IASB and FASB are doing something together.

Marina Viaduct's skyline now

Who are they?
IASB - International Accounting Standards Board
FASB - US's Financial Accounting Standards Board

What have been doing together?
Essentially trying to move the two standards together.
They are planning to do it over 3 phases ie. A, B and C.

What are the 3 phases?
Phase A - completed in Sep 2007 with the issuance of FRS 1R. The FRS introduces the use of some American terminologies. The use of these terms for Singapore is not compulsory. Thus expect confusion in Singapore. Examples,
- Balance Sheet is "Statement of Financial Position"
- Cash Flow Statement is "Statement of Cash Flows"

Phase B
Mr Yeoh Oon Jin, Assurance Leader, PwC Singapore, said the Phase will take a few years to complete and would cover areas on how to prepare the respective statements. Examples,
- what income and expenses items to be classified under which totals and sub-totals in which statements etc etc etc
- whether direct or indirect cashflow presentation should be adopted

Phase C
While they have an idea of what they want to do, no point remembering them as it would too long down the yellow brick road for any certainty of being effected.

Reference - ACCA Focus Q2 2008 pp13-15

Why do you rob banks?

a party in KL worth the memory

A reporter once asked famous bank robber, Willie Sutton: "Why do you rob banks?"
Willie simply replied: "Because that's where the money is!"

I am sure you will get the same answer if you manage to ask those robbers of banks and ATMs in Malaysia.

In the current new term of my classes, I asked the students the reason as to why did they decide to take up ACCA course.

A student duly responded that it is because ACCA is a qualification regularly asked for in the job advertisements she has reviewed.

So for those who have decided to start and complete your ACCA course, it is a good decision ... Good day.

HK outranked Singapore

my ketchup-filled fish ball noodle

ACCA released a report in BT today after conducting a survey among ACCA members in Singapore, HK, UK, US, Canada and Australia to rank their respective tax system in terms of fairness, simplicity and transparent.

The good news is that Singapore and Hong Kong have the fairest, simplest and most transparent tax systems, out of six major developed countries.

The bad news is that Hong Kong ranked better than Singapore in all 3 areas.

The question that matters is whether having a tax system that is fair, simple and transparent translates to real comparative advantage against these big economies.

Or is it a hollow victory for Singapore and HK as it basically reflects the smallness of its geographic size and economic complexities?

SME Rebate Scheme

I quote...

"The SME Rebate Scheme is a 2-year assistance scheme to help locally registered SMEs* adjust to rising business costs.

You are invited to apply for the SME rebate at our website http://www.smerebate.gov.sg/ if your firm meets the following criteria:-

i. For a non-manufacturing firm:

- Business must be registered in Singapore

- Fixed Asset Investment (FAI) of less than S$15 million

- Not more than 200 employees

ii. For a manufacturing firm:

- Business must be registered in Singapore

- Fixed Asset Investment (FAI) of less than S$15 million

Please be reminded to submit your application by 31 July 2008 to receive cash rebates pegged to the total employer and employee CPF contributions made by your firm over two years for the period July 2007 to June 2009.

Firms that apply after 31 July 2008 will only qualify for the rebate for the period July 2008 to June 2009.

Eligible firms will receive notification letters from CPF Board indicating the date and amount of payment.

Please visit the SME Rebate Scheme website (http://www.smerebate.gov.sg/) for more information." Unquote...

FRS 7 Cash Flow Statements - Summary

FRS 7 prescribes the principles in preparing cash flow statements.


The standard requires the provision of information about historical changes in cash and cash equivalents of a company by means of a cash flow statement that classifies cash flows during the period by operating, investing and financing activities.


Operating activities are the principal revenue-producing activities of the enterprise. Cash flows from operating activities are disclosed either using the:-

a) direct method (disclosure of major categories of gross cash receipts and payments); or

b) indirect method (profit or loss for the period is adjusted for non cash items (such as depreciation, foreign exchange losses etc.) and income or expense related items related to investing and financing activities to determine the operating cash flows.


Investing activities are those expenditures incurred with an intention to generate future income and cash flows.

Financing activities are those expenditures incurred that result in changes in the size and composition of the contributed equity and borrowings of the entity.


"Do you know the definition of "cash and cash equivalents"? Can you name some examples of cash equivalents?", ask Edgar.


Source - ICPAS ePublication 22 November 2005 Issue 11/2005

FRS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Summary

The objective of FRS 8 is to prescribe the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and correction of prior period errors.

Changes in accounting policies
An entity should change its accounting policies only if the change is required by the Standards or the change results in a more relevant and reliable information about the entities financial position. Any changes in accounting policies shall be accounted for in accordance with the specific transitional provisions of the Standards. If there are no specific transitional provisions, the change in accounting policies shall be done retrospectively as though the new accounting policy had always been applied.

Changes in accounting estimates
Changes in accounting estimates should be recognised prospectively in the profit and loss account either in the period of the change only or the period of change and future periods, if the changes affect both. Any corresponding changes in assets, liabilities or equity are recognised by making adjustments to the carrying amount of the assets, liabilities or equity in the period of change.

Errors
Material errors in financial statements that are discovered in subsequent periods must be adjusted retrospectively in the first set of financial statements authorized for issue after their discovery. The comparative amounts for prior period are either restated or if the error occurred before the earliest prior period presented, the opening balances of the assets, liabilities and equity for the earliest prior period are restated.

FRS 8 specifies that in instances where it is impracticable to do a retrospective adjustment for change in accounting policy, the entity should restate the comparative information prospectively from the earliest date practicable.

FRS 8 also specifies the disclosures required of changes in accounting policies, accounting estimates and errors.

What is prior period errors? When did an error occur?

Prior period errors are omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:-

• was available when financial statements for those periods were authorised for issue; and


• could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.

Source - ICPAS ePublication 29 Nov 2005 Issue 12/2005

FRS 2 Inventories - Summary

Objective
FRS 2 provides guidance on the determination of cost of inventories and its subsequent recognition as an expense, any write down to net realizable value.

FRS 2 applies to all inventories except for:

a) WIP under construction contracts;
b) Financial instruments; and
c) Biological assets related to agricultural activity produce at the point of harvest.

Inventories are measured at the lower of cost and net realisable value (NRV).

• NRV is the estimated selling price in the ordinary course of business less estimated costs of completion and costs necessary to make the sale.
• Cost of inventories comprise of cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Three methods of costing inventories are specified under paragraph 23-27 of FRS 2.

i) Specific identification of costs method

ii) First-In, First-Out (FIFO) costs method

iii) Weighted average costs method

FRS 2 requires that the amount of write down of inventories to NRV is recognised as an expense in the period the write down or loss occurs. Any reversals of the write down, as a result of increase in NRV, is recognised as a reduction in amount of inventories recognized as an expense in the period the reversal occurs.

