December 2013

THE CHARTERED ACCOUNTANTS JOURNAL DECEMBER 2013 VOLUME 92 NO.11
DECEMBER
2013
Official magazine of the New Zealand Institute of Chartered Accountants www.nzica.com
Crombie Lockwood 2013
Chartered Accountant
of the Year
American Express 2013
Outstanding Service to the
Profession
EY 2013 Public Sector
CFO of the Year
Westpac 2013 Outstanding
New Member of the Year
MYOB 2013 Innovation Award
D
E
D
R
A
W
E
R
IP
H
S
R
E
D
LEA
PROCESS IMPROVEMENTS
FAREWELL TOM
NAMING RIGHT
IR’s view of alternative dispute
resolution
Uncle Tom recalls threats of
shooting, veterinary impropriety
and Porirua heavies is his final
column
Does your name indicate which
profession you will join?
When you’re on the list,
you’re in good company.
ACC, Holmes Consulting Group, Staples Rodway, Statistics New Zealand, Wall Fabrics, Coffee Supreme, Chen Palmer,
Honda New Zealand, College of Business & Economics, University of Canterbury, Z Energy, Kiwi Bank, Parry Field Lawyers,
Anderson Lloyd, New Zealand Institute of Chartered Accountants, Eugene St John Solicitor, Scottish Pacific Business
Finance, Ministry of Business, Innovation & Employment, American Embassy, Michael Thornton Barrister & Solicitor,
Cavell Leitch Law, Vista Entertainment Solutions, PlaceMakers New Zealand, Unitec Institute of Technology, Barfoot &
Thompson, Digital Island Communications, AUT University, Gen-i, Mighty River Power, ASCO Lawyers , Two Degrees
Mobile, RaboDirect, Synlait Milk, NZX, Industrial Research, Capon Madden, DAC Beachcroft New Zealand, Wynn Williams,
CCH New Zealand, Manukau Institute of Technology, Fisher & Paykel Healthcare, Meridian Energy, New Zealand Post,
Southern Cross Health Society, The Business Advisory Group, Mazda Motors of New Zealand, MSN New Zealand, Marsh,
Heritage Hotel, McDonald Vague, University of Otago, Probity Consulting, Gallaway Cooke Allan, Insight Creative, Brittain
Wynyard, Intergen, Markhams, Rain Forrest Retreat, BDO, KCL Property, Environment Canterbury, Air New Zealand, Reserve
Bank, Ministry for Primary Industries, Te Tumu Paeroa, Ministry of Foreign Affairs and Trade, Commerce Commission,
Russell McVeagh, KPMG, Ministry of Justice – Judicial Libraries, Financial Markets Authority, Building the Future 1, APN New
Zealand Media, Madison Recruitment, AWS Legal, McCulloch and Partners, Hewlett Packard New Zealand, Kordia, Rakon,
Guardian Trust, HSBC, Bell Gully, AIM Valuation, DraftFCB, CBRE, National Library of New Zealand, the Department of
Internal Affairs, AJ Park, Hayes Knight Services, The Todd Corporation, Jardine Lloyd Thompson, Skope Industries, Yellow
Pages Group, Hudson Gavin Martin, Tompkins Wake, Canon New Zealand, Simpson Grierson, Turners & Growers, First NZ
Capital Group, QBE Insurance, Colliers International, Jackson Russell, Crombie Lockwood, Retail Holdings, PKF Group,
NZI, The Hodge Group, Auckland Council, Hamilton City Council, The University of Waikato, AMP Capital, National Mini
Storage, Ohope Beach Realty, Exhibit Group, Spencers Chartered Accountants & Advisers, Todd Property Group, ASB Bank,
Horizon Energy Distribution, Wigley & Company, NDA Engineering, University of Auckland, Forsyth Barr, Harmos Horton
Lusk Corporate Lawyers, General Cable New Zealand, OfficeMax New Zealand, Institute of Directors in New Zealand Inc,
CASS | Treasury, Microsoft NZ, Short & Partners, Energy Efficiency and Conservation Authority, Running with Scissors, UBS
NZ, AECOM, Vodafone NZ, Office of the Controller & Auditor-General, Crowe Horwath, Kensington Swan, SYL Research,
PricewaterhouseCoopers, Anthony Harper Lawyers, Ministry for the Environment, COSCO (NZ), Brookfields Lawyers, NZ
Superannuation Fund, Lowndes Associates, Willis Bond & Co, Harcourts, Heartland Building Society, MediaWorks, Property
Institute of New Zealand, Beca, Trust Investments Management, Cameron Partners, Bayleys Real Estate, Chapman Tripp,
BeyondD, Hesketh Henry, Parliamentary Library, Parliamentary Service, Malloch McClean, Massey University, Serious
Fraud Office, SKYCITY Auckland, Winton Partners, Metservice, Grimshaw & Co, Outsource Communications, Wellington
City Council, Corporate Library, Buddle Findlay, New Zealand On Air, Red Seal, Fletcher Building, The Warehouse Group,
Yahoo! New Zealand, New Zealand Trade & Enterprise, Pharmacy Retailing, Avis Budget Group, David Bigio Barrister, Seek
NZ, Fonterra, Solarix Networks, Sinclair Knight Merz, Datacom, Duncan Cotterill Lawyers, Ernst & Young Group, Spit Roast
Catering Company, Southland Building Society, New Zealand Racing Board, LINK Ellerslie, Tonkin & Taylor, Telecom New
Zealand, FMG, Creative Spaces, Verve – The Event Agency, Edge Capital Markets, ANZ Bank, Swarbrick Beck Mackinnon,
BJ Ball, Hugh Green Group, Inland Revenue Department, Harrison Grierson, Omnicom Media Group, Frucor Beverages,
Bellingham Wallace, Property Tools NZ, IBM, DB Breweries, Disputes Resolution Services, Snap Internet, Hobbs Global
Logistics Solutions, BNZ, The Knowledge Hunters, Deloitte, The Radio Network, Burger Fuel, Optimation, Westpac,
Refining NZ, Mackenzie Elvin, Barristers & Solicitors, New Zealand Oil & Gas, SKY Television, Auckland Library, JBWere,
The Commerce Commission, C B Norwood Distributors, Rothbury Insurance Brokers, IAG New Zealand, The New Zealand
Automobile Association, Genesis Energy, WHYBIN/TBWA, DLA Phillips Fox, Burton & Co, Polson Higgs, Aon New Zealand,
GE Capital NZ, Transfield Worley, Personal Finance, Oyster Management, Lane Neave, Cambridge Asset Management,
Grant Thornton New Zealand, Open Country Dairy, Queen City Law, Mitre 10 New Zealand, Trustees Executors, Meredith
Connell, CST Nexia, Northington Partners, Greenwood Roche Chisnall, Contact Energy, Minter Ellison Rudd Watts Lawyers,
New Zealand Registry Services, Fuji Xerox, Business NZ, House of Travel, Victoria University of Wellington, ARL Lawyers,
New Zealand Steel, Chorus, CallPlus.
To get on the list go to http://accounting.onthelist.co.nz
On the list is bought to you by NBR.
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In this issue
Winners on the up
2013 NZICA Leadership Awards, p24.
EDITOR Aaron Watson ([email protected])
ASSISTANT EDITOR Jennifer Black
DESIGN & PHOTOGRAPHY Nick Salmon
SUBSCRIPTIONS Customer Service Centre
(contact: [email protected]) p: 04 474 7840
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Accountants.
34
18
Naming right
Does your name indicate which profession
you will join?
40
Livestock tax
Changes to livestock tax rules are highly significant
and should be understood by chartered accountants
and their clients
44
Market cues
Time the CFO took a cue from the CMO
PRINTING T he Chartered Accountants Journal is printed by Webstar. ADVERTISING sales by
Gavin Leary
DDI: 09 927 7112
Email: [email protected]
The Chartered Accountants Journal is the official magazine of the New
Zealand Institute of Chartered Accountants.
ISSN 2253-3877 (Print)
ISSN 2253-3885 (Online)
NZICA is a member of the Global Accounting Alliance.
Ball wheels way across USA
NZICA Life Member Dr Ian Ball FCA celebrated the
end of his 11-year contribution to global accounting as
CEO of the International Federation of Accountants by
hitting the open road
Contents
LATEST
6 From the CE’s desk – A new institute
Craig Norgate FCA: I am proud of what has been achieved during
my year as NZICA Chief Executive
9
8 Quizzical Corner
Expectations of a CFO
Deloitte merges with Curtis McLean Wgtn
NZICA comment on IASB ED/2013/8 “Agriculture: Bearer Plants”
9 Seasonal questions and answers
Do you know the answer to these Christmas party-related tax
questions, raised by CCH NZ?
11IR releases draft minimum requirements
12 What others think we do
In a 1953 issue of The Professional Engineer an anonymous
contributor examined the accountant in an article “What the other
fellow does”
14IR Satisfaction Survey
Focus on accounting technicians
15Changes to taxing of employee allowances
17Partner news
18Naming right
Does your name indicate which profession you will join?
20New admissions
22Ask Uncle Tom
12
Sadly, things come to an end, and this is the last instalment of Uncle
Tom’s column
FEATURE
24Winners on the up
2013 NZICA Leadership Awards
34Ball wheels way across USA
NZICA Life Member Dr Ian Ball FCA celebrated the end of
his 11-year contribution to global accounting as CEO of the
International Federation of Accountants by hitting the open road
BUSINESS
36IFRS in context
October IFRS Advisory Council Report: the Conceptual Framework
38Internal control
IFAC’s guidance has been effectively incorporated into the New
Zealand government’s thinking and approach to internal control
40Livestock tax
48
Changes to livestock tax rules are highly significant and should be
understood by chartered accountants and their clients
44Market cues
Time the CFO took a cue from the CMO
46 NZ Post leads way
What do New Zealand Post Group, Coca-Cola and Microsoft have in
common?
48 Process improvements
Tax disputes and alternative dispute resolution
50 Efficient energy
A focus on energy can help the bottom line
54
COLUMNISTS
52 Goal crazy
Goal setting, performance planning, and happiness
54 Looking forward
Exciting times ahead for New Zealand business
56 A trust issue
A recent decision of the Taxation Review Authority considered a number
of issues arising out of a series of property transactions entered into by the
trustees of the disputant trust
58 Capital formation
In the matter of capital formation, one can earn it, inherit it, steal it,
marry it, or win it, goes the adage
60 BEPS firmly on government’s agenda
The latest developments in New Zealand’s response to base erosion and
profit shifting (BEPS)
62 SmartMove
Staff recognition and rewards
62
INSTITUTE
64 Image Matters
Deborah Simeon CA, a Business Advisory Services Manager, gets a new
look as she prepares for her Valentine’s Day wedding
66 Summer reading 2013
70 NZICA Knowledge Builder
NZICA’s exciting professional development programme offers a range of
opportunities to help you stay at the forefront of your career
74 Notice of decision and order of the Professional Conduct Committee
75 Notice of decisions of the Disciplinary Tribunal
77 Classifieds
78 Less is not more
Short auditor rotation periods may harm, not support, good quality audits
64
FROM the CE’s DESK
A NEW
INSTITUTE
I am proud of what has been achieved
during my year as NZICA Chief Executive.
T
here were two things I said I wanted to do when I
took on the role of NZICA Chief Executive.
The first thing I wanted was to encourage a positive
culture within NZICA and ensure our staff were
working collaboratively. Recent culture survey results indicate
that this is happening and it is great to see the development
of our people during the year.
That we have managed to develop a collaborative operating
culture is a really good sign. It is a reason that, as we enter this
significant period of change, I expect to see many NZICA staff
in key positions in the new trans-Tasman institute.
The second was to sort out the merger process – which at
that point meant either getting the proposal to a stage where
it could be taken to members for consultation, or stopping it
if that couldn’t be achieved.
With voting now completed, I am very pleased that the
members of NIZCA and the ICAA have decided to join forces
to form a new institute, Chartered Accountants Australia &
New Zealand.
The whole process was handled very well and was a great
credit to all our staff who were involved – but in particular
Rebecca Ingram and Logan Mudge from our communications
team, who were seconded to the One New Institute project.
Thanks also to staff in the regional network who did very
good work liaising with members and ensuring the roadshows
were effective.
6
DECEMBER 2013
At the start of the year I set a stretch target of 35% of
members voting. That was nearly three times the highest level
we had experienced over the past decade in full member votes on
issues such as Fit for the Future or Rule changes. We got a 59%
turnout on the One New Institute proposal, and with almost
70% of those in favour we have a clear mandate for change.
While the turnout was a great testament to the effectiveness
of the consultation process, there was also a more general
benefit in getting the membership to think about the future of
our institute and of our profession in an international context.
This was a once-in-a-generation opportunity to have a rich
conversation on where the profession is going.
There is a lot of interest on the world stage in the work we
are doing here (and with the moves to unify the profession
in Canada). I was invited to present last month to a meeting
of the General Accounting Alliance in Tokyo, and it is clear
from the discussions that we are very much at the forefront
of thinking internationally.
The “yes” vote was a real endorsement, but it now puts
the burden of expectation on us: the challenge to deliver on
the promises we have made. This is where my focus will now
turn. From 1 December, I take up the role of Transformation
Director, working with the executives of NZICA and the
ICAA to establish the new organisation on a sound footing,
ready to deliver on the strategic initiatives and cost savings
we have promised.
