follow-on offerings, Ernst & Young�s Global IPO trends report 2009 notes that market analysts commonly cite the following indicators of an IPO market revival: positive fund flows into the equity market, investor appetite, brighter corporate earnings outlook, recovery in market valuations, evidence of liquidity to spur business and consumer spending, successful public-equity transactions involving carve-outs/spin-outs from existing large public companies and new VC/PE-backed IPOs.

Financial services: no return to growth until first half of 2010 at the earliest Last Update - 06/07/2009

The majority of global financial services companies expect no return to growth until the first six months of 2010 or even later, according to new Ernst & Young research published today.

Accelerating the change finds that while a third of the 125 global financial services respondents expected some expansion this year, 34% of those polled expect the return to growth to begin in the first six months of 2010, with 32% believing it would be further out.

As an indication of just how deep the recession is impacting the financial services sector, just over two thirds of those polled expect to increase the amount of time they spend on securing the future of their business.

The industry was clearly taken aback by the ferocity and depth of the downturn: 72% of respondents were surprised at the severity and 70% were surprised by the speed of the financial crisis. Only 30% had seen any improvement in their business over the last 12 months, compared to almost 50% that had not.

Tom McGrath, managing partner of Ernst & Young�s EMEIA financial services business, comments: �The end of the recession and a return to profitability is a tough one for any industry to call. But financial services are naturally more cautious � and possibly more realistic � about when the return to profitability might happen.�

The reorganization of the industry will be fundamental and it will vary by sector. However, managers are working hard to position their organizations to emerge stronger when the recovery comes � but there may well be some more casualties.�

Pennies being pinched, as profitability continues to decline
What is clear is the business-changing impact that the recession is having on the structure of financial services companies � and the toll it is taking on their bottom lines.

The majority (70%) of institutions have permanently changed their risk management strategy as a result of the crisis: 68% had implemented permanent differences to their regulatory framework and over half (54%) have changed their operating model. And it is easy to see why: almost six in ten financial institutions have seen their profitability decline and 56% have seen overall revenues decline in the same period.

Winston Ngan, Financial Services Leader for Ernst & Young in Singapore says: �Our observations in Singapore show that banks in particular are changing their risk management strategy and framework. The change is driven by both the need to respond to the crisis as well as the scheduled implementation of the Internal Capital Adequacy Assessment Process (ICAAP) under Basel 2 Pillar 2 which requires local banks to strengthen their risk management framework. Financial institutions here are focusing on assessing the risk adjusted return of their businesses and reviewing staff remuneration structures as part of their risk management measures. In anticipation of declining revenue and profits, financial institutions are examining their own operating models to look for ways to drive effectiveness and cost efficiency. One such way is to streamline and standardize existing operating platforms, policies, procedures and controls across business lines and geographies.�

Based on the survey, 61% of respondents have had more opportunity to improve cost cutting in the last six months. Four in ten also plan to hive off their non-core or non-performing business.

Keith Pogson, managing partner for Ernst & Young�s financial services business in the Far East, says: �Fierce competition, volatility in the capital markets and business complexity are key concerns for any large enterprises, but they weigh more heavily on global financial institutions.�

Financial services clear on action from authorities
The sticky issue of pay and reward strongly divided respondents: 45% thought it needed more regulation while just under a third disagreed.

Financial services were also found to be broadly supportive of national and global initiatives aimed at stimulating the capital markets and easing the impact of the recession. However, only a third believed that their government should retain a stake in the financial services industry, with banking and insurance respondents the most skeptical suggesting that the time for bailouts may have come to an end.

Almost two thirds were inclined to agree that cooperation between international governments had played a central role in helping domestic and international economies in the last 12 months. Two thirds were supportive of their national governments economic policies in the past six months and half of the respondents believed their governments were powerful enough to solve their economy�s woes although a distinct minority (29%) felt they were ineffective in the face of the global recession.