FRS 2 also specifies the disclosures required of inventories.

Source - ICPAS ePublication

FRS 1 - Presentation of Financial Statements Nov 2005

Objectives

1. To prescribe the basis of presentation of general purpose financial statements and;
2. To ensure comparability of entity’s financial statements with previous periods and with other entities’ financial statements.

Below is a summary of the overall considerations for the presentation of financial statements.

• Fair presentation and compliance with FRS

A faithful representation of the effects of transactions, events and conditions in accordance with the FRS.

• Going concern

Preparation of financial statements with the assumption that the business will continue indefinitely.

• Accrual basis of accounting

A method where income and expense items are recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually received or paid.

• Consistency of presentation

Presentation and classification of items in financial statements are retained from one period to the next unless the standard requires a change in presentation or there is a significant change in the nature of the entity's operations, such that another presentation would be more appropriate.

• Materiality and aggregation

Similar items of each material class are to be presented separately.

• Offsetting

No offsetting of asset and liabilities, and income and expenses unless permitted by a Standard.

• Comparative information

To disclose comparative information of previous period for comparative purposes.

FRS 1 also specifies the minimum line item disclosure required on the face of the balance sheet, income statement, statement of changes in equity and notes to the financial statements except for presentation of cash flow statements which is covered under FRS 7.

FRS 1 also specifies that entities disclose information that is presented in the financial statements such as the accounting policies, judgments and key sources of estimation uncertainty at the balance sheet date.

Source - ICPAS ePublication 8 November 2005 Issue 9/2005

ATTS Graduation Ceremony 2008

Congrats to all graduands.

D&B - The 4th SME Credit Bureau Conference

Dear friends,

My last posting to Accounting With Edgar was towards the end of last month. Edgar had since been engulfed in taking on new endeavours such as new classes and most importantly, preparing for this speech (among many other things) for the following event.

"Surfing the Wave of Increasing Competition"
Suntec City Convention Centre, Ballroom 3
Friday, 28 March 2008
http://www.dnb.com.sg/agenda.html

Well I managed to pull it off. Addressing more than 250 people in a conference hall at Suntec City is a first for me.

How do I rate myself? A can do only. I will definitely strive to do better.

Read further if you wish to have a peek at my presentation. Essentially my simple objective was to arouse excitement among business owners currently being encircled in the rapid rate of price increases.

===== Start of Speech =====

The current business environment is one of:-

• $107 per barrel of oil,


• strengthening SGD,


• tightening labour market, (In Mar 2008’s edition of CFO Asia, cost and availability of labour are top 2 concerns of CFOs in Asia.)


• escalating rental rate,


• increasing prices of raw materials …

Against this background, the focus of my presentation today is to ask ourselves as to how we can use these cost pressures to positively “excite” the way a business operates and ultimately its bottomline.

Some businesses do have the uncanny ability to transfer the increase in costs to their customers. These are companies who can price their product at a base selling price plus a fuel surcharge while demand for their products remains unchanged.

Utilities companies too are able to review their selling prices on a quarterly basis to its customers in the form of thousands of households.

At the other end of the spectrum, there are businesses who are holding on their prices for their dear life while absorbing the blows of increasing costs.
By some good fortune, there maybe some businesses out there who may say they currently not experiencing any such cost pressures. While life is good and dandy for these businesses, they should not rest on their laurels.

Can we “excite” the business from its comfort zone by injecting some sort of cost pressures into the system without costing it an arm and a leg?

Well the answer may lie in reviewing your business’s depreciation policies.

Here we look at how to achieve this awareness when analyzing depreciation, which can represent a big portion of the expenses found on a company's income statement.

While there are rules governing how depreciation is expensed, there is still plenty of room for management to make creative accounting decisions that can create the necessary pressures to stimulate the business. It pays to examine depreciation closely.

What Is Depreciation?
Depreciation is the process by which a company allocates an asset's cost over the duration of its useful life.

Each time a company prepares its financial statements, it records a depreciation expense to allocate a portion of the cost of the buildings, machines or equipment it has purchased to the current fiscal year.

For intangible assets - such as brands and intellectual property - this process of allocating costs over time is called amortization.
Assumptions Critical assumptions about expensing depreciation are left to the company's management.

Management makes the call on the following things:-

• Method and rate of depreciation


• Useful life of the asset


• Scrap value of the asset

Traditional Application of Depreciation

In the traditional mode of thinking, we take the sales turnover figure as given.

By adjusting the various components of the depreciation methods, our bottomline would be affected immediately ie. depreciation, being an expense would reduce our profit.

So to show higher profit, we can apply a longer useful life or switch from reducing balance method to straight line method of depreciation.

Now consider this…

What if we tighten the depreciation policy instead ie…

By reducing the useful life of certain key non-current assets or by changing the depreciation method from a straight line to reducing balance method, we immediately put pressure on the bottomline by increasing the depreciation expense in the early years.

The higher non-cash expense and consequently total costs would translate to a higher breakeven level.

The higher breakeven level is not meant to be kept top secret. We should instead translate these cost information into headline KPIs for all to see. Staff from all levels of a business must be aware of the KPIs.

Harness that awareness!!

Create a suitable environment to harness that awareness heightened by the injection of the additional cost pressures. Can the heightened awareness encourage ideas to freeflow?

Management must rally its troops to use the cost pressures positively to think of ways of improving the topline. Topline is a function of price and quantity sold.

Think of how we can sharpen our business model to sell more units? Or how to get our customers to pay more for our products?

If a business had priced its exports in SGD while the SGD continues to strengthen, it has to give its customers continuous good reasons to do business with us.

The process of creating these “continuous good reasons” for customers to keep coming back and buy from us is to innovate to differentiate.

The “good reasons” must be dug up from:-

• production processes,
• product design,
• customer service,
• staff training and retention,
• management of call centres,
• accounts dept,
• support services, etc etc etc.
• No stone should be left unturned.

Some examples of innovation that I observed recently.

Eg. 1 – moving to higher yield products by removing economy class seats and replacing them with business class seats. Revenue per flight would consequently increase. Brilliant!

Eg. 2 – In a product I drink quite often, the manufacturer raise the price after adding some vitamins. The “non-vitamised” product was removed from retail. Customers are again left with no choice but to buy the higher price product.

Eg. 3 – In the banking business, a simple switch from a 365-day year to a 360-day year in interest computation would translate to millions more to the bottomline.

Were these ideas the fruits of the cost pressures?

For it to be sustainable for a long time, the cost pressures must induce a PARADIGM shift all together to adapt to the extreme environment.