FROM the CE’s DESK
I will certainly look back on the
year with pride, particularly in the
work our people have done and
in what they have been able to
achieve. It has gone well beyond
reasonable expectations
There is still a legislative process to go through. The
government is very supportive, but it still has a lot on its
agenda and it may be some time before all the necessary
legislation is passed. On this note, I would like to thank our
General Counsel Richard Moon for his leadership of the legal
processes on both sides of the Tasman.
Given the need for legislative change before we can
implement anything structural, members should not expect
to see too much change before the middle of next year. From
that point on you can expect to see a lift in our leadership
and advocacy profile, and incremental improvements to
our professional development programme, ahead of more
significant shifts in 2015 as the strategy for the new institute
begins to take effect.
The main focus for 2014 will be getting the staffing
and structure we need to achieve the benefits that we have
been talking about. Staff numbers are coming down, and
there is work to be done to ensure that the remaining staff
are organised in such a way that they can deliver the high
standard of support and service that members need, wherever
they are in the world and through all stages of their careers.
This is a particularly difficult time given the impact on staff
as individuals.
It is also vital that we reach out to those members who did
not support the proposal. Those members are an important
part of the institute and their contribution to the debate was
respected and valued. We must ensure that the new organisation
delivers for them as well.
While I take up the new role of Transformation Director
with great excitement, it is with some sadness that I leave the
role of NZICA Chief Executive. Kirsten Patterson will serve
as Acting Chief Executive from 1 December 2013, until the
new institute officially comes into existence. She will then
transition to the role of New Zealand Country Head. Kirsten
has been outstanding in her current role as Chief Operating
Officer and is a key reason why our culture is so positive
despite the change process.
I will certainly look back on the year with pride, particularly
in the work our people have done and in what they have
been able to achieve. It has gone well beyond reasonable
expectations. And I’m proud of our members for the way they
have engaged with the proposal and for that they turned out
to vote in such numbers.
However, I won’t personally take pride in the One New
Institute proposal until we have delivered on the promises
that we have made.
It has been a privilege to have the opportunity to lead
the organisation through this year and to contribute to the
profession in such a manner. I wish you all the best for the
festive season.
Craig Norgate FCA, NZICA Chief Executive
DECEMBER 2013
7
Latest
EXPECTATIONS OF A CFO
Quizzical
Corner
Compiled by Quizmaster d Flash
• Christmas •
1. Which famous hotel magnate was born
December 25, 1887?
2. Which Dr Seuss character is rumoured to
have stolen Christmas?
3. There are 365 days in a year. What number
is Christmas Day?
4. According to the Bible when Joseph, Mary
and Jesus left Bethlehem, which country did
they go to?
5. In which decade were flashing Christmas
lights introduced?
6. Where in the world do children receive their
Christmas gifts on 6 January? A) Mexico B)
Finland C) Russia
7. What is the day after Christmas day called
in Ireland?
8. How many reindeer does Santa have?
9. In which country did the tradition of having
Christmas trees originate?
10. Which famous author wrote the inaugural
Royal Christmas Message for King George V?
1.Conrad Hilton 2.The Grinch
3. 359 4. Egypt 5.The 1930s
6. A) Mexico 7. St Stephen’s Day
8. Nine 9. Germany 10. Rudyard Kipling
Scores
0–3
Prancer
4–7
Dance
8–10
Dasher
8
DECEMBER 2013
The International Federation of Accountants (IFAC) has issued a Discussion Paper
on the Role and Expectations of a CFO, designed to stimulate a global debate on
preparing accountants for finance leadership.
The objective is to establish a principles-based framework (five principles) for
understanding the changing expectations, scope and mandate of the CFO and finance
leadership roles.
NZICA’s Technical Services Team will be preparing a submission to IFAC, and
recently held a brainstorming session with the Corporate Sector Advisory Group on
the key principles outlined in the Discussion Paper.
We are seeking other interested members’ comments for inclusion. Please send
your feedback to [email protected] by 17 January 2014.
NZICA COMMENT ON IASB ED/2013/8
“AGRICULTURE: BEARER PLANTS”
NZICA has submitted its comment letter in response to the International Accounting
Standard Boards (IASB) exposure draft ED/2013/08 Agriculture - Bearer Plants, issued
in June 2013.
In principle, NZICA supports the limited scope amendments to account for bearer
plants as property, plant and equipment in accordance with the requirements in IAS
16, rather than in accordance with IAS 41.
However, NZICA considers that the scope of the proposed amendments could be
broadened as they fail to include other bearer biological assets, such as livestock held
for agricultural produce which could also be valued in accordance with IAS 16.
The proposed amendments are based on the view that an attribute, other than
fair value, best represents the nature of these assets and for these reasons NZICA
proposes that this should apply to all bearer biological assets - not just bearer plants.
In forming the content of the submission, NZICA sought feedback through
NZICA’s Regional Advisory Group, as well as other interested NZICA members.
Download the full comment letter from nzica.com.
DELOITTE MERGES WITH CURTIS MCLEAN WGTN
Professional services firm Deloitte has announced it will merge with Curtis McLean,
a leading provider of private accounting services to small- and medium-sized
enterprises (SMEs) in the Wellington region.
The Curtis McLean team of five partners and 35 professional staff will join
Deloitte from 1 February 2014 and be part of Deloitte Private.
Deloitte Chief Executive Thomas Pippos CA says the move is exciting is a direct
response to addressing the needs of the local market and the growing number of
successful privately owned businesses in Wellington.
“Successful privately owned businesses need access to both specialist and
traditional trusted business advisor services. Bringing both teams together better
enables us to serve that market and augments our existing Deloitte Private team,”
Pippos says.
Curtis McLean’s Mike Curtis says the decision to join Deloitte was ultimately an
easy one as it was evident there were benefits that would flow on to clients and
staff by accessing specialists with national and global reach.
Latest
SEASONAL QUESTIONS AND ANSWERS
Do you know the answer to these Christmas party-related tax questions, raised by CCH NZ?
“Give me a T, give me an A, give me an X on the cheek...”
Q) Santa Claus runs a small workshop at the North Pole
with a dedicated group of hardworking elf employees.
Each year Santa holds a Christmas party for the elves.
He is thinking of inviting the Iceland division to the
party this year. Santa would pay the airline costs for
ten elves to travel from Iceland to the North Pole.
Are there tax issues with this?
A) Christmas party costs: The cost of the Christmas party will
be subject to the entertainment rules, so Santa’s deduction
for this expenditure will be limited to 50%.
Travel costs: The elves’ travel costs will be deductible to
Santa as staff remuneration costs. The travel costs will be
subject to FBT unless the de minimis exemption applies.
Providing travel to the Christmas party is a fringe benefit.
De minimis exemptions: For employers paying FBT on a
quarterly basis, no FBT is payable provided that:
•
the total taxable value of unclassified benefits provided in the quarter to each employee does not exceed $300 and
•
the total taxable value in the past four quarters
including the current quarter of all unclassified benefits
provided by the employer, or an associated person, to all of
the employer’s employees does not exceed $22,500.
For employers accounting for FBT on an annual or incomeyear basis, the total taxable value of unclassified benefits
must not exceed:
•
$1,200 per employee pa
•
$22,500 per employer pa.
References: Income Tax Act 2007, ss CX 29, DD 2, DD 9, RD 45.
Q) During the Christmas party, Santa gets a bit tipsy on
sherry. With some of the naughtier elves, he takes the
sleigh on a joy ride.
Unfortunately for Santa, he runs into a checkpoint (his
red nose is a bit of a giveaway). He is charged with
excess breath alcohol and his sleigh is impounded.
Santa’s lawyer tells Santa he will probably receive a
large fine but, if he loses his licence, he should be able
to obtain a limited licence for work purposes.
Santa wants to know, would the fine be deductible?
What about the legal fees for obtaining a limited
licence?
A)Fine: The fine would not be deductible as the traffic offence was not conducted in the course of any income-earing
process. Also, Inland Revenue has made it clear that a
deduction would be disallowed on public policy grounds.
Legal fees: The fee incurred in obtaining a restricted licence
should be deductible provided:
•
the licence only applies to business use in Santa’s business vehicle
•
it is restricted to Santa’s business hours.
References: Income Tax Act 2007, s DA 1, DA 2(2). Case
L15 (1989) 11 NZCT 1,113 IS 09/01 “Fines and penalties –
income tax deductibility”.
Reprinted from the CCH New Zealand Christmas e-newsletter
with permission.
DECEMBER 2013
9
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Inland Revenue (IR) has released its draft minimum
requirements for special purpose financial statements.
Changes to the Tax Administration Act will allow IR to
specify the information it requires taxpayers to include in their
financial statements.
Amendments included in the Financial Reporting Bill will
eliminate the need for many small-to-medium companies to
prepare general purpose financial reports (GPFR).
IR is a significant user of financial statements and has
considered the level of information it needs now that the
requirement for companies to prepare GPFR is being removed.
Under the IR draft requirements, companies will be required
to prepare a balance sheet, profit and loss statement, statement
of accounting policies, tax reconciliation, schedule of related
party transactions and certain other supporting schedules. The
draft requirements allow tax values to be used where possible.
NZICA believes the requirement for companies to prepare
a schedule of related party transactions will impose a high
compliance cost. NZICA would prefer IR to ask specific,
targeted questions rather than the fuller form of disclosure
currently proposed.
For non-companies, the indicative threshold for preparing
special purpose financial statements is $60,000 of turnover. IR
has asked for feedback on this threshold and NZICA will submit
that it should be raised.
If any members have comments on the IR draft requirements
that they would like to feed into NZICA’s submission, please
contact the tax team on [email protected].
Separately, NZICA is drafting a special purpose financial
reporting framework that will meet the more extensive needs of
the users of financial statements.
This framework is due for release next year.
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11
Latest
WHAT OTHERS THINK WE DO
In a 1953 issue of The Professional Engineer an anonymous contributor examined the
accountant in an article “What the other fellow does”.
T
he engineer’s article was reprinted in a Society Journal
of the same year.
“Accountants are ordinary human beings,
whatever may be said to the contrary. To refer to
them as inhuman is unkind, because I know many who, apart
from being addicted to figures of all shapes and sizes, look
rather like quite nice people.”
With a few exceptions, explained the engineer, accountants
are the male of the species, ranging in age from the very young
(22) to the very old (44).
“It is impossible to be an accountant earlier in life, because
Bookkeeping III is still but vaguely understood, and it is
difficult for them to live beyond their mid-40s and still retain
any measure of mental or annual balance,” the engineer wrote.
He went on to define four types of accountants: the public,
the unpublic, the company-secretary and the auditor.
Public accountants were to be found between the hours of
10.30am and noon, and again between 3pm and 5pm in an
office with a glass door on which was painted the accountant’s
name.
On the other side of the door sat a secretary, “who is
usually a typist but considers herself above such a title”.
“The value of public accountants to the public is
multifarious and many taxpayers, particularly during March
12
DECEMBER 2013
of each year, have reason to mention them in their evening
prayers...”
The unpublic or not-so-public accountant is to be found
in banks, insurance companies, private trading concerns,
local bodies and numerous other places and, unless he has
failed to register his worth with his employers, usually has
a glass door also.
“The company-secretary type of accountant is deserving
of the highest praise and is usually very unpopular with any
engineers on the staff of the company,” the engineer wrote.
This was because, he postulated, engineers were not paid
enough to fritter away their money on high living, comforts
for the home, motor cars and education for their children.
Additionally, company-secretary accountants did not make
overseas currency available to obtain engineering machinery
from abroad, and therefore the luckless engineer had to make
do by hand.
Finally, company profits were not squandered on
the production side of a business but instead diverted to
purchasing extra bookkeeping and adding machines for the
accounts department.
The fourth variety of accountant, the engineer explained,
was the auditor, under which the other accountant varieties
flourished.
Latest
Public accountants were to
be found between the hours
of 10.30am and noon, and
again between 3pm and 5pm
“These are the MI5 of the profession and drop in
unexpectedly on unsuspecting common types of accountant.”
While accountancy, the engineer continued, was not the
oldest profession in the world, “nor has any dealings or
practical sympathy with that profession”, it did go back to
the days when accountants had to add up columns of figures
with no more than eight fingers and two thumbs.
“This meant that any youth unfortunate enough to jamb
off a finger or two in a doorway could never become an
accountant.”
Nowadays, he added, this is no longer an issue as adding
machines mean one finger could do the job nicely.
To justify their existence, the engineer explained,
accountants devote their lives to the production of two things
– keeping books and balance sheets, and “these kept books
?
I PAYROLL
A life ortunity
opp
changing
contain the inner life of the accountant”.
“To realise fully the significance of keeping books all
one has to do is to try to get a glimpse of them. Glimpses
are strictly controlled or rationed, and although managing
directors may get one sometimes the rest are reserved for
auditors.
“Balance sheets are as closely related to these books as
Siamese twins. To a good accountant, balance sheets reveal
all sorts of important information such as why Jones cannot
have a salary increase, why Brown, the engineer, must buy
his own slide rule, why production staff must be reduced,
and why another bookkeeping machine will pay for itself
in ten years.”
