ICPAS Financial Highlights for YE 31 Dec 2006

Dear friends,

The info presented here and as always is, is to help to raise awareness of things surrounding you. This is also part of the training to review financial statements.

How much did ICPAS receive from its members?
Answer - It received $2.7mio (a drop of 3.6% against 2005) from its members.

How much surplus did SAA, the training arm of ICPAS, generate in 2006?
Answer - Despite having generated a healthy surplus of $1.9mio, it has declined significantly by 16% compared to 2005.

What is the overall bottomline then?
Answer - On the whole, ICPAS registered $1.5mio surplus (a negative 34% against 2005). The significant drop in surplus could be due to:-

1. higher expenditure in marketing & promotion activities and;
2. more than three-fold increase in deficit in the Practice Monitoring Division

Administrative expenses grew 25% to $4.07mio for 2006.

Cashflow

The most significant activity in 2006 which impacted ICPAS's cashflow was the acquisition of City Campus for $15mio.

1. Cash and cash equivalents declined from $7.8mio to $2.2mio.
2. ICPAS entered into a finance lease position of $8mio.

Should you wish to review the full financial statements, you may approach the institute.

ACCA Qualification - Underlying Intention #2

Dear friends,

In this posting, I attempt to BRIEFLY explain the main intention of all these changes.

In one sentence - ACCA intends to hard implant key values ie. professional values, ethics and governance into all aspiring members-to-be.

These skills are essential as the profession moves towards strengthened codes of conduct, regulation and legislation with an increasing focus on professionalism and ethics in accounting.

They will be examined at every subject (where applicable, with different emphasis) till the highest level in the new ACCA Qualification. They will also be a core element of students’ practical experience requirements. This point was stressed repeatedly in the recent lecturers' briefing.

The intent is demonstrated by the creation of the compulsory online practical Ethics module for all new students.

The focus on ethics is not uncommon. It is a singular subject to be passed in the CFA programme. Given the many accounting blow ups in the recent years, I don't think we are doing enough yet.

ACCA Qualification #1

Dear friends,

There are a few requests for me to give some attention to the new ACCA programme. So this is the first of my series.

What is the name of new programme?
Answer - Boringly and amazingly obviously called - "ACCA Qualification".
The programme was officially unveiled in Jan 2006 for implementation for Dec 2007 exams. That effectively crystallised the effort started back in Nov 2004.

Still the same number of 14 subjects but with significant change in the content of the respective subjects. It will change so much that you will NOT be able to correspond 1 from the old programme with another from the new programme. Example - Paper 2.1.

There is also the online Professional ethics module for new intake students to complete. I was briefed that they will actually track the time you spend on going through the module. Not compulsory for existing students. But you are encourage to do it.

ICPAS membership profile

P/S - A crowded house.

Hi friends,

Last week, I reported on ACCA's membership profile. Tonight I wish to share with you the profile of 18,143 ICPAS members from the latest annual report.

In terms of gender distribution, female members represent about 63% of total membership.

In terms of age distribution, it is as follows:-

• 18.4% are less than 30 years old,
• 43.5% are between 31 and 40 years old and,
• 34.6% are between 41 and above.

Practising members are ONLY 4.5% of total membership while non-practising counterparts represent the significant majority of more than 70%.

In my next article, I intend to give you a glimpse of ICPAS's financial positions.

Accountancy cannot be a mess.

In fact, "Accountancy, at its heart, is all about neatness. It is about of symmetry. It is about double-entry. It is about balancing things out. It breeds a feeling of control. The figures neatly agree. All is well with the world. Job done."

This is the first paragraph from the article entitled "stay focused" by Mr Robert Bruce. It really wowed me with its simplicity and yet so encapsulating.

As accountants, are we always looking to put various transactions in different "boxes" quickly and efficiently, so that we can pass entries, balance our books and go home?

Mr Bruce also took a swipe at the auditors when he said, "Diligent auditors follow screen-by-screen, ticking all boxes, and then fold up the laptops and go home."