Summary
If the business is currently experiencing cost pressures, use it to create, to innovate.

If the business is currently immune from current cost upheavals, perhaps you may “adopt” some cost increase by reviewing your depreciation policy.

Translate the higher breakeven into KPIs for all to see.

KPIs heightened awareness.

Harness the awareness.

We then await the fruits of our effort.

I shall conclude my paper today by quoting Mr John Kao, the Chinese-American innovation evangelist, who was in Singapore recently.

He said, “innovation enables people to adapt to the waves of disruptive change”.

Whether the business is facing the disruptive waves now or otherwise, innovation to differentiate can and must be institutionalised within an organisation, compelled or otherwise.

On that note, I wish you all a good day. I thank you.

ACCA's Certificate of Achievement for F1, F2 and F3

Under the new scheme,

There will be no more paper winners for F1 to F3. Instead a Certificate of Achievement will be awarded to students who have scored 85% and above in these papers. This is regardless of whether they took the paper-based or CBE exams.

MSER students will only be eligible for prizes from F4 to F9 and P1 to P7 when they transfer to the Professional Scheme.

P/S - So for those who have scored higher than 85%, please look out for your "Certificate of Achievement". Cheers.

We got to learn new names.

The terms "Balance Sheet" and "Cash Flow Statement" will be passe very soon.

In Sept 2007, IASB issued the revised IAS 1 (similar to our sFRS 1) with the main changes in the presentation of financial statements and terminology.

For international versions of CAT6, CAT8, F3, F7, F8, P2 and P7:-

• "Balance sheet" will be "statement of financial position".
• "Income statement" - no change.
• "Cash flow statement" will be " statement of cash flows".

It is effective from June 2008 sitting.

For other papers NOT mentioned above :-

• "Balance sheet" = "statement of financial position (balance sheet)" (for Jun / Dec 2008 exams).
• "Balance sheet" = "statement of financial position" (from Jun 2009 exam onwards)
• "Cash flow statement" = "statement of cash flows" (from Jun 2008 exam onwards)
• "Income statement" = "statement of comprehensive income" (from Jun 2009 exam onwards)

Michelle says...

Hi Edgar,

Checked my results on Monday. Passed all the 1st 3 papers =) n I got 91 for F3 (reflected in myACCA).

Many thanks for your guidance all this while. Really appreciate all the effort u've given!

Thanks again.

Regards,
Michelle

Sok Ching says...

"... I really really a big thank you to u. i got 94 for F3. =D

Many thanks"

Mei Hua says...

Hi Edgar,

Just logged in to the ACCA website to check my F3 exam result....I got 86. Just want to say thank you for your repeat reminders on the important points and for the extra (free) revision class given going through all MCQ. I struggled for about 15-20 minutes on the first question and was all nervous throughout the whole examination.....

Cheers,
Mei Hua (Jun 2007)

Pui Shan says...

Thanks Edgar! I got 72 for F3 (June 07 intake)!

Thanks so much for ur effort! Without your constant revision and reminders i wont have passed as i really had no time to study!

You are the best!

What is "verifiable CPD"?

What is the Rule?
A member has to fulfill 40 relevant units of CPD each year, where one unit is equal to one hour of development. 21 units must be verifiable. The other 19 can be non-verifiable.

Verifiable CPD, to many, is the act of getting a certificate ie. a black and white to confirm that you have attended a learning event.

But is it all that is? The simple answer is no.

There are 3 other critical criteria to be fulfilled before a verified event can be counted towards the Rule. What are they?

• The relevant activity must be relevant to your role/s.
• You need to tell ACCA how you can apply the learning.
• You need to show some things that learning has taken place. (This last is tough ya?)

Is there any other ways, beside collecting the certificates, of evidencing that you have attended a learning event/activity?

• Can you show the report/review/proposals arising from that event?
• Did you get a copy of the handouts/powerpoint slides?
• A copy of the invoice or evidence of payment made to attend the event?
• Did you keep the email confirmation of your attendance?
• Or like Edgar, writing about these events on the blog after attending them?

P/S - This is note to remind Edgar and for those who have completed your studies and qualified for the ACCA qualification.

Depreciation policy and your bottomline

branding?

I have just completed my session on FRS16 on property, plant and equipment with F3 Financial Accounting class.

I have stressed that depreciation policy is within management's right to decide. The management may adopt a relevant method or formula to account for depreciation for the "right impact" on its bottomline.

Allow me to cite the example of this airline company managing its fleet of planes and the choice of depreciation policy.

The company chose to expense high depreciation for its young fleet. This will consequently push up the breakeven passenger load factor and cargo capacity utilisation levels. The management are thus "motivated" to think at operating its business at different levels (ie. in terms of efficiency, effectiveness, customer service etc) compared to its competitors.

After using the planes for a few years and given its expressed desire to maintain the youngest fleet for its passengers, these planes with relatively low net book values were then disposed at market prices at very handsome accounting profits.

If these gains from disposals were to be judged as non-operating profits and thus not subjected to the usual corporate tax, this would be certainly provide the icing on the cake for the overall bottomline.

Conclusion
Attentive review and consequent adoption of any accounting policies are critical first steps of a company. While the depreciation policy alone is not the magic wand in making a company successful, it will help in certain circumstances.

Financial leverage?

It relates to how your business is funded ie. how much of it is funded by your own money and how much of it is funded by other people's money.

There is always a price for money. Money is a precious resource. Price of money comes in different terms ie. interest, dividend etc.

While you may be willing to forgo your dividends for the monies that you have invested in the business, other investors and lenders of monies to the business would want their "pound of flesh". These groups of people would want to be paid.

Thus the risk.

In any economic downturn and consequent negative impact on your topline ie. sales revenue, it would severely reduce your ability to pay these investors.

As accountants to be and in practice, we have to ensure a capital structure that is vigorous enough to protect the company's existence and also to meet the investors' aspirations.

Refer - http://investingwithedgar.blogspot.com/2008/01/big-picture-impacts-on-singapore.html

I will continue to review the specifics of the article here in AWE.

Was Mr Wee Sing Guan the only one who knew? Part 2

BNPP relied on Singapore Financial Reporting Standard 39 as the basis of its rebuttal to Mr Riehl's expert opinion.

BNPP said concealment or deferment would be impossible "with fair valuation of ALL derivative financial instruments through the profit-and-loss account as required by by FRS39".


BNPP said this is further evidenced by assurances made by Board of Directors in 2006's audited financial statements on Mr Wee's forex transactions.


BNPP said it was not able to fully appraise its client's forex positions as it was dealing with 11 other banks.


On a hindsight, similar to APB's case, a bank with significant dealings with a company, should seek periodic face-to-face report and review with a panel of at least 2 or more its senior management staff.