Society Journals of old repeatedly examine the reputation
of the accountant, with much anguish. Judging from this
engineer’s less than complimentary opinion, it is not difficult
to see why.
While much in accounting has changed over the past 60
years, perhaps the one development for which accountants
can be most grateful is the marked improvement in the public
perception of the profession.
Alexandra Johnson is a freelance Wellington writer.
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DECEMBER 2013
13
Latest
IR SATISFACTION SURVEY
The annual Inland Revenue (IR) Satisfaction Survey,
commissioned by NZICA and Tax Management New Zealand
(TMNZ), has found that public practitioners are less satisfied with
the overall level of service provided by IR than they have been in
previous years. The survey undertaken in October asked NZICA
members working in public practice and corporates to rate
different aspects of IR’s service.
NZICA has shared the survey results with IR and regularly
engages with IR about NZICA members’ concerns and ways it
can enhance its service delivery. Our engagement with IR will
increase as it embarks on its ambitious Business Transformation
project. The survey results show that NZICA public practice members
are dissatisfied with IR’s telephone service. There has also been
a decline in NZICA members’ perception of the speed, accuracy
and consistency of IR processing.
IR has continued to improve its performance rating in the
audit area. IR’s auditors rated well in terms of their manners and
courtesy and their availability but less positively in terms of their
consideration of taxpayers’ views and their response times.
Most respondents were happy with the information provided
by IR including on its website.
NZICA’s Tax Team and TMNZ will summarise and comment on
the survey findings in more detail in the February Journal.
FOCUS ON ACCOUNTING TECHNICIANS
The rejuvenation of NZICA’s College of Accounting Technicians
(AT College) is underway with the introduction of new pathways
to membership, and a strategic partnership with the UK’s
Association of Accounting Technicians.
This year NZICA introduced an experience-based pathway
to AT College membership this year, which recognises work
experience and expertise gained “on the job”.
A flexible, online study pathway was also launched to provide
an alternative to the standard academic pathway to the AT
College.
Together, the moves are part of a plan to strengthen and grow
the AT College and provide more support for members working
as ATs across a range of industries.
ATs are employed to oversee and manage financial accounts
in roles such as accounts manager or assistant finance manager.
They work in all areas of finance and business.
The 2013 SmartMove Remuneration Survey found the
average salary for an accounting technician in New Zealand was
$80,213. (The highest AT salary was $270,840.)
Employing ATs gives business managers the security of
knowing their staff meet recognised standards. Organisations
that develop their staff by helping them achieve AT College
membership benefit by being able to attract and retain the best
people. See nzica.com/at for more information.
WE’RE LAUNCHING AN NZICA APP which will allow you to access Regional Connections on
your Android or Apple tablet. Touch, Zoom, tap, pinch and scroll to view the latest updates from
your region.
THE APP IS FREE and now available to download, once installed you
will be able to access Wellington Connection which is the first available
content.
You can INSTALL THE NZICA APP to your iPad by downloading it from
the Apple App store or to your Android tablet by downloading it from
Google Play.
FIND OUT MORE by visiting nzica.com/NZICA-App-FAQs .
We hope that you continue to enjoy the updates from your region.
EXCITING CHANGES HAPPENING
WITH YOUR REGIONAL CONNECTIONS.
THERE ARE SOME
14
DECEMBER 2013
Latest
ACRONYMIC
With the adoption of “EY” as the official
designation for the firm formerly known
as Ernst & Young, Deloitte is now the only
Big 4 accountancy firm to have a proper
name. The others all have acronyms
(ET, PwC and KPMG). How appropriate
for an industry that generates so many
acronyms.
CHANGES TO TAXING OF EMPLOYEE ALLOWANCES
Changes to the tax treatment
of accommodation allowances,
reimbursements and employer-provided
accommodation will provide more
certainty for both employers and
employees and reduce compliance costs.
The changes announced by Minister
of Revenue, Hon Todd McClay, are
included in a November tax bill that is
expected to be enacted before next year’s
general election.
New “bright-line tests” will mean
that, when an employee is required
to work away from their normal
workplace, employer-provided or funded
accommodation will be tax exempt for
up to two years. The bright-line will
be extended for up to three years for
employees working on specific projects
and up to five years for Canterbury
earthquake recovery projects.
The tax treatment of accommodation
allowances and payments has been a
contentious issue recently with different
0800 223 729
Ace Payroll
for New Zealand
employers.
views of the law and how it should be
applied. Given the number of employees
now required to work away from their
normal workplaces –for example on
infrastructure projects and the Canterbury
earthquake recovery projects – the
government’s intention to clarify the law
and provide certainty is a welcome move.
NZICA’s Tax Team is pleased to see the
government responding to the Institute’s
submissions about the need for more
certainty in this area.
www.acepay.co.nz
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Take control on pay day with easy low
cost software and great help desk support.
DECEMBER 2013
15
WIN A SPOT IN THE
NEW ZEALAND OPEN
BMW’s commitment to international golf is globally
renowned and highly successful. This is recognised in
New Zealand where BMW supports the NZ Open, the NZ
Women’s Open and is a sponsorship partner of NZ Golf.
This passion for golf led BMW New Zealand to establish
the BMW Golf Club in partnership with NZ Golf. The
BMW Golf Club was designed with one goal – to help
golfers like you to improve your game and get more from
your sport.
If you play golf and want to improve your performance
on the course, the BMW Golf Club is the perfect place
to play. And with the new season approaching, now’s a
great time to check your BMW Golf Club performance
reports. Once registered, your stats will give you an
advantage by helping you identify the areas of your game
to focus on. They’re like having your own virtual coach.
While you’re online, you can also use our video tips to
work on specific techniques.
Plus, as an NZICA member, if you join the BMW Golf Club
between 1 December 2013 and 31 January 2014 you
will be entered in the draw to win an exclusive “money
can’t buy” invitation to play in the NZ Open Pro-Am
tournament, including return flights and accommodation.
The NZ Open takes place in Queenstown at the
prestigious The Hills and Millbrook golf courses from
the 27 February to 2 March 2014.
Go to bmwgolfclub.co.nz to sign up to the BMW Golf
Club for free to start enjoying the benefits and you will
automatically be entered into the draw.
Terms and Conditions
You do not have to be a BMW owner to join the BMW Golf Club, just a current NZICA member and a competent golfer (ladies or men’s handicap 18 or lower). Winner
must be available to participate in the event over the dates specified in order to claim the prize. Competition dates are 27 February to 2 March 2014.Prize includes
return flights for one, transfers to and from the airport, five nights accommodation and admission to play in the event. A shuttle service will be provided between the
accommodation and the course for each day of play. Please visit nzica.com/bmw for full terms and conditions. The winner will be drawn and notified on 7 February 2014. PARTNER NEWS
KONICA MINOLTA
The mobility trend in technology is helping us all be more
flexible and more productive as, increasingly, we can work from
anywhere via the web. If you have wireless internet at your
office or at home you have the framework to take advantage of
this mobility trend. Your ability to access and share documents
becomes easy once you have the correct document software in
place.
Konica Minolta has the expertise and experience to help
your organisation with this, and it continues to help businesses
navigate the path towards mobility adoption.
Mobility in service support is also a huge efficiency driver,
and Konica Minolta customers benefit from the company’s
proactive service model. On the latest generations of Konica
Minolta bizhub MFPs the control panel can be accessed remotely
(from the Konica Minolta Help Desk) so we can help check
settings and basic functions, saving you precious time. It’s faster,
smarter and better.
Please email [email protected] or call 0800 933
008 to find out more.
SWITCH TO MYOB
past quarter and is receiving exceptional feedback in New
Zealand and Australia. James Scollay, MYOB General Manager
– Business Division says: “Our vision is to make business life
easier by delivering superior new generation cloud solutions and
supporting SMEs in moving to the cloud at their own pace.”
New clients are switching to MYOB to enjoy better value
and to access a broader set of features through AccountRight
Live. Not to mention the flexibility of choosing to work on their
accounts in the cloud, on the desktop or seamlessly switching
between the two whenever they like.
Visit myob.co.nz/convert for more information on how to easily
move clients across.
GOLDEN VALUE FOR NZICA MEMBERS
members only. Enjoy a $0 annual Card fee (save $90 pa) and
complimentary enrolment in Membership Rewards (save $50 pa).
All up, NZICA members receive up to $220 in value (indicative
value). Apply now and join the 5,000 NZICA members who are
already Cardmembers.
Please see partnersamericanexpress.com/nzica for full terms
and conditions or to find out more.
New Zealand’s largest accounting software provider has
announced the availability of Conversion Services to MYOB,
available through select partners.
In response to increasing demand for its cloud accounting
solutions, MYOB is empowering business operators to switch
from Xero or QuickBooks to its flagship cloud-enabled accounting
solution - AccountRight Live. AccountRight Live is a powerful and
flexible cloud-enabled accounting solution with a rich desktop
interface.
The conversion services program has been in pilot for the
As an exceptional introductory offer, new NZICA Gold Credit
Cardmembers will receive 18,000 Membership Rewards Bonus
Points. Simply apply by 31 December 2013, be approved and
spend $500 in the first two months of Cardmembership. This
introductory offer is available to new American Express card
Check out the latest Member Privileges at nzica.com/privileges
DECEMBER 2013
17
NAMING RIGHT
By Aaron Watson
Does your name indicate which profession you will join?
T
he NZICA member database shows that some names
are more common in chartered accountancy than
others.
John, David and Michael are the most common
names among our male members. Among our women, Sarah,
Susan and Michelle lead the pack. Good, dependable names all.
Somewhat surprisingly, when LawTalk magazine in
September revealed the most common first names of practising
lawyers in New Zealand, they were… John and Sarah. A quirk
of demographics or proof that kids named John or Sarah are
more likely to enter the professions than your average Tom,
Di or Harrison?
Various studies have found that name clusters exist in
different professions.
A global survey of LinkedIn in 2011 found the most common
CEO names (on LinkedIn) were Peter, Bob, Jack, Bruce and
Fred for men, and Deborah, Sally, Debra, Cynthia and Carolyn
for woman. (Go Debs!)
LinkedIn also found that the top names in HR were all female
– Emma, Katie, Claire, Jennifer, Natalie – while the leading
names in law enforcement were all male – Billy, Darryl, Pete,
Rodney and Troy.
So perhaps there is something in the idea that our names
will influence our career choices. Certainly, we judge other
people based on their names.
A study of 3,000 teachers in Britain, undertaken by parents
website bounty.com, found educators were wary of kids named
Callum, Chelsea, Connor or Jack. Other names that spelt trouble
included Aleisha, Kyle, Demi, Jake and Brooklyn. (Would you
take business advice from someone named Brooklyn?)
The same study found teachers expected children to be
brighter than average if they were named Alexander, Adam,
Elizabeth or Charlotte.
If you are concerned about how your choice of name may
influence your child’s career, there’s an iPhone app that
claims to predict a child’s profession based on their name.
“Nametrix: Doctor or Dancer” suggests Carey will become
a dentist, Scott a meteorologist and Velma an accountant.
Thomas, interestingly, is deemed most likely to become a pirate.
Whether you view this as nonsense, coincidence or a
manifestation of fate, I would like to leave you with one piece
of advice – may it serve you well.
If you can’t remember the name of that familiar face at an
industry function, try John or Sarah.
Top 5 NZICA member names by decade
1940s
John
William
Robert
James
George
1
2
3
4
5
Mary
Margaret
Jean
Peggy
Joan
1950s
John
William
James
David
Donald
1
2
3
4
5
Margaret
Patricia
Joan
Nancy
Joyce
1960s
John
Peter
David
Robert
Brian
1
2
3
4
5
Margaret
Shirley
Pauline
Alison
Wendy
1970s
John
David
Peter
Michael
Robert
1
2
3
4
5
Anne
Margaret
Susan
Elizabeth
Judith
Top 10 first names of NZICA members by gender
NAME CHECK
Number
Female
Number
Male
1
Sarah
1
John
2
Susan
2
David
3
Michelle
3
Michael
4
Karen
4
Peter
5
Angela
5
Andrew
6
Jennifer
6
Paul
7
Nicola
7
Mark
8
Lisa
8
Richard
9
Joanne
9
Robert
10
Rachel
10
Stephen
Of the 33,841 current NZICA
members, we have 3,881 distinct
first names for females and 2,905
for males.
Internal Affairs data shows the
most popular names for babies
born in New Zealand in 2012
were Jack and Olivia.
In the US, Jacksonville has
a disproportionate number
of Jacks, Philadelphia a high
number of Philips, and Denver
an unexpected number of guys
named Dennis, according to the
Journal of Personality and Social
Psychology (vol 82, no 4).
Top 10 first names of ICAA members by gender
Number
Female
Number
Male
1
Michelle
1
David
2
Sarah
2
Michael
3
Lisa
3
Peter
4
Jennifer
4
John
5
Karen
5
Andrew
6
Rebecca
6
Mark
7
Susan
7
Paul
8
Melissa
8
Robert
9
Amanda
9
Christopher
10
Nicole
10
Stephen
1980s
John
David
Peter
Michael
Stephen
1
2
3
4
5
Susan
Jennifer
Christine
Sandra
Karen
1990s
David
Andrew
Michael
Paul
John
1
2
3
4
5
Susan
Karen
Lisa
Julie
Nicola
Aptonyms are names that
seem to match their bearer’s
occupation; as in the world’s
fastest man Usain Bolt, or
Belgian footballer Mark de Man.
