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November 14, 2007

Region round-up

Region round-up

Asia-Pacific

Asia Pacific• Leonard Gardner and Sheryl Hunter have been named young chartered accountant of the year and accounting technician of the year, respectively. They were presented with their awards at a New Zealand Institute of Chartered Accountants’ dinner in Auckland. Gardner is a director of Foster Construction Group. He won his award after showing exceptional entrepreneurial characteristics in accountancy and business. He also devotes a lot of his spare time to charity work. Hunter won her award after helping research and development company Rentokil Initial become more customer-focused.

• The National Institute of Accountants has released a paper analysing how business accounting principles can be used to account for Australia’s water resources. It was put together with the help of experts from the University of Melbourne. Water resources have become an issue in Australia, as many parts are experiencing drought conditions.

• The Auditing and Assurance Standards Board of Australia has released three guidance statements: GS 003, GS 004 and GS 005. The statements deal with financial services licensees, general insurers and those using the work of actuaries.

• A KPMG Australia study of sustainability reporting practices in Australia has found that major public and private entities increased the incidence and quality of their sustainability reporting during 2006 – a trend that is expected to continue. KPMG said improved reporting is being driven by a range of forces, including the greater focus of analysts and institutional investors on long-term performance, the increasing financial materiality of greenhouse gas emissions and a global movement towards more overt corporate responsibility and associated competitive positioning.

• Thirteen members of the New Zealand Institute of Chartered Accountants were made fellows at the institute’s AGM last month. The new fellows are Frank Claridge, Craig Fisher, David Morrow, Andrew Thompson, Stephen Tubbs, Brian Martin, Joanne Scott, Peter Byers, Bill Thomson, Howard Davey, Paul Hickson, Rex McKinnon and Terry McLaughlin. The fellowships were handed out to people who had made an outstanding contribution to the accountancy profession.

• Deloitte Australia is merging with data analytics firm Analytic Insight. The company’s team of eight senior analytic consultants in Sydney and Melbourne will join Deloitte’s existing national practice of 70. Deloitte’s chief executive, Giam Swiegers, said: “This merger increases Deloitte’s capacities to assist organisations navigate data identification and acquisition, through to implementation of operational and market-facing solutions.”

• KPMG China has opened an office in Shenyang – its 11th office location in China. The Shenyang office will be the firm’s third in northern China as it has existing offices in Beijing and Qingdao. KPMG China and Hong Kong chairman John Harrison said: “We will endeavour to contribute to the growth of Shenyang, which is blessed with natural resources, such as oil, iron, coal and natural gas. It is also a major transportation hub in north-east China, with a well-connected air, rail and road transportation network.” The new office will commence operations with about 50 professionals.

Africa, Middle East, South Africa Africa, Middle East, South East Asia• The International Network of Asian Businesses (INAB) has formed a strategic alliance with the Grant Thornton UK South Asia Group. Rupal Patel, director of INAB, said that one of the reasons for the alliance was that Grant Thornton understood the subtleties of doing business in the South Asia region. The alliance will help Grant Thornton strengthen its ties with Asian businesses working in the UK and vice versa.

• MSI Legal and Accounting Network Worldwide (MSI) has appointed Bangalore-based accounting firm Balakrishna & Co as a member. An MSI spokesman said the network sees this as an important appointment because of Bangalore’s growing importance as an IT hub. The city is also experiencing strong growth in many sectors including aviation and real estate. Balakrishna & Co is MSI’s tenth Indian member. The three partner firm was set up in 1988 and specialises in core audit, tax and accounting services.

• The Institute of Cost and Management Accountants of Bangladesh celebrated its 30th anniversary recently. The celebrations were attended by Feroz Ahmed from the Bangladesh Ministry of Commerce. A historic mural was unveiled, a new class room was opened and the institute launched a new website as part of the event.

• Problems still exist with public expenditure in South Africa despite the introduction of the Municipal Finance Management Act and Public Finance Management Act, according to Ernst & Young South Africa (E&Y). The Big Four firm said the laws were being undermined by corruption and financial mismanagement, and this had serious consequences for service delivery. The problems included unauthorised employee expenditure, unfair tender issues and unauthorised debt. George Higgins, the manager of professional practice group/public sector at E&Y, said the only solution to the problem is transparency.

• The Indian Supreme Court has determined Accounting Standard (AS) 22 Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India (ICAI), is within the power of the provisions of India’s Companies Act of 1956 and valid. When the ICAI issued AS 22 in 2001, it was challenged by a number of companies on the ground that it overrode provisions in the Companies Act. The Calcutta High Court ruled in favour of the standard earlier this year, but the decision was appealed by several companies.

• Paying tax in the Maldives requires the least amount of preparation of any country, according to a report from Pricewaterhouse-Coopers. The remainder of the top ten was made up of Singapore, Hong Kong, United Arab Emirates, Oman, Ireland, Saudi Arabia, Kuwait, New Zealand and Kiribati. The ten economies where it was most time-consuming were Panama, Jamaica, Mauritania, Bolivia, the Gambia, Venezuela, the Central African Republic, the Republic of Congo, Ukraine and Belarus. The report found that globally, on average, a company spends almost two months a year complying with tax regulations – 15 days for corporate income taxes.