Carmine DiSibio, managing partner for Ernst & Young�s Americas Financial Services Office, comments: �The financial services industry has been battered, but will certainly emerge from this recession stronger and healthier, with more focus on risk management. As the industry recovers, we are likely to see changes in operating models and regulatory frameworks. It's likely to be a new world, and financial services firms will find their way together.�

Industry Survey Identifies Skills Gap in Regulatory Knowledge Last Update - 06/07/2009

Knowledge of regulatory standards is the largest skills gap in financial services institutions, according to research conducted by FIRST FINANCE, a leading global learning &
development solutions provider. Regulation was closely followed by risk management and communication & management skills as areas of concern.

FIRST FINANCE surveyed 51 divisional, learning and development managers in leading financial institutions to examine where they believe skills gaps lie within their teams and 45 per cent highlighted regulatory standards as an area of concern.

The survey asked respondents how satisfied they were, on a scale of one to five, with the level of knowledge within their companies in areas such as financial products, ethical standards and risk assessment and management skills.

The three areas in which the biggest gap was identified were:
- Knowledge of regulatory standards
- Communication & Management skills
- Risk Assessment and Management

Risk assessment and management also stood out as challenging areas, despite the fact that several respondents highlighted this as a top priority for their business. This gap was
particularly evident in areas of investment banking.

Interpersonal skills, such as communication and management, also scored poorly. Some respondents commented that although many individuals had excellent technical knowledge, they had poor soft skills. Some HR managers also admitted that many individuals with excellent technical skills had been promoted into management positions, despite their lack of people management ability.

Employees in financial markets have received a great deal of negative publicity about their ethical behaviour. Although scores in this category were relatively high compared with other
areas covered in the survey, around one in five managers still highlighted their team�s knowledge of ethical standards as being only fair or poor. However, few participants suggested that ethics would be an important focus of training activity in the next 12 months.

Respondents also gave high scores to their teams� technical knowledge of products, as well as their analysis and modelling techniques. However, there were a number of qualitative
responses underlining the importance of developing new products and being innovative, particularly in the area of new funding techniques.

The highest-scoring questions in the survey were:
- Understanding of company code of conduct
- Product knowledge
- Understanding of business ethics
Eric Chardoillet, CEO of FIRST FINANCE, said: �Financial services companies have had to come to terms with huge turbulence over the last
two years, especially as governments are bringing forward tighter regulation of the whole sector. In the current economic climate, training is not a luxury � it is a necessity, and financial
institutions cannot afford these skills gaps�.

The survey also found that learning and development managers (L&D) often scored their satisfaction levels even lower than operational managers. Subsequent interviews confirm that
L&D managers believe that line managers are not recognising weaknesses within their teams and that skills training is not being prioritised by operational managers.

Impact of financial crisis poses greatest threat to insurance industry Last Update - 23/06/2009

The impact of the financial crisis is the most significant risk facing the insurance industry, according to a new report by Ernst & Young. In the Second annual business risk report � insurance 2009, model risk and regulatory intervention rank second and third among the top ten risks.

�As a result of the current economic conditions, there have been significant changes in the risks since the release of our 2008 report,� says Peter R. Porrino, Global Director of Insurance in Ernst & Young�s Global Insurance Center. �As insurance companies continue to navigate their way through this downturn, they should be focusing on changing their approach to risk management, regulatory analysis and the communication of risk information.�

The report identifies the top 10 business risks faced by the industry as ranked by more than 100 leading sector analysts. The top ten risks this year are:
1. Financial market crisis: the crisis has severely battered the financial services industry. Even if systemic risk abates, the consequences have been so profound that they are likely to shape the industry for the next decade.
2. Model risk: the failure to recognize the shortcomings of models and to adequately capture the nature of risk have left some companies unprepared for the depth of recent financial events.
3. Regulatory intervention: organizations must prepare for the sweeping changes around Solvency II, the convergence with IFRS accounting principles and the ongoing debate of federal and state regulation in the US.
4. Managing the non-life underwriting cycle: mismanaging the cycle is arguably the number one cause of insolvency in the non-life insurance industry and the number one contributor to losses in stakeholder value.
5. Geopolitical shocks: greater risk of geopolitical shocks is heightened by the economic slowdown, as falling incomes generate political pressures and collapsing tax revenues threaten governments� capacity to respond.
6. Demographic shifts in core markets: consumer focus on savings products increases the insurance industry�s need to strategically manage capital risk, including exposure to equity markets.
7. Emerging markets: while proving to be an area of expansion for large diversified insurers, emerging markets are more susceptible to rapid and unexpected deterioration.
8. Channel distribution: even with current market conditions and an increasing focus on expense reduction, there are still significant opportunities and risks in investing in multi-distribution strategies.
9. Legal risks: unexpected changes in both the forms and sources of liability continue to be one of the greatest challenges facing non-life insurance companies.
10. Climate change and catastrophic events: extreme events are major strategic risks for the industry and have far-reaching implications for insurers paying the price for the escalating costs of rising catastrophic losses.