Was Mr Wee Sing Guan the only person who knew in SembMarine? Part 1

Referring to the court proceeding between BNP Paribas (BNPP) and SembMarine as reported by Conrad Raj in BT, January 3, 2008.

Heinz Riehl, SembMarine's "expert" witness, is trying to offer a defence for SembMarine, with the following:-

• non-financial institutions do not mark to market the value of the forward positions and;
• only recognise cash (ie. realised) profits and losses.

My opinion

This is a very poor excuse offered on behalf of a corporate of the size of SembMarine. He is saying that SembMarine do not have anyone to monitor whether the respective forex positions were making money or otherwise. They would just receive any profit and pay out any losses upon closure of any position.

As I have said before in my last posting on this topic, SembMarine could always ask the bank for a daily mark-to-market report assuming if SembMarine may not have the expertise in house.

Mr Riehl, are you saying that once a pregnancy is conceived, there is no need for any medical review at various stages of pregnancy but are only concerned with the outcome at the day of birth?

Changes to ACCA OBU Degree

The following changes will be effective immediately for ACCA students who registered after 1 January 2007 and who will sit the new ACCA Fundamentals level papers in December 2007.

* RAP - research and analysis project

1. Project mentor is still required.
2. RAP will be graded A, B or C.
3. RAP word limit is increased to 6,500 words.
4. Overall class of degree will be determined by the average marks of F4 - F9 module papers and the RAP grading.
5. You have to submit the RAP and a Skills and Learning Statement. And you must pass both papers.
6. If you failed the first submission of RAP, you can only get "C" at best, for getting a pass on resubmission.
7. You are given 3 chances to secure a pass for RAP. After 3 "strikes", you are out!

Bottomline
The process to be a "graduate" has become more vigorous. You need to plan your time and effort as part of your ACCA education strategy. For more information, you may click www.accaglobal.com/students/study_exams/qualifications/degree/.

Positive impact of fair value gain for Ipco

On Dec 15, 2007, BT reported that fair-value gain boosted Ipco International's 6-month profit by more than 100% (ie. from $2.1mio ti $5,4mio on a revenue of $24.4mio) despite a 31.5% fall in first 6-month sales.

What is Ipco's business?
Ipco is essentially a developer and investor in oil and gas, water and environment infrastructure projects.

ESA Electronic, its subsidiary in the semiconductor equipment distribution business, responsible for 31.5 per cent fall in group's sales of goods to $11.9 million from $17.4 million.

This was offset by a rise in other revenue from $2.4 million to $8.2 million, which included $7.5 million in 'fair-value gain' on financial assets.

So without the fair-value gain, the Group's total revenue would be $16.9mio instead of the currently reported $24.4mio (a 16% drop instead).

So while Labroy and SembMarine have been negatively affected by financial assets valuation, we have a company here that has been glossed with positivities instead.

P/S - Fair-value gain of $7.5mio is accounted as "Other revenue". Hmmm...

Audit exemption criteria for Groups?

a Japanese chef who has left this

The current law on audit exemption applies to individual company but not to a group of companies. So say Mr Joseph Alfred, Technical Advisor for ACCA Singapore.



Which law?

• Companies Act's Section 205(2) says companies are required to appoint auditors.
  
• Companies Act's Section 205A says private exempt companies with less than $5mio turnover and dormant companies are exempted from audit.

Where is the problem?

Let me illustrate with a simple example. Holding company has a turnover of less than $5mio and may be exempted from audit.

Subsidiary company has a turnover of more than $5mio and thus its financial statements would be audited. So far so good.

But when it comes to Group's consolidated financial statements, the regulator has confirmed that there is no legal compulsion for them to be audited.

Joseph opined that a Group with a turnover of of more than $5mio should NOT be exempted.

As for me, I am still not convinced with the need to audit the consolidated statements. As some practitioners have said, the need to audit should rest primarily on who are the ultimate key users of the statements. We should not just rely on mere criteria.

Four banks vs Asia Pacific Breweries for $109mio

"The best defence is offence."

Well that is the basic position of the four banks against APB in trying to claim back $109mio of their lost funds. Disregarding the bank's internal control failure to detect the fraud, the banks have chosen to place the faults on APB.

• One of the banks argued that Chia Teck Leng's acts were carried out in his capacity as APB's finance manager - and the company must shoulder the blame.


• Senior counsel Steven Chong, who represents two of the foreign banks, told the court that the fundamental issue was how Chia was able to perpetrate the fraud for almost five years and remain undetected. The obvious answer, he said, is that APB has vested wide powers and authority on Chia without any proper checks and balances in place.


• Chia was also able to ensure that correspondence from the banks was never opened by anyone other than him. His secretary was specifically never to open letters from banks addressed to him.

Background

From 1999 to 2003, Chia, now 47, had submitted to the banks fictitious documents with forged signatures of top APB executives, which convinced the banks to give him credit facilities in APB's name.

What did Chia do with the monies? He blew $62 million in casinos around the world, before being convicted and sentenced to 42 years' jail in 2004. Some millions still cannot find.

While Mr Chia sits in prison for the remaining 39 years, many bank officers' career have been scarred.

Accounting for Charities and Coops

The new Accounting Standards Council (ASC) will issue a separate set of accounting rules for Charities and Coops.

Donors to charities are more concerned with how the donated funds were used rather than financial performance information generally required by shareholders of companies.

The new accounting rules are still pending ie. waiting the new Council to get around to this issue.

Appeals Court raps Accounting profession

The Courts of Appeal ruled recently on 2 fraud cases where the auditors took some blame for losses experienced by their respective clients.

What are the 2 cases?

• Case 1 - Gaelic Inns vs PlanAssure Public Accounting - I discussed it back in Feb 2007. Take a look. http://accountingwithedgar.blogspot.com/2007/02/denise-ang-and-her-gaelic-victim.html


• Case 2 - JSI Shipping vs TeoFoongWongLCLoong (Tfwl) - Mr John Riggs, the MD of JSI Shipping, made $1.8 million disappeared via its monthly salary! FYI - his salary represented 25% of total staff costs. The Court said "Tfwl should have shown more professional scepticism." (In another word, the errors are so BIGG that normal human eyes should be able to see and check on them.)

So what is the penalty for not doing your job?

In Case 1, PlanAssure is to pay Gaelic Inn $317,108 (half of earlier ruling of $775,266) for contributing to the negligence.

In Case 2, Tfwl is to pay JSI $273,386 for being bo-chap to Mr Riggs' activities.

As in any profession, auditors too have their fair share of problems and risks.

Origin of "Debit" & "Credit"

I was curious about where and how the terms debit and credit come about.