NZICA’s aptonyms include
members surnamed Addy,
Bean, and Dollimore.
2000s
David
Michael
Andrew
Mark
Matthew
1
2
3
4
5
Sarah
Michelle
Nicola
Rachel
Anna
2010s
Matthew
Andrew
Michael
David
Christopher
1
2
3
4
5
Sarah
Anna
Michelle
Jennifer
Rebecca
Latest
NEW ADMISSIONS
Congratulations to our people on the rise.
The following admissions to NZICA’s Chartered Accountants, Associate Chartered Accountants and
Accounting Technicians Colleges, and Certificates of Public Practice have been confirmed.
CA COLLEGE
Blackwell, Julie Vanessa
Clark, Kylie Ann
Bay of Plenty
Waikato
Ross, Elizabeth
Auckland
Satherley, Katherine
Auckland
Smillie, Franklin Neilson
Auckland
Auckland
Douglas, Timothy
Canterbury
Sun, Zhiting
Dunn, James Charles
Wellington
Tan, Johnathan
Farrell, Pamela
Canterbury
Trent, Claire Louise
Auckland
Auckland
Gibson, Claire Marie
Auckland
Wadsworth, Robert James
Gu, Xiao He
Auckland
Walker, Haidee Anne
Huang, Yiting
Auckland
Wang, Hui
Johnson, Kirsty Robyn
Lam, Shing Chi
Waikato
Asia
Leaf-Wright, Tim Hemsley
Wellington
Lo, Benjamin Charles Kar-yun
Canterbury
Mao, Larry Lei
Auckland
Whitehouse, Marshall Aiden
Wilkinson, Robert Francis
Zhang, Yan
Waikato
Otago
Wellington
Auckland
Nelson
Wellington
ACA COLLEGE
Mariu, Sharon Mae Ngauru
Waikato
Cowan, Elizabeth Ann
Wellington
McNab, Craig Donald
Australia
Duptala, Ramanjaneyulu
Auckland
Meintjes, Catherine Mary
Auckland
Egan, Daniel Lee
Auckland
Mortimer, Yvette
Southland
Irving, Jeffrey Stuart
Murphy, Hanna Mary
Manawatu
Jung, Woo Jin
Auckland
O’Connell, Sarah
Auckland
Lopez, Lyannel
Auckland
Perrine, Jameson
Wellington
Murphy, veronica Jayne
Auckland
Otago
Pinson, Michael John
Auckland
Park, Hun
Auckland
Pithadiya, Mahesh Vinod
Australia
Toledo, Rowela Pascasio
Auckland
Wang, Wen Jun
Auckland
Roberts, Steven Boyd Joseph
20
DECEMBER 2013
Canterbury
Latest
OCTOBER
PROFILE
Kate McEvoy AT
Ward, Vianni
Whale, Bridget Anna
Zhang, Xiuling
Waikato
Auckland
Central Bay of Plenty
AT COLLEGE
Beaumont-Orr, Jane
Hughes, Elsabe Carina
Mazzone, Karen
Waikato/Bay of Plenty
Canterbury
Auckland
McEvoy , Kate Louise
Canterbury
Samarakoon, Deepa Sadini
Wellington
PUBLIC PRACTICE CERTIFICATES
Carter, Brenda Jayne
Waikato
Dillon, Sarah Margaret
Coastal Bay of Plenty
Edwards, AngelaMaree
Northland
Free, Steven James
Gailey, Barbara Helen
Canterbury
Northland
Gray, Andrew James
Nelson
Jeram, Kanu Alpesh
Auckland
Nielsen-Vold, Brian Stephen
Hawke’s Bay
O’Gara, Fergal
Westland
Van Der Burgh, Randolph Edward Casimir
Auckland
Webb, Clayton Glen
Wellington
Financial Systems Accountant
City Care Ltd, Christchurch
How long have you worked for City Care Ltd?
Eight years.
Why did you choose accounting as a career?
The path of accounting was created for me after
taking on various finance roles at City Care
after starting as the office junior. I was given
the opportunity to start studying – initially just
wanting to complete my Diploma in Accounting
– and now I’m one year away from completing
my degree.
What has been a highlight of 2013 for you?
Seeing my husband’s business succeed,
allowing him to be a stay-at-home dad to our
two-and-a-half year old daughter.
What is one thing you’re looking forward to
changing?
I’m looking forward to the end of part-time study
on top of a full-time career and family life.
What keeps you busy in your spare time?
Now that the weather is warming up we are
spending lots of time outdoors. We have started
a project of landscaping our three-quartre acre
property and keeping the vegetable garden full.
We also spend a lot of time at the local rivers
walking our dogs.
What’s your favourite food?
A roast meal cooked by mum.
Do you have any holidays planned?
In the new year we have a family holiday
planned to Penzance Bay in the Marlborough
Sounds, spending lots of time fishing and
swimming. It’s my daughter’s first big holiday,
so she’s already talking about it.
Complete this sentence: If I hadn’t gone into
accounting, I would have been a…
... forensic scientist as I love watching C.S.I.
DECEMBER 2013
21
Latest
ASK UNCLE TOM
Sadly, things come to an end, and this is the
last instalment of Uncle Tom’s column.
I
handed in my resignation for the fourth time a couple of
weeks ago and it finally got accepted. What really brought
home the reality of it all was when I cancelled my car park
lease at the same time. A new life starts on 1 January.
Frank Owen FCA, whom many readers will know as the
present Director of Professional Development, is moving into
my old position. He’s very experienced, seen it all, pragmatic,
tells it how it is, and I’m sure will be excellent in his new role.
Don’t know what Professional Development is going to do.
My wife, appalled at the thought of my being home 24/7
is threatening to return to work. We’ll see.
In the meantime I’m concentrating on my immortality
programme. Don’t laugh, it’s working and hasn’t let me down
yet. But if it does, and I have to present my documentation
to St Peter, I’ll be looking forward to enlightenment on two
things. One is Einstein’s theory of relativity, which always
makes me pause and think: Now, how does this go again? The
other is a better understanding of clients’ minds when they’re
unhappy over a fee. I’m reasonably hopeful about the former.
Regarding the latter, television courtroom dramas have
a lot to answer for, and have clearly been a feature of many
people’s commercial education. It is truly amazing how many
disputatious clients, without ever having discussed their bill
with their accountant, get on to the phone to me to declaim
that they will be taking this matter, a gross breach of ethics, the
law and established religion, to the highest court in the land.
They will also be informing the SFO, the police, the
Governor-General, and their MP, occasionally poor Mr
Key and, of course, Fair Go about the fraudulent attempt to
22
DECEMBER 2013
overcharge a poor Kiwi bloke/housewife/worker/whatever.
Usually the vehemence of the attack is in inverse proportion
to the size of the fee. When I helpfully point out that arguing
over a $300 fee in the High Court, let alone the Supreme
Court (“You did say the highest court in the land, madam?”)
might be expensive, I’m told that cost is not the issue, it’s the
principle of the thing.
If I’m enjoying myself I might be extra helpful and suggest
they get on to Fair Go pretty quickly as they’re the fifth this
week planning to do that, and I understand that the studio
production slots are now filled through to the end of 2015.
Naughty, I know, but fun.
What is interesting is that no one these days ever has a
lawyer, a solicitor or a barrister – it’s always their QC they
refer to. There must be more QCs in the land than I thought,
or else they’re extraordinarily busy disputing $300 fees for
their clients.
Do you want this job, Frank?
One of Professional Support’s tasks is dealing with
appointments of valuers, trustees and experts which NZICA
is called upon to make quite regularly, usually when parties
can’t agree. Normally this is quite straightforward, but
sometimes people do get carried away.
I took a call from one lady a while ago who was incensed
over some appointment she thought I was about to make,
and threatened dire things if I did so. Her town would be
conducting a protest march against the Institute’s failure to
consider her favoured candidate, and the town’s chartered
accountants would be boycotted.
Latest
As my screen showed her telephone number and I knew her
name (this was not exactly her first call) I looked up the town
and discovered through Google Earth (isn’t Google great?)
that it was a settlement of about ten houses. If the marchers
kept in a straight line I estimated the march would be over
in three minutes, four if they went on to the petrol station.
As for the boycott, there appeared, not surprisingly, to
be no CAs in that thriving metropolis, so I reckoned we
would risk the boycott, and made my own decision on the
appointment, which had to be independent anyway.
Do you really want this job, Frank?
My wife, appalled at the
thought of my being home
24/7 is threatening to return
to work. We’ll see
Another task for Professional Support is doing all the
jobs that the Chief Executive can’t persuade, beat or batter
others to take on. We once (what do I mean “once”? – we
get quite a few) had a persistent writer, clearly retired with
too much time on his hands (I’ll have to watch that), who
wrote long rambling letters to the Chief Executive about
matters which were an issue only to him (NASA’s deceit
over the Apollo moon landings – they never happened and
what was the Institute’s position on it – and various arcane
economic calculations) and who was convinced that every
decision made by anyone, the Institute included, had some
secret undeclared evil purpose.
The Chief Executive of the day asked me to draft replies
for him. On one of them I thought I’d have some fun, and
drafted an opening paragraph which I knew he would strike
out before signing.
A while or so later I asked how much of my draft he had
deleted. He looked a bit surprised, and said he didn’t recall
having deleted any part of it. I suggested he had better go
and read of it. He came back a few minutes later rather more
quickly than he had sauntered away, asking what on earth
were we (meaning me) going to do about it? Apparently he’d
come in late one evening and signed everything on his desk
without reading things through.
The opening went thus:
“I acknowledge your further letter dated 4 December
20XX regarding XX’s report on the Reserve Bank’s 1993
forecasts. It is clear that you are coming off a high induced
by completing Dan Brown’s The Da Vinci Code, and are
suffering the deleterious effects on mental processes commonly
experienced by other readers of his works. I strongly advise
you to avoid his Angels and Demons. Indeed, I suggest you
avoid that entire genre of reading for 20XX while your mental
capabilities are restored, as otherwise I fear you will ineluctably
be drawn into the ranks of Conspiracy Theorists Inc, and
we all know where that is taking the unfortunate President
Bush (an avid reader of Dan Brown, although I believe he
has difficulty with some of the longer words).
“I appreciate that this restriction on your reading will
dampen your intellectual activity over the Christmas/New
Year break, but I can assure you that it will immeasurably
improve mine in the post-Christmas/New Year period! As an
alternative I can recommend Burchfield’s The New Fowler’s
Modern English Usage which is available for a modest price
from reputable bookshops.
“You may also wish to reconsider your address, as living
in a street associated with Bran Castle will keep you searching
for dark hints and demonic allegations, and is unlikely to
assist a return to balanced and logical thought. To turn now
to the comments in your latest letter.”
I calmed the CE down by pointing out that he was now
in the running for the most effective business letter of the
year as we had not received our usual weekly letter now for
several weeks. It worked so don’t knock it. I don’t think he
was entirely convinced but we kept our heads down and have
heard no more from our most vexatious letter writer ever since.
And finally, some further vignettes from the life of the
Director of Professional Support, for Frank to ponder his
responses as opposed to mine.
• “Yes, sir, I agree he deserves dobbing into the IRD, but
you can’t do that with clients.”
• “I don’t recommend using your pocket knife on the dog to
recover the client’s memory stick even if today is the last
day of the extension. You’ll have to use a vet. Better still,
wait at the other end, it’ll be cheaper, but I think you’ll
have to wear the client’s IR late penalty, and, by the way,
have a look at your security over client records.”
• “My accountants are sleeping with my wife”. After a long
pause, “Well, sir, it’s always difficult when hormones and
ethics get entangled. Send me the details”. (I’m still waiting.)
• “Yes, sir, you could send round your Porirua heavies to
collect the fee, but from what you tell me about the client,
I think his heavies might be heavier than yours. Ponder the
consequences.”
• “I’m going to shoot the bastard!” Keep him talking. “Well,
sir, it’s a great day for it. The sun’s shining, the birds are
singing”. To Director’s PA – “Quick, get this call traced –
a member’s about to bring the profession into disrepute.”
Still want this job, Frank?
Well, as they say on all the best shows, that’s all folks.
Good night!
Tom Davies FCA was NZICA’s Director – Prefessional Support
from April 2002 to December 2013.
DECEMBER 2013
23
Crombie Lockwood 2013
Chartered Accountant
of the Year
American Express 2013
Outstanding Service to the
Profession
EY 2013 Public Sector
CFO of the Year
Westpac 2013 Outstanding
New Member of the Year
MYOB 2013 Innovation Award
D
E
D
R
A
W
E
R
IP
H
S
R
E
D
LEA
WINNERS ON THE UP
2013 NZICA Leadership Awards
N
ZICA is delighted to congratulate those honoured as
finalists and winners at the 2013 NZICA Leadership
Awards in Auckland on 26 November.
These glamorous awards are NZICA’s flagship
event where we recognise and celebrate those who have
performed to an outstanding level in the busines community
both locally and internationally.
This year the black tie event returned to the North Island
and was held at the Auckland War Memorial Museum, with
the theme This Way Up.
