16 JUNE 2010

ASH CLOUD
CHAOS

ASSESSING
RISK
FINANCIAL
REPORTNG
FINDING YOUR WAY
THROUGH THE MAZE

WORLD CUP
2010 COMPETITION
EMAIL YOUR
PREDICTIONS

AC CHA
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UP A Q GES
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TE LIF O T
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OR AT E
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4 cOntents

dispatch
06 GRAPHIC NEWS Late payments in Europe
08 NEWS ROUNDUP Global accounting and finance news

features
18 ashes to ashes Using the recent volcanic
ash cloud as an example, we investigate what risk
assessment processes airline companies might
have used
22 find your way Navigate your way
through the maze of reports that you
will produce as an accountant

learning centre
10 3 things you should know about Social interviews
10 problem solved Public to private
11 member profile Kamran Malik, UAE 14 my working life Nicky Chandarana, UK
12 PER SUPPORT Online resources 16 competition Predict the winner of the 2010 World Cup

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 Welcome to Issue 12/2010 of student accountant
Brendan Murtagh
Please email studentaccountant@accaglobal.com with your feedback on this issue President 16 JUNE 2010

ASH CLOUD
CHAOS

Mark Gold ASSESSING

RISK
Deputy President FINANCIAL
REPORTNG
FINDING YOUR WAY
THROUGH THE MAZE

Dean Westcott
WORLD CUP
2010 COMPETITION
EMAIL YOUR
PREDICTIONS

Vice President AC CHA

C N
UP A Q GES
DA UA T
TE LIF O T
S F IC H
OR AT E

Helen Brand 20 ION

11

technical Chief Executive

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to the acca
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ACCA students
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Published by the Certified Accountants

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with ACCA.

39 noticeboard The Council of ACCA and the publishers

Essential do not guarantee the accuracy of
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Why did you want to become an accountant, and important information ISSN 1473‑0979
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 6 dispatch
money down the drain
Bills being written off due to late payment is on the
rise in Europe. The average percentage of written‑off
payments has increased, according to the 2010
Intrum Justitia European Payment Index survey.
The main reason for paying late is financial difficulties.
graphic news
Late payment results in a loss of income and
reduced liquidity.