He said the neatness give all of us a feeling that the job is done. But in fact it may not be and we could end up being at home for months after being fired for not doing our job. So Mr Bruce advised that we should tossed everything up in the air and watched how they come down to earth ie. undo the neatness!

Cheers to you, Mr Bruce. Interesting stuff.

CFOs, this is your job description.

P/S - a painting

Keith Stephenson, the advisory partner of PricewaterhouseCoopers and Asia Pacific leader of performance improvement came up with the list in an article written by Sonia Kolesnikov-Jessop of A&B.

1. Complying with reporting requirements.
2. Ensure no surprises.
3. Getting the audit committee to give you a thumb up on your general standard of corporate governance.
4. Get yourself to move from being a guardian of numbers to the frontline of generating shareholder value.
5. Managing movement offshore.

There is a need for a CFO to move up the value chain, staying relevant and keeping pace with business development as rallied by Lim Yen Suan, executive director of KPMG's Risk Advisory Service.

Is the general lack of such movement giving rise t0 a trend of non-accountants taking on the role of CFOs?

Mr Kaka Singh - ACCA Members Forum

Hi friends,

Wish to share the highlights of today's forum at M Hotel with Mr Kaka Singh, the immediate past President of ACCA Local council in Singapore.

He said once there were too many doctors and lawyers, now we are short of them. Then there were many people producing only on 2 children, now we are short of people in Singapore. He was responding to a question from a member who expressed his concern that ACCA as a desired qualification may be eroded given the high membership level of about 5,000 ACCA members and 3,000 affiliates.

Mr Singh noted a uniqueness of ACCA programme when he related this story. He attended the graduation for ACCA students and met a doctor who went through and graduated. Mr Singh asked why he needed to go through the programme. The doctor said the ACCA programme allowed him to gain competence in dealing with numbers in his job as an administrator of a hospital.

• The ACCA programme is the only avenue in Singapore that provides working adults and mid career individuals the opportunity to secure an a recognised financial training qualification part time.

CPD programmes under ACCA Singapore are priced on a cost recovery basis.

Mr Kaka's final words today - "How good you are will depend on how prepare you are."

P/S - Mr Kaka Singh is standing as a candidate for election to ACCA council in UK. Please give our support to him to ensure Singapore's voice in international forum.

Return on Equity & Creditors' Turnover in days

P/S - This is my feel.

Hi,

Just completed my lecture on financial ratios & interpretations recently. Two stories related to the topic were sent to me. I wish to share them with you.

The first story from Paul. He said,
"Hi Edgar, I thought this was particularly relevant to what you have mentioned in your last class with regards to inventory ratios. Interesting to relate this to everyday news, especially in Singapore context. Paul"

Paul cited Daniel Buenas's report that most S'pore companies are tardy paymasters and are worse paymasters than companies in China, Australia, Hong Kong and Taiwan. 52 per cent consistently late with their payments from a study done on 1,000 firms from 6 countries by Dun and Bradstreet (D&B).

Only 33 per cent of companies here were 'prompt' in their payments, which is defined as 'consistently paying within the credit terms given to a business'.

The second story in today's Busines Times said Singapore firms are among the Asia-Pacific region's top companies by return on equity (ROE). This is according to a Dun & Bradstreet's (D&B) study released yesterday.

Of the 1,000 companies ranked in the study, Singapore firms ie. Starhub Mobile and APL, Neptune Orient Lines's subsidiary, took second and fourth places respectively.

StarHub Mobile recorded an ROE of 1,019.3 per cent. The fourth placed Neptune Orient Lines subsidiary APL achieved a 935.2 per cent ROE.

Wow! Amazing....

SME Accounting Standards

Hi,

I am looking to form a small team of people to review and comment where applicable on the proposed standards.

CCDG is inviting for comment from public. Due date - Sep 1, 2007.

If you are interested in participating in the democratic process of accounting standard formulation and at the same time, learning something together, please drop me a note to indicate your interest.

Good day...