Europe Europe• The Institute of Chartered Accountants in England and Wales has launched a new special interest group to support non-executive directors. The group will help non-executive directors develop their financial expertise to constructively challenge management decisions, ensuring they become an effective part of an organisation’s corporate governance.

• Tax reform is moving forward in Russia, according to an Ernst & Young survey of taxation issues. The study interviewed 58 local and international companies operating in Russia. It revealed that there is disappointment with tax administration and many respondents are concerned about the authorities’ interpretation and inconsistent application of tax laws. About 84 percent of respondents said they had tax disputes with the authorities. Eighty-nine percent of companies won dispute cases that were contested in Russian courts.

• The Institute of Chartered Accountants of Scotland has issued updated guidance for audit committees assessing their company’s external auditor. The guidance, entitled ‘Appraising Your Auditors’, is designed to help answer questions about the audit process, including when companies should put their audit out to tender and what the tell-tale signs are of senior management getting too close to the external auditor.

• Two professional services firms have warned that the incidence of personal insolvency is set to escalate in the next 12 months. PKF UK has blamed interest rate rises, growing consumer debt and tightening lending practices as the major reasons for the spike, while KPMG has added rising council tax and other household bills into the mix. Insolvency Service UK shows that 111,359 people either went into bankruptcy or entered into an individual voluntary arrangement in the 12 months ended 30 September 2007, which is an increase of 13 percent over the previous 12 months.

• Syscap has been accredited member product and services partner by the Institute of Chartered Accountants in England and Wales (ICAEW). The IT finance provider will work with ICAEW members to ensure they can take full advantage of its specialist advice and tailored finance solutions for a wide range of business-related finance requirements.

• The UK Accounting Standards Board (ASB) is asking for comments on its response to the International Accounting Standards Board’s (IASB) proposed amendments to IFRS. The IASB plans to amend IFRS as part of its first annual improvements project. The ASB believes the global standard setter should highlight whether amendments will have a material effect and has questioned whether issues that do not achieve unanimous agreement should be part of the improvements. The ASB said the amendment to IAS 39 Definition of a Derivative should be withdrawn.

• The UK Auditing Practices Board has published a consultation draft of a revision of Practice Note 19(I), which deals with the audit of banks in the Republic of Ireland. The revision is planned for a number of reasons: to reflect the replacement of national Statements of Auditing Standards with International Standards on Auditing, and to keep up with more general changes in legislation and regulation.

North America/Latin America Americas• Canada’s Auditing and Assurance Standards Board plans to develop a new Canadian Auditing Standard in line with the revised International Standard on Auditing 620 Work of an Auditor’s Expert. As a result of this project, the requirements and guidance in Section 5049, Use of Specialists in Assurance Engagements, will be replaced.

• Tom Hohman has announced he is to leave his post as chief financial officer of the Public Company Accounting Oversight Board (PCAOB) to become the chief financial officer of a private company. Hohman joined the US watchdog in July 2003 and is the watchdog’s first CFO and a founding officer. PCAOB chairman Mark Olson described Hohman as “integral in developing a PCAOB infrastructure, helping the organisation put in place sound financial systems and internal controls”.

• The Accounting Standards Board of Canada (AcSB) will hold a series of round-table discussions on progress towards the adoption of IFRS by publicly accountable enterprises. AcSB plans to confirm by the end of March the mandatory adoption of IFRS by Canadian publicly accountable enterprises for fiscal years beginning on or after 1 January 2011.

• The Canadian Institute of Chartered Accountants has released a draft version of a simplified accounting framework aimed at owner-managed businesses. It was created due to concerns that the current framework is more suited to public companies and large private businesses. There are 1.7 million owner-managed businesses in Canada that employ 32 percent of the Canadian workforce.

• The Center for Audit Quality (CAQ) said it believes US domestic registrants should be given the option to file financial statements using IFRS as part of an overall plan to transition all US domestic registrants to IFRS. The CAQ said the US Securities and Exchange Commission should develop a comprehensive plan, with appropriate timetables and a specific date for the move.

• The US Public Company Accounting Oversight Board has announced new appointments and reappointments to its Standing Advisory Group for 2008. The board received 90 nominations and renominations for the positions. Eleven new appointees and nine reappointments were made. They include Randy Fletchall, who is the newly elected chairman of the board of directors of the American Institute of Certified Public Accountants.

• Institute of Management Accountants (IMA) president and chief executive Paul Sharman has supported the rationalisation and convergence of IFRS and US GAAP. However, Sharman said the IMA’s support is on the condition that convergence improves the quality of financial disclosures and enables businesses to focus on creating and growing shareholder wealth. He added: “IMA especially applauds any efforts that will result in convergence of standards being more scalable, effective and efficient for small- and medium-sized entities.”

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