I finally come across a brief explanation of the terms.

The words have Latin origins ie. "debitum" and "creditum". Pacioli is the name of the Italian monk who wrote about accounting in the 15th century and used these terms.

So they were NOT "debere" or "credere" as I thought they were initially. And the mystery continues ie. who was the inventor of these terms.

Well I learned something new today.

Are SFRSs very different from IFRS?

How does Singapore Financial Reporting Standards (SFRS) fare in terms of our assessment as being IFRS-equivalent?

One opinion said that SFRS are almost in complete sync with IFRS and are applicable to all entities. How come? Singapore generally adopts new or amended IFRS within a three-month period but there are some exceptions.

• FRS 40 Investment Property

IAS 40 was issued in year 2000 and effective for financial periods commencing Jan 1, 2001 while FRS 40 was issued in 2005 and effective for financial periods commencing Jan 1, 2007. By now, there are no timing differences between IFRS and SFRS.

Any difference between FRSs? Yes, the difference is in these areas:-

• Differing finance lease requirements
• One-off revaluation exemption from periodic revaluation for property, plant and equipment.

Anyway Accounting Standards Board (who will replace the Council on Corporate Disclosure and Governance with effect from Sept 1, 2007) is to present to Committee of European Securities Regulators (CESR) that the SFRS is equivalent to IFRS. Probably to get some sort of compliant certification from the Euro body.

Source - "Bridging the gap between accounting standards", Aug 23, 2007, BT, Choo Eng Beng and Chew Tong Gunn

Mid-career folks as Public Accountant?

my coffee at 11.37pm

In Joe's humble opinion - it is difficult for a middle-aged person (at least under current framework to qualify) to switch career and work his way to be registered as a Public Accountant.

Why is Joe so pessimistic?

Joe said the biggest stumbling bloke is the Practical Experience requirement.

Joe is a living example of someone who has acquired 4 of the 5 requirements but could not take the final step to be a public accountant.

How to get the Practical Experience?

For him to fulfill this requirement, he got to work in an audit firm as an audit professional for 3 years.

While the opportunities to seek such positions may be plenty at this point in time, the economics of transition has to be considered. Can Joe maintain his current income level to sustain the current costs of living with family bla bla bla while pursuing the trophy of public accountancy?

Define mid-career folks?

ACRA has defined “mid-career entrants” to include:

(a) people who have worked in other professional settings (such as bankers and financial analysts), but decided to make a career switch to the audit industry; and

(b) people equipped with the basic accountancy qualifications, but had chosen not to engage in any accountancy work in the early stages of their career.

Why is ACRA eager to look for ways to bring the mid-career folks into the audit profession?

One view is that professionals from alternative specialised industries often are experts in their own fields. These “experts” could make significant contributions to the audit profession by bringing in valuable knowledge and strengthen the audit team by adding to the team’s range of expertise.

Where the mid-career entrant aspires to become a public accountant, he could acquire the necessary audit experience under a public accountant before seeking to be registered. BUT HOW given Joe's position?

Any idea?

What are the qualifications needed to be a good Public Accountant?

flowers for me. thanks irene.

Can help me to answer the above question by classifying the existing 5 requirements (described below) either as

• "Essential",


• "Good to have" or


• "Thoroughly irrelevant".

The current 5 requirements for registration as a Public Accountant:-

1. Academic qualifications;


2. Practical experience;


3. Continuing professional education;


4. Completing the course on ethics and professional practice subjects as determined by the Public Accountants Oversight Committee; and


5. Membership with the Institute of Certified Public Accountants of Singapore.

Your view, please?

Public Accountant - How to be one?

Currently, the registration framework for public accountants comprises five elements:-

1. Academic qualifications;


2. Practical experience;


3. Completing the course on ethics and professional practice subjects as determined by the Public Accountants Oversight Committee; and


4. membership with the Institute of Certified Public Accountants of Singapore.


5. Continuing professional education.

The above first 4 are the various doors that a person aspiring to be a public accountant would have to go through before you gain your official registration and recognition as a Public Accountant. The 5th door is a maintenance factor.

What is a Public Accountant?

Public accountants are persons who are registered with ACRA in accordance with the Accountants Act (the “Act”) to provide public accountancy services of audit and reporting on financial statements or any other professional services that are required by any written law to be done by a public accountant.

What is the problem?

We have a shortage of them now and in future to promote high quality audit and corporate financial reporting to build confidence in Singapore’s corporate financial reports.

Any idea?

ACRA has proposed the following alternative pathways:-

• entry of international auditors (with specialist expertise);


• entry of mid-career professionals with specialist expertise which are relevant to audit; and


• re-entry of former public accountants who had left the profession.
  

Any other way?

Bong says...

Hi Edgar,

Just want to drop a mail to thank you for helping me to pass my 1.1 paper.

I got 90%.

I know you have been putting in a lot of effort on student. So far you are the one that spend most of the time with student. Giving enough time for student to think and try in the class.

That really help in building up confident of student rather than just quickly come out with the answer. especially for account dummy like me (have my study in mechanical engineering before).

Once again, THANK YOU and keep it up with your hardwork!

Your student,
Bong (Class of Jan 2007)

P/S - Bong, you have put in a lot of effort too. Well done.

Majority in CPA survey favour simplified treatment of SME accounting

A difficult bak kut teh lunch

The following are the results of a survey done by CPA Australia and the Corporate Governance & Financial Reporting Centre (CGFRC) at the National University of Singapore (NUS). It is reported in BT today.

1. 42% agreed with the definition of an SME in the proposed IFRS as 'entities that do not have public accountability and publish general purpose financial statements for external users'.


2. More than 60% felt that we should also include large unlisted companies which do not have public accountability into the new standard.


3. 72% said the new standard would better meet the needs of users of SMEs' financial statements.


4. 69% said they feel it would reduce the financial reporting burden for SMEs that want to use global reporting standards.


5. 59% said they believe it would reduce the audit burden of SMEs in general.


6. Banks who lend monies to SMEs are expected to be the main users of the financial statements.

What are some of the suggestions to simplify certain accounting treatments for SMEs?

SMEs are generally not in favour of complex accounting standards - for example:-

• share-based payments,


• accounting for impairment,


• fair value accounting.
  

What are the respondents' concerns?

1. Adopting SME-specific accounting standards today would lead to difficulties in aligning financial statements to full IFRS in future, when needed.


2. SMEs today may dread the work of converting from current full FRS to the new SME standards.


3. Many believe the guidance to implement the proposed IFRS for SMEs is inadequate.

P/S - On Wed, I will attend the Mr Kon's presentation at ASME.