Hurray!!! Simpler SME accounting standard coming

The CCDG announced the new standard for small and medium enterprises (SMEs) last month and is seeking comments from the public.

The proposed rules closely relate to the new SME financial reporting standards put forward by the UK-based International Accounting Standards Board (IASB) in February.

What are some of the proposed changes highlighted?

• Choices for accounting treatment have been removed and topics that are not generally relevant to SMEs, such as share-based payments and segment reporting, have been cut.
• Methods for recognition and measurement have also been simplified. For example, for goodwill impairment, SMEs can use an indicator approach rather than an annual impairment test.

What are the potential impacts?

• CCDG expects the current volume of accounting standards for SMEs to be cut by more than 85 per cent.
• The auditors are looking at 10-15% reduction in audit fees. But is it fair? We will wait and see till at least after the first done under the new rules possibly end of next year.

The proposed rules are now opened for your comment till Sep 1, 2007.

I am delighted by the news as this would help to ease the frustration I experienced recently in dealing with some fellow professionals. Story about this in my next article.

Oxford Brookes Degree

P/S - A sad memory.

Hi,

Oxford Brookes has revised its degree programme to incorporate ACCA syllabus changes. Here are the snippets that I wish to share with you.

The revised scheme will apply from Aug 2008.

While you still have to complete F1 to F9, but only marks for F4 to F9 will count towards which qualification you will get ie. first class honours, second upper etc. Why? F1, F2 and F3 have been light-weighted to 2 hours of MCQs.

The quality of Research and Analysis Project (RAP) will also go towards qualification. It can ONLY upgrade you from one class to another. To illustrate, if your average mark for F4 to F9 qualifies you for second upper and you did such a wonderful RAP, Oxford Brookes may "bump" you up to first class honours.

By the way, I was told that you would have to submit a RAP of 6,500 words from Aug 2008 (currently 5,000 words). This is to partially compensate for the lower loads of F1 - F3.

For more detailed info, you know where to go right?

Stock valuation - Weighted Average Pricing

P/S - My Sunday walk along Boat Quay today...

Hi class,

There are 2 general types of weighted average pricing ie.

a) Cumulative weighted average pricing
b) Periodic weighted average pricing

a) Cumulative weighted average pricing
- The average price is determined by dividing total cost by the total number of units.
- A new weighted average price is calculated everytime upon arrival of a new batch of materials into store - key feature

b) Periodic weighted average pricing
- For a certain period, a RETROSPECTIVE average price is calculated for all materials issued during the period.
- The issue price can only be determined upon closure of a certain period.
- How to calculate?

Opening stock value + Cost of all receipts within period
-----------------------------------------------------------------------
Opening stock in units + All receipts in units

ACCA2007 Exemption policy announced

There is now a standard and transparent set of policy guidelines for those seeking exemption as they initiate their pursuance of ACCA qualification

Here they are:-

Type of degree (ACCA exemption)
- Accounting degree - major (F1 - F4 )
- Accounting degree - joint/minor (F1 - F3)
- Finance degree (F1 - F3)
- General business / management degree (F1)
- Law degree (F4)
- MBA (F1 - F3)
- Non-relevant degree (no exemption)

LLP for small businesses

Friends,

Saw this signboard at a hawker stall.

It reflects the increasing sophistication of people operating even small businesses.

Are you familiar with this form business registration to take advantage of it? For those uninitiated, LLP is limited liability partnership.

Send me a pic of anything interesting relating to the topic of accounting.

Cheers...

P/S - Will try the food this weekend.

Companies in China have 2 sets of accounts?

P/S - Jalan Besar Stadium

Yes, it is official now.

What happened?
Mainland-listed companies will have to prepare two sets of annual reports for this year after new accounting standards come into effect on Jan 1.

Shanghai and Shenzhen-listed companies will have to publish their 2006 annual reports as before, using the current accounting standards, but will also have to publish an additional report where their results are calculated according to the new international standards.