The evening also provided an excellent opportunity to
thank and farewell 2013 President Liz Hickey FCA. Liz has
carried out her role with strength, grace and good humour in
an extraordinary year that was often squarely focused on the
vote to create a new institute with the ICAA.
This was also the occasion to officially welcome Fred
Hutchings FCA as 2014 NZICA President and Kevin Murphy
CA as Vice President. We wish them every success as they fulfil
these roles in a pivotal year for NZICA, as the transformation
into one trans-Tasman institute continues.
We are proud to announce the following finalists and
winners at the 2013 NZICA Leadership Awards.
EY 2013 PUBLIC SECTOR CFO OF THE YEAR
Paul Helm CA
Finalists:
Ross Chirnside CA
Tina Cornelius CA
EECA BUSINESS 2013 SUPREME ANNUAL REPORT
Watercare Services Limited
EECA BUSINESS 2013 BEST ANNUAL REPORT BY
A CORPORATE ORGANISATION
Telecom Corporation of New Zealand Limited
Finalists:
Contact Energy
New Zealand Post
Tainui Group Holdings Limited
EECA BUSINESS 2013 BEST ANNUAL REPORT
BY A PUBLIC SECTOR ORGANISATION
Watercare Services Limited
Finalists:
CROMBIE LOCKWOOD 2013 CHARTERED ACCOUNTANT
OF THE YEAR
Nicholas Main FCA
Auckland Transport
Department of Corrections
Guardians of New Zealand Superannuation
AMERICAN EXPRESS 2013 OUTSTANDING
SERVICE TO THE PROFESSION
David Barker FCA
EECA BUSINESS 2013 BEST ANNUAL REPORT
BY A NOT-FOR-PROFIT ORGANISATION
The Parenting Place
Finalists:
MYOB INNOVATION AWARD
Kenneth Stephens CA
Patrice Wynen CA
Auckland War Memorial Museum
Queen Elizabeth II National Trust
Finalist:
EECA BUSINESS 2013 BEST ANNUAL REPORT
SUSTAINABILITY REPORTING
New Zealand Post (see p46)
Gregory Sheehan CA
WESTPAC 2013 OUTSTANDING NEW MEMBER
OF THE YEAR
Benjamin Richmond CA
Finalists:
Finalists:
EECA BUSINESS 2013 SPECIAL AWARD
FOR INNOVATIVE REPORTING
Plant & Food Research
Aimee Gray CA
Jayne Hyslop CA
Watercare Services Limited
DECEMBER 2013
25
BY JENNIFER BLACK
THE MAIN MAN
The Crombie Lockwood 2013 Chartered Accountant of the
Year Nick Main FCA initially studied chemistry, and has
harnessed his science background to understand and advance
sustainability in business.
N
ick Main FCA’s career was originally meant to be in
science. He gained a bachelor’s degree in chemistry,
but neither of the job options upon graduation –
teaching or research – appealed.
But it’s this background in science that has helped him
specialise in sustainability issues in a career that has been
based in New Zealand and London.
After rejecting a career in science, Main decided to study
accountancy.
“The accountancy bodies trained many ‘non-relevant’ degree
graduates through professional exams and so it seemed a good
option to transition into a business career, as you could take
the exams while working.”
He trained as an accountant in London, specialising in
audit. This focus broadened over time into internal audit and
computer audit. He first started working at an antecedent
Deloitte firm in London in 1975 and has spent his entire
career with Deloitte.
“There has been something about the culture of all those
[antecedent] firms that matches – and indeed made up – the
culture that Deloitte has, and it is one that I personally enjoy.”
Main transferred permanently to New Zealand in 1982
and says it really is home – so much so that he has supported
the All Blacks since his arrival.
26
DECEMBER 2013
“When I qualified I knew I had the opportunity to travel for a
couple of years. We had met a number of New Zealanders who
spoke highly of the country so I took a two-year secondment
here.
“We went back to London after that, but couldn’t settle,
so in less than two years we had returned permanently.”
The quality of life in New Zealand was the real deciding
factor, he says.
Main then progressed his career at Deloitte and was admitted
as an audit partner in 1985. In 1998 he was elected Office
Managing Partner for the Auckland and Wellington offices,
before becoming the first national CEO for Deloitte in New
Zealand. Then in 2005 he became the New Zealand Chair of
Deloitte. It was over this time that Main became increasingly
involved in sustainability, while maintaining his focus on
audit and assurance.
“I started to get involved when Deloitte joined the New
Zealand Business Council for Sustainable Development
(NZBCSD). My science background helps me get to grips
with the science behind the issues.”
A sustainability leadership course through the Cambridge
Programme for Sustainable Leadership helped develop his
thinking in this area.
“I firmly believe that business engagement is the way we
“Extend yourself into new
challenges and you will be
rewarded”
Nick Main FCA Crombie Lockwood 2013
Chartered Accountant of the Year
will solve some of the world’s pressing environmental and
societal issues.”
In 2008 Main was appointed Global Chief Ethics Officer
for Deloitte. This saw him lead the revision of Deloitte’s global
ethics policy, develop a global anti-corruption policy and revise
and enhance member firm reporting protocols. He led a team
of member firm ethics officers, working with them to resolve
any issues that might arise, but says there were very few.
In 2009 he was appointed to a new position as Global
Managing Partner Sustainability and Climate Change, based
in London.
He then became Deloitte’s first Global Chief Sustainability
Officer, which he describes as the most enjoyable role in his
career.
Main returned to New Zealand last year and is working
with Deloitte to develop its sustainability practice.
He is chair of the Middlemore Foundation for Health
Innovation, a charity closely allied to the Counties Manukau
District Health Board. He has also just taken on a role as
independent chair of the stakeholder working group seeking
to develop a spatial plan for the Hauraki Gulf.
Main says the test he applies when considering any new
roles is to ask himself whether they will be interesting, and
whether they will make a difference.
He has held a number of governance roles including chair of
the New Zealand Business Council for Sustainable Development,
Deputy Chair of the New Zealand Leadership Institute, board
member of the NZ US Council, board member of the Icehouse
business incubator, member of the Climate Change Leadership
Forum and member of the Advisory Board to the Cambridge
Programme for Sustainability Leadership.
Main says he has been lucky in his career, in ways he
couldn’t have anticipated.
“The qualification has allowed me to travel, but also I found
the work interesting – it really is the language to understand
business.”
A Fellow of NZICA and the Institute of Chartered
Accountants in England and Wales, Main says winning the
Crombie Lockwood 2013 Chartered Accountant of the Year
award is the highest honour he has achieved in his career.
He says accountancy is a great profession, and has advice
for newcomers.
“Work to get the foundation right, but then take opportunities
as they present themselves. Extend yourself into new challenges
and you will be rewarded.”
In his spare time Main, who is married with two adult
children, enjoys golf, fly fishing, shooting, gardening, travel,
wine and maintaining an eight-acre block.
DECEMBER 2013
27
GIVING BACK
PCC chair David Barker FCA, winner of the American Express
2013 Outstanding Service to the Profession award, says a
commitment to service and professionalism have always been
hallmarks of chartered accountants.
“W
hen I started out we had a massive computer
with an operator – and we weren’t allowed
near it. We had a lot more people,” says
David Barker FCA.
“One of the big changes is that, with technology, we to a
lot more work with fewer people,” he says.
“There is more regulation now, things like the Financial
Reporting Act. Not that it was the wild west when I started,
but it was less complex. But in terms of the things you need to
do to provide good service to your clients, and the standards
you must have, I don’t think that has changed at all.”
As a member of NZICA’s Professional Conduct Committee
(PCC) since 2004 (and chairman since 2009) Barker has played
a significant role in ensuring standards of ethics and quality
are maintained.
The PCC serves an important public interest purpose, while
also maintaining the reputation of NZICA. Alongside that,
it contributes to the continuing professional development of
members through highlighting problems they may need to avoid,
or areas where care needs to be taken.
Barker admits it is a difficult role, but one that he feels is
respected by members.
“The people who are angry when they come in [to PCC
hearings] are few and far between.
Most of the people who are there treat us with respect and we
are very conscious of treating them with respect. They understand
we have a job to do and we understand it is a stressful and
difficult situation for members to find themselves in.”
“Enjoy” is not quite the right word, he says, but working
on the PCC is a rewarding role.
“There are cases you remember for certain reasons. Some
very unfortunate cases you wish had not come about. Old
members in their 70s who really shouldn’t have been practising.
But you have to go through the process if they are not meeting
the standards. You also remember the scumbags. Those who
28
DECEMBER 2013
definitely need to be there, for the way they have conducted
themselves.”
It is not an environment of “us and them”, he says, as the
PCC team is predominantly made up of members. Many of the
cases that come before it are the result of simple human error.
“There are times I have thought I could easily have fallen
into that trap – it would be a mistake that is so easy to make.
I learn something at every meeting that I can take to my work
outside the Institute – from the mistakes of others or from the
good things they have done.
“For me it has also been an incredibly important part of
staying in touch with the profession and the Institute. As a sole
practitioner it can be quite lonely and we need to find ways
stay in touch with the issues and important items affecting the
profession.”
Those who don’t stay “in touch” can find themselves in front
of the PCC. They face a process which is as fair as it can be,
he says, and the committee has tried, over the years to make it
less intimidating for members.
“If our investigations find the member has done nothing
wrong, the complaint is dismissed. If the conduct is particularly
bad then it is referred to the Disciplinary Tribunal. But there
is a lot in the middle – these are the cases that you can do
something with.”
The “something” Barker tries to encourage is improvement
in practice that benefits both members and the public.
He says highlighting areas of practice of which members need
to be aware, or areas where there are potential difficulties, is a
key role of the Committee.
“A primary focus is to make members aware of the traps
people can fall into. That’s the main benefit we offer back, I
think, from my feedback from members. The section in the
Journal, where a lot of the notices don’t include names, is not
meant to be punitive, it’s meant to be educational. People do
read those notices and they take them on board.”
“There are cases you
remember for certain
reasons. Some very
unfortunate cases you wish
had not come about”
Barker joined the PCC after many years of involvement with
the profession. He was active on the Canterbury Public Practice
Committee in the early 1990s, including a spell as chairman,
was elected to Council in 1995, serving till 2002.
He was on the Executive Board from 2000 to 2002 and has
also served on the National Tax Liaison Committee (including
several years as chairman), and the National Public Practice
Committee.
“I was encouraged to become involved when I first went
into public practice. One of the partners at the firm had been
involved at a local level and he said that you get a lot out of it.
I enjoyed working with the people and dealing with issues, and
it all blossomed from there.”
Barker was interested in finance at school but didn’t begin to
study accounting until university. “I found I enjoyed accounting
and decided to try and make a career out of it – something I
have not regretted for a moment.”
In the early stage of his career he did three years in audit,
and recommends this as a way to gain a grounding in how
business works.
“Audit had given me a taste for working with firms in an
advisory capacity. Then the opportunity to buy into a small
practice came up. In a place like Christchurch you just have
to be in the right place at the right time – and on thing led to
another.”
Being Christchurch based has also brought unique challenges,
particularly following the devastating earthquakes.
“It’s been very interesting. Most Christchurch CAs will have
learned about aspects of new buildings and refurbishments that
they might previously have only rarely come across.
“It has required us to be adaptable. I had two years working
out of an apartment at the university. You learn that you can
make do in less than ideal working conditions if you need to –
and a lot of our clients have had to make the same adjustments.
Another thing CAs have had to learn is the ins and outs of
insurance – mainly material and business continuity insurance.”
“In a business advisory role, there are a lot of questions
around trying to maintain a business under financial stresses
and strains. You have to be proactive with your clients, and
approachable.”
CAs have had to learn to be sensitive to clients’ personal
needs, as well as their financial requirements. As an advisor,
Barker says it is not uncommon to help clients work through
more than just their financial difficulties when normal life is
disrupted to the extent the quakes disrupted Christchurch.
“Some people did want to unload. It’s a big reason I do
business advisory work. It can be more than just an accounting
advisory role. You end up with some good friends out of it. You
are happy to make yourself available to clients with whom you
have developed that sort of relationship.”
As PCC chair, Barker is aware that the reality of such a working
environment can present challenges to a public practitioner.
“You have to manage conflicts of interest and maintain your
independence. It is one of the most important parts of the job.
Barker says that public practitioners can sometimes find
themselves taking on work they are not qualified for through
trying to help their clients, or getting too close.
“The majority of complaints are around that independence,
when people lose sight of their responsibility to not have conflicts,
or to manage conflicts appropriately.”
Barker says he was surprised to win the award and is adamant
that for all that he has given to the profession, the profession
has also given back to him.
“I have never regarded it [my work for NZCIA] as a
imposition of time, even when serving on national committees
and being required to travel a lot, because I get a lot out of it. I
would recommend it to anyone entering the profession today.”
DECEMBER 2013
29
WESTPAC 2013
OUTSTANDING NEW
MEMBER OF THE YEAR
BEN RICHMOND CA
Sales and Product Specialist –
NZ, Xero Ltd
B
en Richmond CA is passionate about the value
accountants provide to clients, and enjoys dispelling
stereotypes about the profession.
He studied at the University of Canterbury, gaining a
Bachelor of Commerce in Accounting Finance and Information
Systems in 2009. Since then he has gained a good mix of
corporate, public practice, governance and small business
experience and is working toward his goal of leading an
entrepreneurial start-up and gaining global experience.