While much of the downside risk may have already occurred, the current market turbulence still poses an immediate threat.

�In this environment, it is essential that insurance companies address product innovation, changing regulation, investment strategies and capital requirements to help retain earning power and maintain agency ratings. This will help to serve as a starting point for discussions among leadership so that their near- and long-term business strategies take these issues into account,� Peter Porrino concludes. �While instability still prevails, opportunities abound for those companies that are able to rebuild and strengthen their businesses.�

Not all companies are equally affected by the downturn: E&Y study Last Update - 26/05/2009

Ernst & Young recent study revealed that not all companies are equally affected by the downturn and that a sizable minority see opportunities from the current crisis � albeit also recognising the threats. While the overall impact on market capitalisation has been extremely negative in the past twelve months, there is significant variation in performance by sector.

Executives the CPA firm spoke to recognise the challenge to their business but only thirty per cent felt their focus for the next twelve months would be on corporate survival. Seventy per cent believe there are opportunities to do more. While 35 per cent reported a significant deterioration in the profitability of their sector, only 22 per cent reported such a problem for their own company � indeed 15 per cent reported some improvement in profitability over the past twelve months.

Similarly, their perspective of development in the competitive environment was also mixed. Price competition has increased for most � significantly so for almost a quarter of respondents � but other developments offer opportunity:
� Forty per cent are seeing reduced risk of new entrants
� 34 per cent are seeing competitors withdraw from their market; and
� 35 per cent are seeing an increase in bankruptcies among competitors.

This is the harsh reality of competition � performance is relative and the misfortune of your competitors can provide the greatest of opportunities.

To understand how companies are reacting to the current crisis and seeing if there are opportunities to learn from their experience and best practice, EY worked with the Economist Intelligence Unit to interview over 300 senior executives from major companies from around the world to see how they are being impacted by the economic crisis and what they are doing about it. All interviews were done between 6 and 19 January 2009.

Pharma companies must explore unconventional collaborations to survive: PwC Last Update - 26/05/2009

According to new research by PricewaterhouseCoopers (PwC), even the largest pharmaceutical companies will soon need to step outside their sector and collaborate with other organisations. Recently announced activity such as GSK and Pfizer�s new HIV-focused venture confirms that pharmaceutical companies are exploring new ways to collaborate.

At the same time, a flurry of merger and acquisition (M&A) deals have been triggered. While M&A will continue, alternatives such as collaborations will actually be more flexible and value-enhancing in the long term PwC believes.

PwC also believes that the financial crisis may force many more companies into collaboration. In fact, the government�s response to the economic climate has allowed collaboration outside the pharma sector that would have been unthinkable before, such as waiving competition issues for mergers. Collaboration could address the current funding crisis for biotech firms which requires an immediate response. In fact, the pressure to change to new business models could come from outside the pharmaceutical sector, such as regulators, investors, and healthcare payers.

More information on the research.

Valuing funds' private assets: KPMG Last Update - 26/05/2009

If the ongoing credit crisis teaches us nothing else, it will be that good governance and transparency should never be sacrificed in the pursuit of short-term gain and profit. Businesses would be foolish to let such things happen again � and any that even considered going down that route would quickly find themselves falling foul of the corporate policemen which many investors and shareholders have become.

Scarred by the events of the past year, these external stakeholders will not forget quickly or easily. One area where this is already being seen is in the valuation of private assets held by the large investment funds. Assurances of returns in years to come no longer hold water � and the pressure is on for the funds to show what�s really going as Mark Collard of KPMG�s Advisory practice explains.