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KEY xx 2010
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turnover
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 8 dispatch
01 Audit rule under fire
A proposal to allow mainland
companies listed in Hong Kong
to be audited by mainland
accountants has come under
news roundup
fire from legislators. Paul Chan,
who represents the accountancy
sector, said the move could
hurt local investors’ interests.
‘This could create a problem,
if non‑Hong Kong auditors
fail in their duty and the local
regulator could not directly
investigate or punish them,’ he
said. The proposal, expected to
be introduced this year, is an
extension of a stock-market rule
that allows some Hong Kong-
listed firms to be audited by
overseas accountants. Secretary
for financial services and the
treasury, Chan Ka-keung, said
that seven of out of 1,332 Hong
Kong-listed companies are
audited by overseas accountants.
The companies are from Britain,
Canada, the Cayman Islands
and Singapore.
02 eu to punish
member states
The EU is to penalise member
states breaching the Stability
and Growth Pact, which is meant
to constrain borrowing. EU
commissioner for economic and
monetary affairs Olli Rehn said
most member states ignore the
rules. In 2007, before the
financial crisis, half of member
states breached the limits on
permitted national debt.
03 asb warning to iasb
International Accounting
Standards Board (IASB)
proposals for changes in
accounting standards relating
to the derecognition of assets
and liabilities could lead to
an increase in off-balance sheet
accounting, the UK Accounting
Standards Board (ASB) has
warned in a letter to the IASB.
The proposed changes focus
on legal form rather than
considering the risks and rewards
involved, and making the system
more robust and less susceptible
to manipulation, says the ASB.
It adds that exceptions proposed
to deal with Repo transactions
are only necessary because the
underlying principles of the
proposed changes are wrong.
04 eu in double
taxation flaw
The European Commission (EC)
has launched a consultation on
problems of double taxation
within the EU. The EC believes
that many individuals and
companies moving between EU
member states may become
liable to tax in more than one
member state, including people
who live in one country but work
in another. It says that while
sustainability
agreement
The International Federation
of Accountants (IFAC) has
signed a memorandum of
understanding on sustainability
with the Prince of Wales’s
Accounting for Sustainability
Project (A4S), supporting
the global accountancy
profession’s role in developing
sustainable organisations.
Measures to be adopted
include the development
of a community
website for professional
accountancy organisations
to collaborate on sustainable
practices, establishing an
international integrated
reporting committee to
develop an improved reporting
model, and incorporating
accounting for sustainability
within professional training
and education.
there are mechanisms in place
to prevent double taxation, it is
inviting suggestions on how to
improve the system.
05 vantis in
legal dispute
Legal action is being taken
against Vantis for alleged
wrongful dismissal and
non‑payment of salaries by two
former tax advisers who were
charged relating to a tax-shelter
scheme for celebrity clients.
Robert Faichney and David
Perrin claim Vantis failed to go
through proper procedures when
dismissing them, and owes them
damages for wrongful dismissal
and more than £1m in unpaid
salary. Peter Coyle, solicitor for
Faichney and Perrin, says legal
advice has been given to Vantis
that his clients did not engage
in illegal practices.
 student accountant issue 12/2010
06 hmrc tax boon
dwarfs city
Her Majesty’s Revenue &
Customs (HMRC) is obtaining
£4bn from taxation on this year’s
City bonuses – more than the
staff themselves. Analysis by
the Centre for Economics and
Business Research concludes
that bonus payouts by the City
for 2010/11 will rise to £6.8bn,
up from £6bn in 2009/10. With
the 50% rate on income over
£150,000 now in place, plus
National Insurance payments,
HMRC will get a larger share of
the bonuses than will the staff.
07 monetary authority
of singapore to
review rules
Singapore will review rules for
its investment management
industry, including hedge-fund
and private-equity managers, for
the first time since it introduced
incentives to lure alternative
asset managers in 2002. The
Monetary Authority of Singapore
will start a public consultation
on proposals to ensure
regulations remain ‘sound and
responsive to the changing needs
of the various stakeholders in
the fund management industry’.
Singapore’s hedge-fund industry
has grown into Asia’s second
biggest behind Hong Kong due
to government tax incentives
and grants.
08 aging nation
status looms
Malaysia is set for aging
nation status by 2035 with
the number of people above
the age of 60 reaching 15%
of the population. Citing UN
figures, Halijah Yahaya, deputy
director general (operation) of
the Welfare Department, said
the main factor contributing to
the country’s aging population
was the decline in fertility and
The latest on the global economy
9
www.accaglobal.com/economy
increase in life expectancy, of WCOA,
which currently stands at which will
71.4 years for men and 76.2 be held in
for women. Kuala Lumpur
The UN categorises any from 8 to 11 November 2010, is
country with 10% of its Accountants: Sustaining Value
population above the age of Creation. ACCA is a Gold sponsor
60 as an aging nation. of the event.
09 leaders briefed 10 china creeps up
on world congress on japan
of accountants China has taken another step
The Malaysian Institute of towards overtaking Japan as the
Accountants (MIA) updated world’s second-largest economy,
global accounting leaders after its gross domestic product
on developments concerning grew by nearly 12%, up to
the technical programme of the eight trillion yuan (US$1.2
World Congress of Accountants trillion) in the first quarter.
(WCOA) at IFAC’s Chief Inflation also appeared to be
Executives’ Strategic Forum held under control, with the statistics
in New York recently. MIA chief bureau reporting that consumer
executive officer Rosli Abdullah prices had increased 2.2% in the
also presented the WCOA 2010 first quarter over the previous
video to CEOs from more than year, well below the government’s
40 accountancy organisations, ceiling of 3%.
which featured a special The strong performance may
message from Malaysian prime prompt Beijing to allow the yuan
minister Najib Razak. The theme to rise, say analysts.
singapore dollar revalued after
growth surge
Singapore revalued its currency to rein in
inflation, after year-on-year economic growth
surged 13.1% in the first quarter. The monetary
policy decision was announced as data showed
that Singapore’s economy had expanded
32.1% on a seasonally adjusted annualised
basis in the first quarter – much more than
expected and the highest rate since records
began in 1975. The government also lifted
its inflation projection for 2010 to 2.5% to
3.5% and its 2010 forecast for gross domestic
product to 7% to 9%. The Monetary Authority
of Singapore (MAS), the central bank, expects
external demand conditions to be supportive
amid the transition towards more sustainable
private sector-driven growth. MAS only sets
policy twice a year, and so would have risked
being behind the curve if it had not acted
now. It manages the Singapore dollar in a
secret trade‑weighted band against a basket of
currencies, instead of setting interest rates.