Earlier this year Richmond joined Xero NZ as a sales and
product specialist. Xero’s General Manager New Zealand
Amanda Armstrong says he made himself indispensable
within weeks of joining the company, quickly contributing
to the business.
“His ability to engage and rapidly develop credibility with
leaders, peers and accounting partners, many years his senior, is
testament to his capability, maturity and intelligence,” she says.
She also noted Richmond’s humility, saying: “You rarely
find someone with the level of strategic thinking and people
skills Ben has, especially in someone so young.”
Prior to Xero, Richmond was Senior Group Accountant at
Telecom, where he was recognised for his technical strength,
30
DECEMBER 2013
strong work ethic and pragmatism, making him a vital member
of the company’s award-winning external reporting team.
He played a pivotal role in establishing the Telecom
Foundation, Telecom’s charity vehicle. He was a staff elected
trustee on the Foundation, driving staff engagement in a number
of the Foundation’s programmes.
Sir Bob Harvey KNZM QSO, who chairs the Foundation,
describes Richmond as an emerging leader in New Zealand. He
says Richmond is a great communicator who is willing to work
on a wide range of projects in an enthusiastic, energised way.
Judges described Richmond as a clear thinker focused on
delivery, and on empowering others. They noted his desire to
contribute to young people through his involvement with the
Young Enterprise Trust, where he helps coach and mentor
students as they develop business and leadership skills. They
were impressed by Richmond’s energy and networking skills,
and the way he has successfully converted his accounting
background to an entrepreneurial focus.
In his spare time Richmond enjoys long-distance triathlons,
water skiing, squash, travelling. Earlier this year he was involved
in the State Epic 10km swim challenge, and has completed the
Oxfam 100km charity walk fundraising challenge.
EY 2013
PUBLIC SECTOR
CFO OF THE YEAR
PAUL HELM CA
CFO New Zealand Transport
Agency
P
aul Helm CA has a passion for financial management and
has been Chief Financial Officer (CFO) at four entities.
He has held his current role – CFO at the New
Zealand Transport Agency – for more than four
years. During this time he has led the development of, and
implemented, the long-term financial management information
strategy for the Agency, requiring working with the Board, the
senior leadership team and other managers in the organisation.
He has developed the role of the finance team to an extent
that they are now seen as business partners who add value
through advice on a range of matters, not solely financial.
This required some restructuring and the appointment of
new finance managers.
His role has also involved leading the SAP finance systems
implementation across the Agency, leading the management of
a borrowing facility for the Agency and operating across the
business to help bring two former organisations together when
Transit New Zealand was merged with Land Transport New
Zealand. Helm has also worked on key projects including the
financial evaluation of the Transmission Gully PPP options,
and managed an Inland Revenue tax review across the Agency.
Prior to this role, Helm was Director of Finance at the
Ministry of Foreign Affairs and Trade. He has also had roles
with Parliamentary Services, the Parliamentary Counsel Office
and the Office of the Clerk, the Ministry of Health, and been
Audit Manager then Audit Director at Audit New Zealand.
Helm has been a CA with NZICA since 1993 and is an
FCA with the Institute of Chartered Accountants of England
and Wales.
He says he endeavours to be a good role model for
accountants in the public sector and sets high standards for
his teams. He aims to bring innovation and change to financial
reporting to add value to the discussions around figures.
Outside of work and family commitments Helm enjoys
extensive running – up to 60km off road at a time. He also
coaches swimming at a local club.
DECEMBER 2013
31
MYOB 2013
INNOVATION AWARD
Patrice Wynen CA and Ken
Stephens CA
PATRICE WYNEN CA
Director Finance Delivery Centre, Fonterra
Patrice Wynen CA has worked for Fonterra and its legacy
companies for 20 years. She joined the graduate programme
after completing a Bachelor of Commerce degree at Auckland
University.
During her career in the dairy industry she has held a number
of roles including a finance and commercial management
role, site operations manager and is currently Director of
the Finance Delivery Centre, which provides finance shared
services to Fonterra companies globally.
Wynen is married with two daughters aged six and eight
and enjoys supporting their activities and spending time with
her family at their holiday home.
KEN STEPHENS CA
GM Reporting Services, Finance Delivery Centre, Fonterra
Ken Stephens CA has worked at Fonterra for four years.
As GM of Reporting Services within the Finance Delivery
Centre his team is made up of 100 accountants who provide
management and financial accounting services to Fonterra
globally. Prior to this, he worked for KPMG for 12 years after
completing a Bachelor of Management Studies at the University
of Waikato. At KPMG Stephens was based in Hamilton and
worked throughout the country providing audit and advisory
services to some of New Zealand’s largest companies.
He is married with two sons under the age of three and enjoys
spending any spare time with his family at their bach.
32
DECEMBER 2013
W
ynen and Stephens were responsible for the
governance of “Project Goldilocks”, a Fonterra
initiative which resulted in reducing the time
taken to complete month end financial close
by more than 50% through leadership and innovation.
Fonterra’s Finance Delivery Centre (FDC) led the change.
FDC is a shared service provider based in Hamilton, providing
financial services globally. Wynen led the strategic engagement
with FDC’s senior stakeholders and led Group-wide initiatives.
Stephens led the operational elements of the project, which
included working with the wider Fonterra finance community.
The project saw the introduction of a “Right at any time”
culture, changing a mindset that month end was the time to
review transactions and do corrections. The success of this
project has seen FDC take a strong leadership position across
Fonterra’s finance community.
A key success factor of this project and the leadership
focus was a cultural change. This was achieved by sharing
the vision, instilling belief, empowering staff to come up
with solutions then harnessing the imagination and energy
of staff to deliver. The project involved a significant change
in organisational culture, but with determination and clear
communication, the pair were instrumental in changing
entrenched thinking that shorter month-end turnaround
time was impossible.
The judges felt the pair lived their corporate values and
showed great commitment and leadership to achieve their
outcomes.
CROMBIE LOCKWOOD 2013 CHARTERED
ACCOUNTANT OF THE YEAR
The Crombie Lockwood 2013 Charted
Accountant of the year knows which way is up. They have used their
extraordinary talents, boundless ambition, leadership skills and dedication
to the profession to become New Zealand’s best professional accountant.
As a company with a proud track record of recognising talent and
fostering excellence, we are proud to be the preferred broker of NZICA,
and the sponsor of the Crombie Lockwood Chartered Accountant of
the Year Award.
Crombie Lockwood has been providing natural cover to New Zealanders
since 1978. With a team of more than 800 professionals located in 22
local offices, we are committed to providing proactive advice and solutions
to position chartered accountants and New Zealanders to financially
survive any insurance event.
Crombie Lockwood congratulates Nick Main FCA, winner of Crombie
Lockwood 2013 Chartered Accountant of the Year.
EECA BUSINESS 2013 SUPREME ANNUAL
REPORT AWARD AND EECA BUSINESS 2013
SUSTAINABILITY REPORTING AWARD
EECA congratulates Watercare Services Limited, winner of the EECA
BUSINESS 2013 Supreme Annual Report Award, and New Zealand
Post, winner of EECA BUSINESS 2013 Sustainability Reporting Award.
Both organisations are well placed to make energy management work
well for them.
And the size of the prize should not be underestimated. Including
transport fuel costs, firms in New Zealand spend around $8.3 billion each
year on energy. EECA BUSINESS estimates that together New Zealand
businesses could save $1.6 billion of this through energy efficiency.
By understanding how to better manage energy through energy-saving
technology, renewable energy and changing the way they work, businesses
can improve performance significantly.
Depending on business sector and size, EECA BUSINESS offers funding,
and information that makes starting and building on a successful energy
management programme that bit easier.
Investing in improving the way your business uses energy is one of
the most effective ways of raising productivity.
Improving energy efficiency is a low-risk investment with savings that
go straight to your bottom-line, but the benefits don’t end there. Energy
efficiency delivers for businesses on many levels.
AMERICAN EXPRESS 2013 OUTSTANDING SERVICE TO
THE PROFESSION
American Express is a leader in global payments and a
global service company, providing customers with access
to products, insights and experiences that enrich lives and build business
success. It offers a broad array of payment, expense management and
travel solutions for consumers, small businesses, midsize companies and
large corporations.
As an NZICA Privilege Partner, American Express provides a range
of products for NZICA members, such as the NZICA Gold Credit Card
and the NZICA Platinum Credit Card.
As part of the 2013 NZICA Leadership Awards, American Express
would like to congratulate David Barker FCA, winner of the Outstanding
Service to the Profession Award.
MYOB 2013 INNOVATION AWARD
Everyone at MYOB has been excited about the
2013 NZICA Leadership awards, in particular
the new Innovation Award we sponsored.
We’ve been inspired by many of the entrants and wholeheartedly
congratulate deserving winners Kenneth Stephens CA and Patrice Wynen
CA. The talent on display bodes well for a fantastic future for New
Zealand’s accounting industry.
Innovation is something we embrace every day and it is one of our
core values. Some of our latest milestones are uniting with BankLink,
introducing the new MYOB Accountants Office Tax Manager product,
launching a conversion service for clients who want to switch to MYOB,
giving SMEs access to a free business reality check portal and taking the
next big step in realising our vision of the Common Ledger with our
latest Client Accounting release.
Here’s to plenty of milestones for all of us over the next year.
WESTPAC 2013 OUTSTANDING
NEW MEMBER OF THE YEAR
With 1.2 million customers and 5,500 employees,
Westpac is one of the country’s largest full-service banks.
We’re about helping our people, customers, communities and businesses
get to where they want to be, and supporting programmes that Kiwis
are passionate about.
We’ve been in New Zealand for more than 150 years and we love
celebrating business success and leadership – that’s why we’re the Sir
Peter Blake Trust’s Foundation Partner, demonstrating our commitment
to developing leadership. We sponsor 19 Business Excellence Awards
nationwide, and are proud to complement this business and leadership
focus with our support of the NZICA Leadership Awards.
Westpac would like to congratulate Benjamin Richmond CA, winner
of Westpac 2013 Outstanding New Member of the Year.
EY 2013 PUBLIC SECTOR OF CFO OF THE YEAR
EY congratulates the finalists in the Public Sector CFO of
the Year, and in particular the overall winner, Paul Helm
CA, for his achievement.
Today’s CFO plays an important role in evaluating opportunities and
collaborating with other functions to achieve strategic goals. The CFO
and their team are agents of change, leading the transformation of public
services delivery, using improved systems and processes that are more
effective, efficient and better value for money. In today’s environment,
the public sector CFO must balance the pressure on governments to do
more with less while meeting public expectations for high quality services.
EY works alongside CFOs to meet today’s complex challenges,
bringing together teams of highly skilled professionals from our assurance,
tax, transaction and advisory services. We are inspired by a deep
commitment to help you meet your goals and enhance public value,
today and tomorrow.
DECEMBER 2013
33
The wide open spaces of Wyoming near Jeffrey City
(“city” could be misleading!)
Unforgettable, unsealed road down into Monument Valley.
BALL WHEELS
WAY ACROSS USA
NZICA Life Member Dr Ian Ball FCA celebrated the end of his 11year contribution to global accounting as CEO of the International
Federation of Accountants earlier this year by hitting the open road.
In May and June he completed a solo ride on his BMW K1200
GT motorcycle across the continental United States. Beginning
in upstate New York, Ball set out on a 8,000 mile (more than
12,000km) road trip to Seattle. He travelled via Florida, the Gulf of
Mexico, Texas and the Rocky Mountains.
We are delighted to bring you some of the photos from his trip,
including his recommended “hidden gem” Canyonlands National
Park in South Eastern Utah.
Crow taking a very close interest in my gear – all of which survived.
What I wore for two months – and I did wear gloves
– against a Wyoming backdrop.
In hotels.com this is described as a lodge – not quite what I was expecting but a
night to remember. In Blackfoot territory near Browning, close to the entrance
to the Glaciers National Park.
Guarding the entrance to Canyonlands National Park in Utah.
Evening view back over Canyonlands from a small, high altitude road.
At the top of the Trail Ridge Road in the Rocky Mountain National Park. It may be summer, but it is also more than 3,700m high.
Car park at White Sands National Monument – everyone else had
sought shelter from the sun.
Dust storms in Monument Valley – sand in the teeth on this stretch.
BUSINESS
Michael
Bradbury FCA is a
professor in accounting
at Massey University. He
sits on the IFRS Advisory
Council of the International
Accounting Standards
Board.
IFRS IN
CONTEXT
OCTOBER IFRS ADVISORY COUNCIL REPORT: THE CONCEPTUAL FRAMEWORK.
“IN ONE WORKING GROUP I WAS ON, A NON-ACCOUNTANT
WANTED GOODWILL RECOGNISED IN THE FOOTNOTES BUT
NOT IN THE BALANCE SHEET”
O
ne of the agenda items for the October IASB
advisory council meeting was revision of the
Conceptual Framework.
In July, the IASB issued a discussion paper
(DP) that sets out its preliminary views on issues that have
caused problems in the past. The IASB has not reached
preliminary views on all issues in the DP. Hence, there is
scope to influence further development of the final Conceptual
Framework.