In April, a draft European Union directive was issued, relating to the conduct of investment funds � by which we mean everything from private equity and venture capital funds right through to turnaround or real estate funds.

Amongst other things, the directive proposed far more stringent reporting on the value of private assets held by those funds; requiring annual reports and the involvement of an independent valuator.

At first glance, such suggestions might not seem that big a deal but I feel this is indicative of a distinct shift in terms of the attitude towards funds� investments. In happier economic times, investors seemed more than happy to simply place their money into a fund for the requisite number of years, happy with the projected exit value of their investment and their fund�s ability to deliver a healthy profit.

Questions about the interim value of those investments were rarely raised. All that mattered was the exit value and it was taken for granted that such a value would be reached. Now, those more searching questions are being asked � by investors and shareholders but also by auditors and audit committees. No longer are they prepared to take everything on trust.

Such a shift in thinking may appear eminently sensible but the real interest in this issue is in how the funds will react � and how exactly they can be expected to provide accurate, realistic valuations in a time when attributing a value to an asset has never been more difficult.

Let us not forget that the EU directive is still in draft format only but, if it were to come to fruition, I believe that funds would be split in terms of their reaction to it. On one side, there are the funds that see it as best practice and also believe they can use their adherence to such guidelines to better market themselves to potential investors. In addition, it may be seen as helping them to head off any awkward questions which their auditors may have about their asset values.

On the other side are those who will see this as an unnecessary burden, suggesting that the exit value is all that matters. That may well be the case � but this is an issue of our times, when transparency matters above all.

Even the nay-sayers will have little choice but to submit to this though. Certain AsPac financial centers have long been a home for many fund administrators but relocating to such locations now to avoid the burden will look like an admission of having something to hide.

The reaction of the U.S. will be interesting in all this. Currently, many people involved in the funds industry in the U.S. would say that the new FAS 157 accounting rules which govern the reporting of these assets are fit for purpose. Certainly, from my own experience, these rules came into force at a time that coincided with the pressure building from external stakeholder groups. It is probably too early to see whether the practical application of FAS 157 will match external stakeholders� expectations, particularly when there is lobbying from the U.S. fund industry for the authorities to dilute the application of the rules due to the difficulty in valuing private investments at the moment.

Now that the EU directive has entered the fray, if it is passed and is seen to be successful, it will be interesting to see whether that directive becomes a template for change in the global funds industry.

The part of the directive which some funds really might take issue with is over the compulsory appointment of an independent valuator. Some may argue that the fund administrators who currently fulfill that role are already sufficiently independent. Others claim there must be a conflict of interests inherent in such an arrangement.

However that particular issue resolves itself, whether the person in the firing line is the administrator or an external valuator, what is beyond doubt is that this is no time for amateurs. I have never known a more difficult time in which to conduct a valuation process. The metrics typically used in valuations must be applied with far, far more caution than in the past. In addition, there are far more judgment calls required in every single valuation than I can ever remember.

Currently, in our sphere of operations, it feels like everybody is watching us � and rightly so. Transparency is our new watchword and if we fail to deliver the required transparency to investors and shareholders, then we are doing the funds industry a grave disservice.

Despite cautious optimism, threats to global markets could undermine growth Last Update - 30/04/2009

The Deloitte Global Economic Outlook Q2 2009 report shows reason for cautious optimism as government policies have begun to heal credit markets. However, the moderate success of global policy initiatives is overshadowed by the potential impact of demographic threats to global markets. According to the report, demographic threats will create new crisis management challenges in the near future.

The report reveals that some positive indications have begun to emerge. Global shipping rates have stabilised and modestly increased; risk spreads are far below their level of a few months ago; and in the United States, an unprecedented policy response is resetting the playing field.

AFA takes step to realise ASEAN's vision & agrees to accelerate MRA development Last Update - 29/04/2009

The ASEAN Federation of Accountants (AFA) took an important step in realising the vision of Association of Southeast Asian Nations (ASEAN) by agreeing to accelerate the development of Mutual Recognition Arrangements (MRAs) among its member bodies.

This decision was in response to the signing of ASEAN MRA Framework on Accountancy Services at Cha-am, Thailand, on 26 February by the respective ASEAN Economic Ministers. The main objective of this Framework is to facilitate the negotiations of MRAs on accountancy services between or among ASEAN member states by providing a structure towards the conclusion of such MRAs.