Responses to ACRA Review

Mr Simon Ng Yap Peng and Mr Mickey Chiang, both representing their self and Ms Janet Tan, the executive director of ICPAS sent in their respective suggestions to BT / ST on Aug 2, 2007.

Firstly, Mr Simon Ng suggested:-

1. Let minority shareholders elect their independent representatives to sit in the audit committee of listed companies.


2. External auditors should set up a feedback box in their client's premises for their employees to "whistle blow" any irregularities.


3. External auditors should do surprise check on their clients.


4. Our accounting students should do case studies on recent scandals such as NKF, China Aviation Oil, Citiraya etc etc. [Edgar is doing it now thru' his blogs as he tries to inject realism into classroom learning.]


5. Encourage availability of post graduate courses for grads of other disciplines to learn about accounting matters.

Mickey Chiang questioned the following:-

• He understands that the ACRA review programmes were devised accountants from the Big 4. So are these programmes relevant to smaller/small audit firms?
• How many of those auditors who "failed" the review were from the Big 4?
  

Ms Janet Tan of ICPAS suggested the following:-

• To make available more training opportunities to upgrade knowledge and skills. [Yes, if the ACRA Review has highlighted that its members are caught in a time warp and self-contentment that they are good enough to keep making the monies without the need to keep up with time. But I don't think this is the main issue. Our members are failing at basic stuff ie. things like not doing stock checks and insufficient/no documentation.]


• Provision of a panel of "hot reviewers" for members whose work are now required to be reviewed by another suitably qualified person ie. "hot reviewer". [Yes, this will help an important concern raised by ACRA in the interim.]

Edgar says,

• I agree with Ms Tan that the review should be taken as a wake-up call to practitioners who think they can get away with shoddy work.


• But I am sure ICPAS will look for root causes that have contributed to the poor state. With the information procured during ICPAS's own check on its members over the years plus ACRA report, it should be able to present a more comprehensive remedial measures.

FRS40 and FRS12 equals more problem for companies

FRS40 on Investment Property

From 2007, annual changes in the fair value of investment properties are carried to P&L account.

So increased valuation of such properties would increase profit and consequent tax burden, vice versa. Recently, Overseas Union Enterprises (OUE) recorded fair value gains of $105.9 million in Q207 (nil in Q206) on its investment properties, due to the escalation in property values in line with the present exciting real estate market.

Such property firms would have already a cashflow issue in complying with FRS40 ie. cash to pay income tax on unrealised revaluation gains.

In addition to the above, property firms has another angle to consider ie. the impact of FRS12 on Income Tax on FRS40.

Companies have to account for the FUTURE tax consequence of a CURRENT event. This element of deferred income tax for any upward revaluation would have to be accounted for as an expense in the P&L.

What is "future tax consequence of a current event"?

An upward revaluation of an investment property

==> an increase in future stream of rental income OR increase in proceeds from disposal

==> make provision for the future tax liability today ie. deferred tax

While there is no actual cashflow for the provision, it is accounted for as an expense to create that provision.

Consequently, higher tax expense and higher effective tax rate.

Reference - "Property companies could be hit by deferred tax provision issues", Aug 2, 2007 Busines Times, Michelle Quah

A student of mine has joined AGO

Recently I received an email from a student with this type of address ie. @ago.gov.sg.


Curious, I ask him as to which branch of government is she working for now.


"Auditor-General Office," she said. [I thought it was the Attorney General Office. :)]


She is helping AGO to fufill its role to audit all ministries, statutory boards, embassies, and Temasek owned complanies for President. [Wow!]


That conversation brought my attention to the recent article in BT dated Jul 20, 2007 entitled, "Govt audit reveals financial lapses".


Examples of financial lapses revealed by Auditor-General are:-

• The Infocomm Development Authority of Singapore (IDA) could have better managed over $200 million in cash reserves for higher returns. [..from zero return?]


• National Volunteer & Philanthropy Centre (NVPC) had accumulated unused grants of $4.9 million in March 2006. [So again money is sitting idly around.]


• Ministry of Health (MOH) was found to have continued its payments for some 106 deceased persons through a scheme was administered by an agent. It has recovered some $55,850 of the $178,150 that was paid. [Phew! Amount not big.]

My Words

• Thank goodness we have a Government who is willing to be transparent about their own boo-boos.


• Thank goodness we have a good problem of dealing with money sitting around to the tune of millions of dollars. It shows that we have some hidden reserves ie. like housewives putting away money.


• Thank goodness we did NOT find massive frauds.


• It is good that we have taken stock of the problems. We will remedy them and move on.

5 Public Accountants' licence were suspended or cancelled

What happened?
ACRA, the independent regulator of auditors in Singapore, conducted a "test" on 110 of the total 780 public accountants from April 2005 to March 2007.

On Jul 25, 2007, ACRA has for the first time released the "report card" on the state of auditing profession in Singapore. The results are as follow:-

• One third of the 110 received a 'good' rating.
• Another third were rated 'satisfactory'
• The remaining third, or 36 accountants, were asked to undergo remedial action.
• The special 5 got their licence suspended or cancelled.
  

What are the areas of weakness?

ACRA deputy chief Mr Ow Fook Chuen listed the common boo-boos as follow:-

• Inadequate documentation of audit opinions.
• Lack of follow-up on subsequent events up to the date of the audit report. [Why the need to follow up? These events may materially affect the financial statements and the validity of the audit opinion.]
• Audit procedures were conveniently updated as 'noted' or 'done' without actual audit work or assessments being carried out. [While corners were being cut, clients still got charged. Or the other way round where clients want to lower audit fees and thus the corners cut.]
• Insufficient inventory count procedures eg. no physical count procedures.
• Some also blindly and recklessly relied on the audited financial statements by the auditors of overseas subsidiaries without considering their competence.

Edgar's words of wisdom (ha!)

A second round with wider coverage is expected to be completed in 2011. Hmm... isn't it a wee bit too long for the next report card in the current dynamic world?

To hasten the process of quality renaissance, should we do with public accountants what we did to hawkers in Singapore ie. force them to display their "A" or "B" or "C" licence? As hawkers' hygiene in food preparation has public implication, likewise the quality of work of auditors too has significant public implications.

So ACRA what say you?

ACRA's proposal to draw talents into audit

On July 25, 2007, ACRA has proposed some bold moves to ease the talent strain in the audit profession as follows:-

• It is seeking feedback on how to make it easier for mid-career professionals such as bankers and financial analysts to switch to accounting.
• To consider the possibility of letting international auditors with specialised expertise to practise here.

teaching you about "ethics"

One of the biggest problems facing the accountancy profession across the globe is dealing with issues that bordered on ethical grounds.

A student asked me recently on what should he do when the auditor has asked him to disregard some audit errors done.