Any changes made to the Framework will affect the
content of accounting standards for the next decade or
more. Therefore it is important that the concepts in the DP
are reviewed, debated and understood. Comments on the
DP must to be received by 14 January 2014.
36
DECEMBER 2013
As a former member of the NZ Financial Reporting
Standards Board and IFRIC, I can attest to the usefulness
of a conceptual framework.
It promotes consistency in standard setting, as there is a
shared framework rather than each board member having
their own framework.
It improves communication with constituents. For example,
in one working group I was on, a non-accountant wanted
goodwill recognised in the footnotes but not in the balance sheet.
The IASB is not intending to reopen decisions made in
2010 with regard to objectives and qualitative characteristics.
However, it will be under pressure to do so. Issues such as
stewardship (or accountability), prudence and reliability are
likely to be raised by submitters on the DP.
BUSINESS
1
REVISED PRIMARY PURPOSE
The IASB believes the current long list of possible uses of the
Framework is unhelpful and proposes the primary purpose
is to assist the IASB by identifying concepts that it will use
consistently when developing and revising IFRS.
This seems sensible to me. When a jurisdiction adopts IFRS,
it does not simply adopt IAS 39 or IFRS 3, what it adopts
is a process. In this sense I view the Framework as part of a
“contract” that sets out how that process will develop new
accounting standards.
However, I think the DP makes a mistake in listing other
(non-primary) uses for the Framework. In a manufacturing
world, if I make widgets for a specific use, why would I specify
other possible uses?
The DP does not propose to change the current status of the
Framework. The existing Framework is not a standard or an
interpretation and does not override standards or interpretations.
Some argue that the status of the Framework ought to be
elevated. I do not see how concepts can be mandated. In any
event, IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors provides a link with the Framework at
a standard level.
2
DEFINITIONS OF ASSETS AND LIABILITIES
The current definitions of assets (and liabilities) contain the
notion that an inflow (outflow) is “expected”. The DP proposes
that definition should not retain references to probability and
the level of uncertainty should be built into measurement.
For example, contingent liabilities are currently not
recognised because there is no probable outflow of resources.
The DP proposes to delete the “expected” from the outflow
part of the liability definition. Thus an obligation that has a
10% likelihood will be recognised.
Consider an example where Company A has such an
obligation and Company B does not. Is Company A in a
worse position? If so, this should be reported. Furthermore,
if Company C acquires Company A then the obligation is
recorded.
3
standard, rather than at the level of the Framework.
In my opinion, cost-based accounting may have some
comparative advantages, but relevance is unlikely to be one
of them.
The DP approach causes problems, not because multiple
measurement methods are used, but because multiple methods
become the measurement objective. My preference would be
to have a Framework that is “aspirational” and one that can
be used as a basis to develop future accounting standards. For
example, fair value would seem to be a reasonable measurement
objective as it is extensively used in current accounting standards.
4
ENFORCEABLE AND CONDITIONAL
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets extends the scope of liabilities from a legal obligation
to various forms of “constructive obligations”.
The DP asks whether the “present obligation” for a liability
should be restricted to obligations that are strictly unconditional
(ie where obligation cannot be avoided). Or, whether a liability
should be extended to include (1) obligations that are practically
unconditional (eg constructive obligations) or (2) obligations
that are conditional on the entity’s future actions.
5
OTHER COMPREHENSIVE INCOME
Despite a preference for a single statement of performance, the
IASB has allowed items to be reported in “other comprehensive
income” (OCI). Unfortunately there are no principles for
explaining which items belong in OCI or why only some items
are later recycled from OCI to the profit or loss statement.
The DP has come up with some plausible rules, such as
OCI would contain: (1) mismatches and (2) items measured
differently for income and balance sheet purposes, and (3)
re-measurement of items expected to be held for the long term.
Unfortunately, in my opinion, these suggestions are rules that
distil current practice; they are not principles from which to
develop future standards. Furthermore, they are rules that
ignore the empirical evidence on items of OCI.
MEASUREMENT
CONCLUDING REMARK
Current accounting is a mixed-attribute model, whereby
multiple measurement methods exist. The DP argues in favour
of basing the measurement method on how an asset or liability
is expected to affect future cash flows and therefore retains
a mixture of measurements. The DP argues that cost-based
information is more relevant for assets which are used up in
business operations. It also favours cost-based measurement
for several types of liabilities. Effectively, this leaves the issue
of measurement to be decided at the level of a particular
I have highlighted five important Framework issues; but there
are many more. The DP comprises 238 pages and asks 26
questions. Most of us will not have the time to comment on
all issues. However, to have the standards we want, we should
take time to comment on some issues.
References
Discussion Paper DP/2013/1: A Review of the Conceptual
Framework for Financial Reporting, IASB July, 2013
DECEMBER 2013
37
BUSINESS
BY KEN WARREN FCA
INTERNAL CONTROL
IFAC’s guidance has been effectively incorporated into the New Zealand
Government’s thinking and approach to internal control.
A
s the government's lead economic and
financial adviser, the Treasury of New
Zealand has a particular focus on ensuring
state-level public sector performance
improves living standards.
Setting clear expectations and producing relevant
and reliable accountability information is critical to this.
For its work in preparing fiscal forecasts and
financial statements, and in assessing departmental
performance, the Treasury relies on information
provided by other government departments and
agencies. In order to evaluate the adequacy of this
information, the Treasury performs assessments to
ensure that the internal controls used by information
providers are operating effectively.
As the Treasury sought to refresh its approach in
this area, it chose to embed the International Good
Practice Guidance Evaluating and improving internal
control in organizations, published by the International
Federation of Accountants (IFAC), into its internal
control and financial management assessment tool,
CIPFA TICK.
With permission from IFAC, the Treasury adapted
the guidance to help departmental and agency risk
committees and senior management respond to
results that were outside predetermined tolerance
levels. That is, the Treasury doesn’t expect perfect
results but we do expect results to be within the risk
appetite level of senior management.
The IFAC guidance seeks to facilitate the evaluation
and improvement of existing internal control systems
by highlighting a number of areas where the practical
application of existing internal control standards and
frameworks often fails in many organisations.
Because the Treasury wants to be alert to such
issues, this guidance is, therefore, very relevant for
public sector organisations in New Zealand.
Ken Warren FCA is the Chief Accounting Advisor
at the New Zealand Treasury and a member
of the International Public Sector Accounting
Standards Board, ipsasb.org.
38
DECEMBER 2013
THE TREASURY TOOL is an electronic questionnaire that seeks
assessments against each of the nine principles identified in the
IFAC guidance. The survey is completed annually by approximately
500 budget holders, internal auditors, finance staff and senior
managers across New Zealand’s public sector. The first year’s results,
for the year ending 30 June 2013, are available at treasury.govt.
nz. Although the Treasury and other central agencies have been
reassured that internal control systems are currently adequate
for reporting objectives, the survey results have also highlighted
challenges.
There is a low maturity in integrating objectives, risk
management, and internal controls. Work is ongoing to
develop and improve expectations and assessments of
risk management.
Updating risk management processes and responsibilities
has proved a burden for departments that have been
restructured recently. This has reinforced the importance
of central agencies paying greater attention to departments
undergoing significant change or restructuring until new
performance levels are normalised.
Delivering value for money is a common objective of many
public sector organisations, but it is not easily measured.
This has undermined accountability, which has led to a
widespread lack of meaningful responses to substandard
performance in this area. Central agencies currently have
several projects in place in the performance reporting
and management area. The survey has emphasised the
importance of these initiatives.
Some senior management teams lacked consistent
leadership on risk management; internal control was also
not always being consistently reinforced. The departmental
performance assessments processes are drawing attention
to these concerns.
Through this refreshed focus on assessing the effectiveness of
internal controls, the Treasury has been able to collect more
useful performance information for department management
and achieved cost savings in the process. A summary of the survey
results, as well as an analysis of the responses, can be found on
the Treasury website.
BUSINESS
LIVESTOCK TAX
BY GEORGE COLLIER CA
Changes to livestack tax rules are highly significant and should
be understood by chartered accountants and their clients.
T
he government has recently introduced changes to
livestock tax that are the most significant changes
since the introduction of the Herd Scheme in 1987
and the subsequent introduction of the National
Standard Cost (NSC) scheme in 1992.
These include some retrospective changes to the Herd
Scheme and changes to the National Standard Cost (NSC)
scheme for dairy farmers for the 2014 income tax year
(increases in NSC for Rising 1 & Rising 2 year dairy heifers
and subsequently dairy cows valued under the NSC scheme).
The two main livestock schemes used by the significant
majority of farmers are the Herd Scheme and the NSC scheme.
Herd Scheme: Herd Scheme values are derived from an
annual valuation of the six species of livestock and represent
the National Average Market Value (NAMV).
The Herd Scheme recognises livestock as long-term capital
assets, generating income in the form of animal products and
replacement animals to maintain the herd.
Increases in the NAMV over time are tax free (livestock are
revalued annually and are essentially held on capital account).
Likewise, decreases in the NAMV are not tax deductible.
The increases in beef cattle values in the above graph over
time are tax free on the Herd Scheme. Effectively, it inflation
proofs the value of livestock from a tax perspective.
National Standard Cost scheme (NSC): This is a cost based
livestock valuation system which is updated annually and
represents the costs of rearing and growing immature and
mature livestock. It is influenced by on-farm expenditure and
production, and adjusted through an inflation index. It can
40
DECEMBER 2013
also be influenced by livestock purchases. Livestock are held
on revenue account and increases in cost over time are taxable.
The NSC scheme is helpful in minimising the tax cost if
a herd or flock is expanding over time, eg for sharemilkers.
The passing of the Taxation (Livestock Valuation,
Assets Expenditure and Remedial Matters) Act 2013 has
confirmed some changes to livestock tax that will be applied
retrospectively.
Other changes to livestock tax will roll out over the next 12
months, particularly in relation to NSC and dairy cattle values.
HERD SCHEME CHANGES
Herd Scheme changes include:
• significant limitations on exits from the Herd Scheme
• clarification of what year’s Herd Scheme values to use
upon exiting from farming when all livestock are sold
• combining of the NAMV (Herd Scheme values) for Friesian
and Jersey dairy livestock and Red and Wapiti deer for
the coming year (2014).
SIGNIFICANT LIMITATIONS ON EXITS FROM THE HERD SCHEME
The most recent changes have come about to prevent a loss
in tax revenue of an estimated $275 million over the next
six years, starting in the 2012–13 year.
Previously, there has been the ability to elect out of the
Herd Scheme, with two years’ written notice, to an alternative
valuation option which could include NSC, Self-Assessed
Cost and Market Value Replacement Price. Most farmers
have chosen NSC.
BUSINESS
Herd Scheme Values - Beef Cows
Rising 2 Yr Heifers
Mixed Aged Cows
1,200
$ Value
1,000
800
600
400
200
0
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
19
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
20
11
Year
Inland Revenue has recognised that this has allowed
farmers to transfer between the Herd Scheme and NSC
with some planning to take advantage of the fluctuations in
livestock values.
Transfers of livestock between associated parties are also
caught; in that those livestock purchases, which were previously
valued by the seller using the Herd Scheme must adopt the
Herd Scheme and the seller’s base number of livestock on the
Herd Scheme for that type and class of livestock.
the Taxation (Livestock
Valuation, Assets
Expenditure and Remedial
Matters) Act 2013 has
confirmed some changes
to livestock tax that will be
applied retrospectively
The Taxation (Livestock Valuation, Assets Expenditure,
and Remedial Matters) Act 2013 has been enacted and will
in most cases remove the ability for farmers to exit the Herd
Scheme from 18 August 2011. This is the date the officials’
paper on the Herd Scheme was released.
On 28 March 2012 Peter Dunne and Bill English announced
that elections to exit the Herd Scheme under EC 11(3) of the
Income Tax Act 2007 were made irrevocable, which effectively
backdated the legislation and meant that any elections from
18 August 2011 to exit the Herd Scheme for the 2013 year
were not valid (even though correspondence came back from
IR for elections after the 18 August 2011 stating the election
had been accepted).
EXCEPTIONS TO THE IRREVOCABILITY OF EXITING FROM
THE HERD SCHEME
1. A change in farming system from a breeding to a fattening
regime. A formal election in writing must be made. The
livestock must be used in a fattening farming business for
and after the start of the income year.
2. Associated party in the ordinary course of business. For
example, annual draft ewes ordinarily sold from father
to son.
3. Associated party transfers for an intergeneration transfer.
There are, however, several criteria that must be met to
enable this to occur.
a. The transferor (parents) and transferee (children)
cannot have a beneficial interest in each other’s entities
(this could include entities that have a trust) where both
parents and children are beneficiaries in the same entity.
b. The livestock must be sold at market value.
c. All of the livestock in the income year must be disposed
of and the seller cannot derive income from the disposal of
the specified livestock for the next four years (effectively
a full sale of all livestock and no income being derived
from livestock ownership for the next four years).
OTHER HERD SCHEME CHANGES
When exiting from farming there was previously some
flexibility as to what year’s Herd Scheme values could be
adopted (if a written election was completed by 1 February
then the previous year’s Herd Scheme values could be used).