The issue was discussed at length at the 97th AFA Council Meeting held in Manila, Philippines, on 24 to 25 April. The meeting agreed that the most practical way in negotiating MRAs in among ASEAN national accountancy bodies would be to commence with bilateral negotiations between the AFA member bodies, taking into account the various differences educational system, legal framework, institutional mechanism, and socio-economic conditions. In this regard, the meeting agreed that each individual AFA member body should try to commence negotiations by identifying a prospective partner among themselves and notifying the result of this initiative to the AFA Council by August 2009.

To accelerate this process, Indonesian institute of Accountants and Malaysian Institute of Accountants were requested to share with the rest of the AFA member bodies their experience in negotiating the first bilateral MRA on accountancy services among national accountancy bodies in the ASEAN region.

AFA members also agreed to commence the process of compilation and documentation of domestic regulations of the accountancy services sector in their respective ASEAN jurisdiction.

Attraction and retention of accounting & finance professionals a top challenge Last Update - 29/04/2009

Despite the economic downturn and weak job market, Singapore employers continue to report difficulties in finding qualified accounting and finance professionals, according to the third annual Robert Half Global Financial Employment Monitor. The 2009 survey of 4,830 human resources and finance managers in 22 countries also found that losing their top finance talent to other job opportunities remain a significant concern for Singapore employers.

Eighty per cent of a total of 179 respondents in Singapore claiming to have difficulty finding skilled accounting and finance candidates, and this figure is higher than the global average of 68 per cent and only a slight decrease from the 87 per cent reported by Singapore managers last year.

According to the report, Singapore companies are experiencing the greatest difficulty finding skilled candidates for the financial management function, a shift from last year when the talent shortage was most prevalent for the financial and business analysis function. In terms of key executive attributes that employers are seeking, regulatory and compliance expertise (seventy per cent) continue to rank as the number one attribute for the second-year running, followed by experience and knowledge of industries/ sectors (59 per cent) and understanding of international markets (37 per cent).

82 per cent of the Singapore managers claimed to be �very concerned� or �somewhat concerned� about losing their top talents to other job opportunities, just slightly lower than the 92 per cent recorded last year. This unease runs especially high in the Asia-Pacific region, with Hong Kong at 89 per cent, Australia at 61% and Japan at sixty per cent.

Almost eighty per cent of the Singapore respondents reported that their accounting and finance department had been affected by current economic conditions. Specifically, accounting and finance teams are suffering from heavier workloads (58 per cent), accompanied by more stress (45 per cent) and a lower morale (37 per cent). In addition, eighteen per cent of them cited a higher turnover, with colleagues leaving their jobs for other opportunities.

To cushion the impact of the downturn, many Singapore companies are taking active steps to help their employees cope, such as redistributing work (56 per cent), increasing the level of communication between managers and staff (46 per cent), postponing projects (39 per cent) and implementing new work/life balance programmes (27 per cent). In all, just fifteen per cent of the respondents from Singapore reported that no changes have been introduced, compared to the global average of 28 per cent.

Concerted efforts to strengthen corporate governance & uphold listing standards Last Update - 27/04/2009

Singapore Exchange (SGX) has provided updates on its efforts to strengthen vigilance and corporate governance practice among listed companies. Just as attracting foreign companies is a key pillar of SGX's long-term strategy, so is maintaining stringent listings requirements and upholding corporate governance standards of our listed companies. Both elements are equally crucial if Singapore is to prosper as a trusted financial centre for capital raising.

Singapore finance professionals score second lowest in job satisfaction Last Update - 27/04/2009

Only half of finance professionals in Singapore are satisfied with their jobs as concerns over job security and waning career prospects intensify, according to a worldwide survey by global specialist recruitment agency Robert Half (RH). The Global Financial Directions Survey, which polled 3,556 finance professionals across five continents, also found company loyalty to be low with a significant number of finance professionals open to a job change at the right opportunity.