What are the implications?
According to Haitong Securities analyst Zhang Qi - 'Many companies used the old accounting system as a form of window dressing to make themselves look profitable when in fact they were not.'

Will this lead to a severe correction of Chinese stock markets if this has still not been factored into the pricing by now?

Initial public offerings (IPOs) or secondary offerings must also use the new accounting standards starting Jan 1, according to new regulations issued last week by the China Securities Regulatory Commission. Last three years' profit is a prerequisite for listing in China.

Will this therefore reduce the queue for IPOs in China and thus reduce demand for listing in foreign bourses eg. Singapore?

For those who will not make the cut, will they go back door listing?

Local companies are exempted from the rule for now.

If the government want to see a change in this area, it should take the lead by asking all its state-owned enterprises to make that change asap.

Reference - Dec 5, 2006, "New accounting rules affect China firms' profits", BT/SCMP.

CCDG out. ASB in.

Minister of State for Finance, Mdm Lim Hwee Hua said that Accounting Standards Board (ASB) will replace the Council on Corporate Disclosure and Governance (CCDG).

Effective Sept 1, 2007.

It will comprise key regulators, senior accounting professionals, and leading users of financial information.

Why the change?
Except for expanded responsibilities of issuing standards to cover entities such as charities, societies and co-operatives, I wonder why the need to change the name when essentially almost everything else remains unchanged.

Probably the name change is just that ie. to signify the addition of responsibilities.

Good night...

Yen Hoon says ...

Hi,

I thought that I didn't do well for paper 1.1 as I did last minute revision. I was expecting to retake the paper or at most get only 60 marks.

Instead, I got 87. Really happy about the result.

I'm now doing regular studies for my papers 1.3 and 2.1.

Thank you, Edgar, for being a wonderful and dedicated teacher.

Yen Hoon

P/S - Congrats to Yen Hoon. Edgar

Annie says ...

Dear Edgar,

The December 2006 Exams results are out today and I want to thank you for your patience and self-less devotion in lecturing us.

You are an outstanding lecturer who delivers lessons in a unique way. Thank you for your many times of 'nagging' (repeated) so that the concepts are driven to my head without much effort.

You are already a successful lecturer and I know you will enjoy more successes in future.

P/S Annie secured 85 marks for P1.1.

Tan K.T says ...

Hi Edgar and Mr Goh,

Thanks for all your guidance in my paper 1.1.

I am quite delighted with the result i have achieved for your paper 1.1
I have obtain a score of 78 marks for this paper 1.1. Although it is still a bit below my target score (80 marks), at least i pass the paper.

Finally can relax now and can enjoy my Chinese New Year before going all out for the other papers (especially Paper 2.3 under Mr Goh) Hahaha. =)

And by the way, Mr Goh, please forgive me of all those broken english (or maybe not even english language) i have use in this email. Just treat like what you always mention in the sunday class, listening to the uncle's conversation at the coffeeshop.

By the way, i like to wish you a happy Chinese New Year and have a prosperous new year ahead.

Gong Xi Fa Cai.

Once again thanks for all the effort you have made in order for me to pass this paper.

Regards,

Tan K. T.

Making Accounting Cool

Need to up the profile of accountants.

Why? General increase in demand for accountancy services due to:-

• increasing regulation
• hot economy
• record levels of M&A
• adoption of international accounting standards

In Australia, there is only one accountant for every 4 job openings.

How to raise the x-factor in accountancy for the supply?
Besides the standards thrills and frills of bigger pay packages, signing on bonuses, etc etc etc,

• Hong Kong Institute of Certified Public Accountants (HKICPA), through its office in Beijing, will help to train 1,500 mainland accountants over 10 years.
• The most interesting idea of all - Institute of Chartered Accountancy of India (ICAI) want to add the prefix "CA" (ie. Chartered Accountant) to the names of all licensed CPAs ie. as per "Dr" for doctors.

So signing off now at 1.45am, CA Edgar Wong :)

Reference - Feb 2007, "Making Accounting Cool", CFO Asia.