Taking a step back from such incidents, the biggests issues seem to be:-

• how do we teach our students and
• what to teach our students about "ethics"?

How do our students learn about managing ethical issues?

In July 2007's Accounting & Business (A&B), "ethics should be taught (and learnt) as a part of lifelong professional learning".

What to teach then?

Peter Williams in A&B presented 5 fundamental principles in:-

• integrity ---- ["yuen cherk"]
• objectivity --- ["unbiased and focused"]
• professional competence and due care --- ["got leow" and not "boh chap"]
• confidentiality --- ["your mouth must learn to talk less or stop talking"]
• professional behaviour --- ["dun anyhow"]

Friends - It is not easy to be a professional and an accountant at the same time.

HKEx has pushed its limit again

With effect from 25 Jun 2007, Electronic Disclosure Project (EDP), the new regime for electronic dissemination of regulatory information will be launched.

EDP would consist of the following items:-

• mandatory paid announcements will no longer be required [notification in the newspapers will be eventually phased out - less advertising revenue for newspaper companies but lower cost of compliance for listed companies / good for the environment]


• companies must eventually maintained their own website

My concerns
I don't think HKEx and the respective listed companies are expecting the respective shareholders to prowl through a dozen of websites for any announcement that might impact them every day.

Eventually I would forsee the delivery of announcements and financial results by email to shareholders.

Then how about uncles and aunties who don't email addresses? They will learn when making money is involved.

Environmentally, this is definitely a good move.

Practical Experience Requirement (PER) Part 5

This posting focuses on the person called MENTOR.

• Who can be your mentor?
• What is the purpose of mentor to PER?
• Can I have more than one mentor?
• Any advantage or disadvantage of having an ACCA member as a mentor?
• What if my mentor is not an ACCA member? Will I be penalised?

For answers to the above, please read:-
http://www.accaglobal.com/students/publications/student_accountant/archive/2007/77/2957617

Practical Experience Requirement (PER) Part 4

Hi to existing student or affiliate,

If you belong to the above, you will be required to transfer to the new PER by 31 December 2007.

You will need to transfer any STR competences you have recorded under the current or pre-2001 scheme to the new PER.

I have just read this article that described the various actions needed for the following groups of student/affiliate:-

• those who have completed the requirement under the old STR
• those who have started but have not completed the STR
• those who have not started at all

Read this article for a complete help - http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/pract0307.pdf

Pay rise for new recruits to Big Four

The tight labour market has forced the Big Four accounting firms to increase the starting salary twice in 6 months.

So what is the starting salary? Your neck must be straining to know?

As per today's ST, you should get about $2,400 with about 1,000 vacancies.

So what are waiting for?

Faster finish your ACCA papers and get your job applications in.

P/S - Govt is paying as much as $2,900 for accounting graduates.

IFRS 3 - Business Combinations

Crux of the issue
When company Alpha buys company Beta, there are leeways and incentives for Alpha to plan its allocation between goodwill and intangible assets arising.

If Alpha's objective were to maximise reporting of profit, it would be under-reporting the value of intangible assets and over-reporting the value of goodwill.

How come?
Goodwill is not amortised nowaday but subject to impairment test. The clever CFOs have discovered that it would easier to avoid an impairment charge.

Auditors, without a significant authoritative alternative source of info to verify the value of goodwill, would generally concur with the recommendation of the management.

Whereas for acquired intangible assets, they are separately valued on the balance sheet and subject to impairment test too. But as they are separately valued, each asset is individually tested for impairment. Thus it presents a higher risk of being devalued.

Practical Experience Requirement (PER) Part 3

for u...

Question from a Student

"I applied as SAA student before Jan 2007. BUT i'm not working in an accounting field as i'm not studying business related course during poly days. Hence does this apply to me? Do i need to change to a accounting related job before Dec 2007?"

First and foremost, all students and affiliates of ACCA will be affected by PER.

To get the four letters "ACCA" at the end of your name, GENERALLY you have to take 3 steps.

- Exams

- Ethics

- Experience ie. PER

So whether you are working directly or indirectly in an accounting-related job, you must be able to fulfill the lucky 13 performance objectives.

The first 9 Essentials are from 3 main areas ie.

• professionalism / ethics / governance


• personal effectiveness


• business management

As you can see, these are generally non-accounting/financial related and should be achievable by all.


The next 4 are to be chosen from 11 from 5 areas. They are definitely accounting/finance related but they are strictly not accounting/finance jobs. The details are as follows:-

Financial accounting and reporting
- prepare financial statements for external purposes
- interprete financial transactions and financial statements


Performance measurement and management accounting
- prepare financial information for management
- contribute to budget planning and production
- monitor and control budgets


Finance and financial management
- evaluate potential business / investment opportunities and the required finance options
- manage cash using active cash management and treasury systems


Audit and assurance
- prepare for and collect evidence for audit
- evaluate and report on audit


Taxation
- evaluate and compute taxes payable
- assist with tax planning


So realistically, what should you do?
Answer - Get yourself involved actively in at least 4 of the above activities. Diarise the whole process for each activity so as to evident your involvement. Your supervisor must be satisfied with your participation to finally sign off.


You have time to achieve all 13 ie. from the day you start work till whenever you are ready over different supervisors / departments / employers / companies etc.


So it is good to keep PER info in your office all the time!

Welcome more questions. Till then, cheers.

Practical Experience Requirement (PER) Part 2

Only existing students / affiliates who had registered for ACCA Qualification before Jan 2007 need to read this posting.

For existing students, you are required to convert to the NEW Practical Experience Requirements (PER) by 31 Dec 2007.

To assist you, an online conversion tool is available.

You can use this tool to convert and record existing experience to the new PER.

You can then use the TDM to log the performance objectives TO BE achieved as part of the new PER.

For affiliates applying for membership, ACCA will continue to accept applications based on current STRs until 30 Jun 2008.

Always remember
Get your Student Training Record (STR under old scheme) or PER sign off by your supervisor every year and/or BEFORE you resign!

NKF - When auditors are not up to mark

Hi,

Read this article by Ms Lee Su Shyan "When auditors fail to measure up to mark" from some time back.

PricewatehouseCoopers (PwC), who had been the auditor for last few years before the debacle, was blamed for NOT raising the alarm on the various excesses and deficiencies within NKF.

KPMG, who was appointed to do a special audit, found costs and subsidies were inflated and manipulated.

What did Ms Lee say to mitigate PwC's sad position?

There were supposed to be other people or entities within NKF who also have responsibilties to protect the stakeholders' interests. These people or entities were:-

• independent directors,
• audit committee and;
• internal auditors.

All these people or entities did not challenge "the quiet acceptance that ran through the organisation". So does it imply that PwC's responsibility as an auditor, would be any lesser?