Commented Mr Tim Hird, Managing Director of RH Singapore, �The survey results echo the concerns of all working professionals in Singapore in today�s turbulent economic climate. Job satisfaction and company loyalty will continue to be tested as companies tackle the challenges posed by the economic downturn, including those related to their human capital.�

The survey found that finance professionals in Singapore were among the most pessimistic about their jobs, with overall job satisfaction in Singapore standing at 53 per cent, the second-lowest globally after Japan (47 per cent). When asked to indicate the extent of their satisfaction or dissatisfaction with regard to various aspects of their jobs, including overall job security (54 per cent), ability to maintain a reasonable work-life balance (sixty per cent) and the morale of the people with whom they work (48 per cent), scores from the Singapore respondents were among the lowest globally. Only 45 per cent of Singapore respondents say working for their companies would lead to the kind of future they want and just 52 per cent are optimistic about their future success with their companies.

Mr Hird continued, �As job losses continue to mount, concerns about job security, career prospects, and the ability to maintain a work-family balance as workload increases are heightened. During these tough times, managers must demonstrate strong leadership in managing their staff, to not just allay their concerns but also to motivate and encourage them and keep overall employee morale high.�

As with job satisfaction, company loyalty among Singapore finance professionals was also relatively low, with only 59 per cent respondents claiming to be be loyal to their employers. This compares to a high of 84 per cent for France and Dubai, 82 per cent for Ireland and eighty per cent for Brazil. Overall, loyalty was lowest in Asia, with Japan and Hong Kong tailing Singapore at 21 per cent and 42 per cent respectively.

While the majority of Singapore respondents do not have plans to look for a new job, half said they would be open to the right opportunity. A pay increase was cited as the main motivation for a job change (35 per cent), as did respondents from the other countries. Significantly however, work-life balance was cited as the next most important consideration (21 per cent), followed by a new career path (seventeen per cent) and a new position with greater responsibility (fifteen per cent). When asked what would be the most important factor when choosing between two jobs with the same pay and tangible benefits, Singapore respondents ranked improved work-life balance and a new job with greater responsibility the highest, at 43 per cent and 36 per cent respectively.

Mr Hird pointed out that while monetary reasons remain an important consideration in a job.

IPO activity continues to slow Last Update - 07/04/2009

Global IPO activity continues to stall, according to Ernst & Young�s first quarter Global IPO update. Fifty IPOs worldwide raised just US$1.4 billion in capital between 1 January and 31 March 2009. Only two deals raised over US$100 million. This compares with 78 IPOs worth US$2.6 billion the prior quarter. IPO activity has fallen sharply year-on-year. In Q1 2008, 251 IPOs raised US$41.2 billion in capital (this included the VISA IPO which raised US$19.7 billion, the largest US IPO in history).

By number of deals, the most active countries this quarter were South Korea (8 IPOs); Japan (7) and Poland (6). Emerging markets accounted for 34 of the fifty global IPOs. As a region, the Far East accounted for 31 IPOs.

Data from Dealogic shows that 37 IPOs have been postponed or withdrawn in Q1 2009. The decline may be due to lower levels of filings in recent months. However, the 2009 IPO pipeline remains robust.

The leading sectors by number of deals were Industrials (9 IPOs); High Technology (7) and Materials (7). Due to the low value of funds raised, the top three sectors by capital raised mirror the top three IPOs. Consumer Staples (US$843.1 million), Metals, Mining and Paper (US$162.2 million), and Telecoms (US$144.7 million) accounted for 83 per cent of total capital raised.

FASB relaxes accounting rules for banks on assets Last Update - 03/04/2009

U.S. accounting rulemakers crumpled in the face of ultimatums from lawmakers, liberalising rules that will give banks leeway to report smaller losses and asset writedowns.

The Financial Accounting Standards Board (FASB) that sets U.S. accounting standards gave companies more leeway in valuing assets and reporting losses. The changes should help boost battered banks' balance sheets and financial stocks rallied on Wall Street, but the rules may undercut a new financial rescue programme.

But in a move that would help many U.S. banks report stronger results, the board split 3-2 in approving guidance that would let lenders take smaller losses on impaired assets available for sale.

Supporters of the changes argue that forcing banks to mark assets to firesale prices during a time of inactive markets has exacerbated the financial crisis through the writedowns, big earnings hits, damage to capital ratios, and a reduced ability to lend.