FYI - KPMG found errors totalling $2mio against an adjusted surplus of $29.2mio. Deemed not all that "material". So in numerical terms, PwC's performance is not that bad.

Ms Lee highlighted the blessings that we should count.

• NKF's assets and reserves are largely intact.
• There were some but not crippling excesses by its ex-chief executive.
• NKF is still functioning and serving its patients today.
• PwC had been charging NKF a nominal annual audit fee of $35,000 as compared to hundreds of thousands dollars chargeable for similar audits.
• KPMG too charged NKF a nominal fee of only $100,000 for the special audit.

Since Humpty Dumpty (NKF) has had a great fall, all the King's men and all the King's horses are putting Humpty Dumpty back together again (for the sake of all the kidney patients).

ACCA CBEs for P1.1 and P1.2 in transition

Dear friends,

The following information is courtesy of SAA on the terms of offer of CBEs during the transition from OLD to NEW syllabus.

The last date that P1.1 and P1.2 will be offered by ACCA UK for CBE is Friday 12 October 2007.

But the last date that SAA will offer ACCA CBE under the old syllabus (Papers 1.1 and 1.2) is Friday, 14 September 2007.

New Syllabus
The date from which the new ACCA qualification F1, F2 and F3 examinations will be available as CBE is Wednesday 17 October 2007.

The first month that SAA will offer ACCA CBE under the new syllabus (Papers F1 – F3) is November 2007.

Passes in P1.1 and P1.2 will be automatically converted to the equivalent passes of F3 and F2 respectively.

Paper-based exam and/or CBE?

Hi - This is the revised version as of 13 Jun 2007.

Scenario
Just finished my P1.1 exam in Jun 2007. Being not confident, I signed up for CBE in Aug 2007. Which results will ACCA take?

Ed asked : What if i failed my paper-based exam after the release of the exam results but passed my Aug CBE?
SAA said : Aug's CBE result. Accounted as a pass for Dec 07 exam and student can only take 3 more Papers, including CBE, for Dec 07 Exam.

Ed asked : What if I passed both paper-based exam and CBE?
SAA : Paper-based exam's result.

HK to push for Qtrly Reporting AGAIN

Well, they have been trying to do it a couple of times since 1998.

Singapore attempted it once and concluded successfully in 2003 for companies with market capitalisation of more $75mio.

This quarterly reporting requirement was recently reaffirmed.

ACCA Paper 1.1 Exam ended a few hours ago.

Is that you? Hope not.

Hi friends,

How was the paper? The following are comments I got from some of you.

Section B consists of questions on the following topics:-

• incomplete records with sole proprietorship
• control account and reconciliation with listing total
• consolidation
• ratio theory on liquidity ratios
• FRS 38 on research and development and amortisation

"I finished my MCQs in half an hour."

"I didn't hear anybody complaining about the paper on the way out (of exam hall)."

"I did not have time to do 2 questions. Total 19 marks."

".. is this paper a bit difficult from the rest? As some never learn before..."

"ok lor"

"... inventory overstated. I minus off from the retained earnings n asset. Is it correct?"

So for the rest of you, what do you think of the paper?

Simpler but fuzzy SME accounts?

A quiet moment.

Background
Currently CCDG is seeking comment on the proposed SME FRS.

Discussion
Referring to a news article in BT Weekend dated May 19-20, 2007, here are the views of Mr Kon Yin Tong, an ICPAS council member, on the proposed SME FRS.

The proposed change is expected to reduce the existing volume of accounting requirements for SMEs by more than 85%.

This is no good as it would cause problems for USERS of financial information such as tax authorities and lenders. [Why? I wonder.]

He opined that given the different standards and thus different profit definition would result in creating more work for the tax authorities to determine taxable income. [So?] For the lenders, the bankers would be in a mess assessing creditworthiness. [Huh?]

Is he implying that the tax authorities and lenders, given their massive resources, will not be able to sort out their resources to meet the challenge? Instead the burden of reporting under the full FRSs be continued to dwell on the shoulders of plumbers, electricians, small retailers, traders.. who are toiling in increasingly demanding business landscape.

Mr Kon also highlighted the difficulty of SMEs presenting their financials should they decide to go public. [Huh?] If my humble company were to aspire to go public, I would have planned for it. And overcoming the reporting shortfall, if any, would be a lovely problem to solve. But the reality is that those SMEs without such aspiration would far outnumber those with aspiration to go public.

In my humble opinion, I believe the economic benefits derived from the proposed move would outweigh the costs.

2007 May ACCA Graduation

P/S - ACCA President Yam making her speech.

While the graduands, parents, relatives, friends listen.

World no. 1 for Paper 1.1

The top students for various subjects.

Paper 1.1 World No. 1 winner receiving her certificate from Mr Kon.

A representative of all graduands making her speech.

Practical Experience Requirement (PER)

What is the current process called Student Training Record (STR)?
Answer - It is where you are required to match your practical experience AGAINST a set of competencies and record them accordingly.

What is the new PER?
Answer - You have to demonstrate that you have met a range of workplace performance objectives ie. benchmarks of effective performance.

What are these performance objectives?
Answer - 9 key and 4 optional performance objectives.

How to complete a performance objective?
Answer - You are to respond to a set of "challenge questions" for each objective online or paper-based.

When to complete the return?
Answer - Annually ie. last quarter of each year.

Who can be my workplace mentor?
Answer - It could be your line manager, mentor or another individual. If possible, select a qualified accountant, so as to avoid being priority flagged for monitoring purposes.

What is the purpose of having a workplace mentor?
Answer -
- select performance objective to work on
- setting targets
- provide access for you to tap on mentor's experience for your overall development
- evaluate and review your progress

I disagree - Dec 2006 Section B Q2

Hi friends,

Can help me to understand the following? I disagree with official ACCA's answer to ACCA Paper 1.1 Dec 2006 exam Section B Q2. Can review my approach?

"During the year, $8,000 interest received on a holding of loan notes had been correctly entered in the cash book but debited to interest payable account."

Required
a) Prepare journal entries to correct error.
b) What is the impact on profit given the correction?

Edgar's answer
- DR Suspense a/c $8,000
- CR Interest payable a/c $8,000
[To cancel out the wrong entry into Interest Payable a/c.]

- DR Suspense a/c $8,000
- CR Interest Income $8,000
[To correctly place the entry into Interest Income a/c.]

This would increase profit by $8,000.

--------------------------------------------------------------
ACCA's official answer
-DR Suspense a/c $16,000
- CR Interest payable $8,000
- CR Interest receivable $8,000

Profit to increase by $16,000.

* Why credit "Interest Receivable"?