But others said the changes by FASB could undermine a crucial new rescue programme mounted by the Obama administration, in which the government is joining with private investors to buy from banks hundreds of billions of dollars in toxic assets - especially the securities tied to high-risk subprime mortgages at the heart of the financial crisis.

The changes would take effect in the second quarter for most U.S. financial firms, but early adoption could be allowed for first quarter results.

IASB clarifies the accounting treatment for embedded derivatives Last Update - 13/03/2009

International Accounting Standards Board (IASB) clarified the accounting treatment of embedded derivatives for entities that make use of the reclassification amendment issued by IASB in October 2008.

The reclassification amendment allows entities to reclassify particular financial instruments out of the �at fair value through profit or loss� category in specific circumstances. The amendments to IFRIC 9 and IAS 39 issued today clarify that on reclassification of a financial asset out of the �at fair value through profit or loss� category all embedded derivatives have to be assessed and, if necessary, separately accounted for in financial statements.

The amendments form part of the IASB�s response to views received in the round-table discussions organised jointly with the US Financial Accounting Standards Board in November and December 2008. Participants asked the IASB to clarify the accounting treatment of embedded derivatives in the reclassification amendments in order to avoid divergence in practice.

The amendments set out in Embedded Derivatives apply retrospectively and are required to be applied for annual periods ending on or after 30 June 2009.

SGX calls for heightened vigilance in times of financial turbulence Last Update - 27/04/2009

Singapore Exchange Limited (SGX) has stepped up engagement with listed companies and market professionals since September 2008 in response to global financial turbulence and the challenging market environment. They have urged Boards and Audit Committees to heighten their vigilance in identifying, addressing and managing risks that may have a material impact on the financial statements and operations of companies. Closer attention should be paid to liquidity, financing or refinancing, collection of receivables and other risks faced by companies.

Tempers flare as IASB looks to change fair-value rules Last Update - 24/04/2009

The pressure by bankers to suspend fair-value accounting rules is mounting, and now the build-up seems to be spilling over into the standard-setting process. According to a news report by CFO.com, tempers flared at an International Accounting Standards Board meeting during a debate about whether to follow FASB's lead regarding a proposed rule change to fair-value standards.

New and revised SGX listing rules to enhance corporate governance Last Update - 27/04/2009

Singapore Exchange Limited (SGX) announced new listing rules and changes to securities listing rules that will take effect on 24 March 2009. This follows a public consultation in July 2008 on revisions arising from one of the Exchange�s more extensive rule reviews. In finalising the rules, SGX had incorporated feedback and suggestions from market participants to meet the varying market needs.

�By broadening the range of listings, as well as strengthening corporate governance and disclosure requirements, the Exchange aims to enhance market efficiency and keep pace with the developments of the marketplace. We will continue to engage market participants in the review of rules and processes to meet the needs of the industry,� Ms Yeo Lian Sim, Senior Executive Vice President and Head of Risk Management and Regulation, SGX.

IASB enhances financial instruments disclosures Last Update - 10/03/2009

International Accounting Standards Board (IASB) issued amendments that improve the disclosure requirements about fair value measurements and reinforce existing principles for disclosures about the liquidity risk associated with financial instruments.

Forming part of the IASB�s focused response to the financial crisis and addressing the G20 conclusions aimed at improved transparency and enhanced accounting guidance, the improvements also reflect discussions by IASB�s Expert Advisory Panel on measuring and disclosing fair values of financial instruments when markets are no longer active.

The amendments to IFRS 7 Financial Instruments: Disclosures introduce a three-level hierarchy for fair value measurement disclosures and require entities to provide additional disclosures about the relative reliability of fair value measurements, thereby helping to improve comparability between entities about the effects of fair value measurements.

Additionally, the amendments clarify and enhance the existing requirements for the disclosure of liquidity risk. This is aimed at ensuring that the information disclosed enables users of an entity�s financial statements to evaluate the nature and extent of liquidity risk arising from financial instruments and how the entity manages that risk.

The amendments to IFRS 7 apply for annual periods beginning on or after 1 January 2009. However, an entity will not be required to provide comparative disclosures in the first year of application.

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