The new EC20 rule provides that when a farmer ceases
to derive income from livestock, the farmer must adopt the
DECEMBER 2013
41
BUSINESS
Herd Scheme Values - Dairy Cows
$ Value
Friesian Rising 2 Yr Heifers
Friesian Mixed Aged Cows
2,300
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year
prior year’s Herd Scheme values if the livestock are sold
before 1 November. If the livestock are sold after 1 November
then they must use the current year’s Herd Scheme values
(published in May each year).
The rule also applies upon the death of a taxpayer.
NATIONAL STANDARD COST CHANGES
EXAMPLE FOR DAIRY CATTLE
Year
Current R1
Yr Heifer
Revised R1
Yr Heifer
Difference
R1 Yr Heifer
Current R2
Yr Heifer
2012-13
$487.60
$552.52
+$64.92
$119.20
Revised R2
Yr Heifer
Difference
R2 Yr Heifer
Current
Mature
Value
Heifer/Cow
Revised
Mature
Value
Heifer/Cow
Difference
Mature
Value
Heifer/Cow
$429.24
$310.04
$592.50
$966.46
+$374.96
CHANGES TO THE NATIONAL STANDARD COST SCHEME
FOR DAIRY CATTLE
There will be an increase in NSC livestock values for the
2014 income year and this will have an impact over the next
seven years on taxable income for dairy farmers using the
NSC scheme.
The NSC scheme was introduced in 1992 to provide
farmers with “fair and reasonable” livestock values to use
for their inventory livestock valuation system to reflect the
rearing and growing costs of their flock or herd. This scheme
has been used by a large number of farmers who have grown
42
DECEMBER 2013
their herd over time.
The driver behind the increase in NSC values for dairy
cattle is that the model used to calculate growing and rearing
costs had become outdated in that most R1 & R2 year heifers
are now grazed off the dairy platform and therefore incur a
regular grazing fee.
Previously replacements were often grazed on farm or on
a run-off block owned by the dairy farm operator.
IR has recognised that such a fundamental change to the
cost calculation model will in some cases have a significant
impact on increased taxable income for dairy farmers. They
have therefore agreed to spread the increase out over three
years, which effectively means that it could take seven years
for the increased NSC values to become incorporated in the
value of all the livestock, including the cows.
The impact from a taxable income and tax payable
perspective for a 400 cow farm with a 23% replacement
rate (90 heifers): over the next seven years there would be
$156,000 of extra taxable income and at a tax rate of 28%
would equate to $44,000 of extra tax payable.
OTHER LIVESTOCK TAX CONSIDERATIONS
Now that there are significant limitations to exiting the Herd
Scheme, careful consideration needs to be given as to whether
extra livestock should be entered onto the scheme.
Increases in livestock numbers above the base herd livestock
numbers can be valued at market value on any livestock
valuation scheme.
For example if there were 2,000 3 & 4 year ewes and they
increased in number by 500 to 2,500, then the extra 500 3
& 4 year ewes could be valued at the NSC value of $50.90/
BUSINESS
head for the 2013 year, instead of the Herd Scheme value for
3 & 4 year ewes of $102/head for the 2013 year.
Entry into the Herd Scheme for extra livestock above the base
number could be considered in the following circumstances:
• livestock are purchased above the scheme value and entry
into the Herd Scheme provides a tax deduction (although
if future values are likely to fall, delaying the transfer into
the Herd Scheme should be considered)
• a high NSC value and a low Herd Scheme value
• when a sole trader or partnership livestock farming entity
is likely to sell out of livestock farming in the foreseeable
future and they wish to minimise tax payable at point of
exit (however, careful consideration would be required
if the livestock are sold to an associated party)
• when there are significant tax losses that are unlikely to
be utilised in the foreseeable future.
The NSC scheme could be considered in the following
circumstances:
• most applicable to company and trust ownership, as there
is an ongoing continuation of ownership of the livestock
by the farming entity regardless of who the shareholders
of the company or beneficiaries of the trust are
• when increasing livestock numbers by retaining extra
homebred replacements
• when increasing livestock numbers above the base herd
number and the herd values appear to have peaked and
would likely be lower in the following year.
SALE OF LIVESTOCK THAT ARE ON NSC
Delaying the sale of livestock, eg dairy cows, until early in the
new financial year, for example, 1 June compared to 30 May
(for 31 May balance dates) can delay the taxable impact of
the sale for a further 12-months.
SUMMARY
Livestock taxation is a complex subject. It is well worth
seeking the advice of your accountant around the issues
to be considered and the options available. Every farming
business will be different and every year there will be different
considerations to be made as to what is appropriate from a
livestock valuation perspective.
George Collier CA is a Director of ICL Chartered Accountants,
Alexandra and a member of the NZICA Regional Advisory
Group. E: [email protected]
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DECEMBER 2013
43
BUSINESS
BY TIM GACSAL CA
MARKET CUES
Time the CFO took a cue
from the CMO.
A
s business executives continue to embrace digital
trends such as social media, mobile and search engine
technologies to engage with customers, CFOs who
do not keep up will lose influence to astute CMOs
(Chief Marketing Officer) or CCOs (Chief Customer Officer).
Why? Because these new technologies make measuring
marketing’s worth much more accurate and reliable than in
the past and the focus is rapidly switching from “should we
be spending on marketing at all?” to “what’s the optimum
marketing spend needed to hit our revenue targets?”
True, some CFOs have marketing in their DNA and see
the CMO as a valuable ally. However, in my discussions with
many CFOs in major New Zealand corporates and SMEs, this
is more the exception than the norm.
VALUE REDEFINED
Many organisations still resemble a poorly planned potluck
dinner, when everyone brings dessert but no one brings main
dishes.
What tends to result is organisations where one team is
blithely operating unaware of the others. A culture of distrust
emerges, along with a strengthening of functional silos.
One of the biggest causes of this situation is that, while the
silos are trying to create value, different stakeholders conceive
of value differently.
To the CFO value is something that originates from an
internally oriented view, by satisfying shareholders through
minimising costs and maximising returns greater than investors’
risk-adjusted required rate of return.
In contrast, the CMO or CCO sees value as an externally
oriented activity focused on satisfying customers by increasing
the differential effect that product or service knowledge has on
customer response to the marketing of that product or service.
Or more simply, building awareness that results in sales.
Talk to a COO (Chief Operating Officer) and value is likely
to be satisfying both shareholders and customers by ensuring
the product or service can meet customer expectations of utility
at the price and margin set by the firm.
Who’s right? Of course, all three are.
Strong business performance requires a balance between
44
DECEMBER 2013
cost management, meeting consumer value expectations and
smoothly performing operations.
ONLINE REVOLUTION
Traditional marketing has been transformed by online channels.
But what’s really different about marketing activity today and
why does it favour the position of the CMO?
Because new online marketing channels available through
the internet have made the previous inefficient marketing
platforms obsolete. Marketers aren’t decreasing print ad
spending because it was a bad idea, but because it doesn’t
have the ability to hyper-target based on demographics like
Google Adwords, Facebook and LinkedIn.
Many organisations still
resemble a poorly planned
potluck dinner, when
everyone brings dessert but
no one brings main dishes
The other key, and perhaps the more important, reason
why astute CMOs have a great opportunity to gain boardroom
influence is because marketing impact is no longer hard to
measure.
Traditional measures of the impact of advertising, such
as a one page ad in a magazine, are fraught with error and
fail to explain the sources of the firm’s current or future
revenue. Take “reach” for example, which is a common
traditional measure of awareness and measured as the number
of people exposed to an advertisement in a given period.
This criterion fails to link the measure to incremental sales
or whether the advertisement had any real effect at all on
the intended audience.
In contrast, the internet allows the CMO to measure
advertising exposure using the number of “click throughs” to
the firm’s website and then the conversion rate of those click
BUSINESS
throughs and incremental sales by measuring the creation of an
online basket and check out. This arms the CMO with invaluable
data such as what it costs to get a customer to a website, the
conversion rate once they are there and the cost per conversion.
Given increasing the level of paying customers is also key to
creating shareholder value (a traditional finance objective),
this puts the CMO in the front seat when communicating the
value of their activities to the organisation.
If you are a CFO who still feels marketing’s more art than
science, based on outdated assumptions that it’s hard to know
whether the dollars spent on online marketing have led to an
increase in sales, listen up. Marketing intangibles such as status,
belonging and gratification are all powerful and predictable
drivers of customer decisions and, as demonstrated above,
the CMO now has the tools to link those decisions directly to
current and future sales and bottom line results. This makes
marketing metrics of great interest outside of the marketing
department.
INTERACTIVE MARKETING SPEND GROWING
There is a tectonic shift to online advertising going on right now
in New Zealand as highlighted by the Interactive Advertising
Bureau’s (IAB) latest figures for this year which show total
interactive ad spending in Q1 jumped to almost $100m (26%
increase year-on-year) and $121m in Q2, which equates to a
31% increase year-on-year.
By far the biggest growth was in mobile, where they say
more than half of all New Zealanders now own a smartphone
and expect this to grow to 70% early next year.
INTEGRATE YOUR ORGANISATION
One of the keys here is not to let the integration and alignment
fall into the lap of the CEO or COO – which just creates
duplication of work and wasted energy. What’s needed is
aligning shared objectives such a delivering organic growth,
increasing cash flow and profits and reducing earnings risk.
Both CFOs and CMOs play a crucial role in the sustainability
of the organisation and unless they can speak the same language,
neither will be able to maximise value to customers, shareholders
or the organisation.
FINANCE-MARKETING INTEGRATION HEALTH CHECK
As business advisers to many of New Zealand’s leading media
companies, BDO have got exclusive knowledge of the key
trends and developments driving the industry.
Over the past few years we’ve found that failed performance
in the marketplace and its effect on earnings, reputation and
investor confidence are some of the greatest risks of all.
To avoid the risk of being held accountable for significant
marketing spend failures that stem from a lack of integration
and under-informed CFOs, ask yourself five simple financemarketing integration questions which are commonplace
scenarios in leading organisations:
• Is the senior leadership team all in agreement on what
level of integration marketing and finance should have
in driving the business forward, from simply stewarding
the corporate brand to playing the central role in all key
business decisions?
• Is the broader organisational structure siloed where
marketing, finance and operational strategy are not
integrated or connected with each other and decision
making is disparate?
• What level of linkage is there with the firm’s existing
financial and other common systems for tracking marketing
expenditure and effectiveness, such as budgeting systems
where marketing costs are assessed in terms of productivity
and contribution?
• What marketing spend benchmarks and metrics are
currently in place to bring expenditure into line with
industry benchmarks, measuring performance in terms
of linkage with the companiy’s target gross margins and
illuminating the ROI of the current marketing spend?
• Are their formal finance-marketing collaboration
arrangements in place for shared accountabilities,
compensation and rewards for achieving marketing results
as cost effectively as possible?
Tim Gacsal CA is an Associate Director of the Risk Advisory
Services group at BDO NZ.
DECEMBER 2013
45
BUSINESS
BY GINA CHEUNG CA
NZ POST LEADS WAY
What do New Zealand Post Group, Coca-Cola
and Microsoft have in common?
T
he global financial crisis, globalisation, societal
expectations and increased regulatory requirements
have added layers of complexity to current corporate
reporting models. The International Integrated Reporting
Framework (The Framework), released by the International
Integrated Reporting Council (IIRC),1 is designed to support a
more resilient business environment and help organisations to
report on their strategy, governance, performance and prospects
in a clear, concise and comparable format.
Mark Yeoman CA, Group Chief Financial Officer at New
Zealand Post Group (NZ Post), oversaw New Zealand Post
Group undertake a new approach to the preparation of the
Group’s latest annual report.
As a state-owned enterprise, NZ Post, winner of EECA
BUSINESS 2013 Sustainability Reporting Award at NZICA’s
Leadership Awards, is responsible for publishing a Statement of
Corporate Intent each year and having a Statement of Corporate
Governance. It is therefore very familiar with the requirement
to effectively communicate the non-financial dimensions of its
business to its stakeholders. Yeoman says that sustainability
has been a big part of NZ Post’s “DNA” and it saw integrated
reporting as the next level of maturity.
“It provides a way to really talk about the non-financial
dimensions of the business, not only in terms of accountability
in the non-financial areas, but also in explaining our strategies
for managing them.” NZ Post is participating in a worldwide pilot programme
being run by the IIRC, which involves 100 organisations and
50 institutional investors. Participants have the opportunity
to contribute to the development of the Framework and to
demonstrate global leadership in this emerging field. Yeoman
acknowledges participation has been beneficial for NZ Post’s
adoption of integrated reporting. He notes that having examples,
and learning from other’s experience, is important.
“When you start off with a blank piece of paper it can be
46
DECEMBER 2013
tough, so having some guidance and support in the process is
important.”
Integrated reporting allows an organisation to review
itself across six key values – financial, manufactured, human,
intellectual, natural and social – called “capitals”, and provides a
deeper and more comprehensive assessment of activities, beyond
traditional financial and narrative reporting.
“It’s a lens through which we can look at our existing business.
If we don’t have some information that we think might be
useful, then we should be starting to measure it,” says Yeoman.
The integrated report seeks to inform its stakeholders about
how an organisation has created value in each of the capital
areas in the reporting period, and how it plans to keep doing
so over the medium and long term.
“It is an accountability
document, not a marketing
document”
Mark Yeoman CA, CFO NZ Post
NZ Post has established steering groups, each led by a
member of their Leadership Team, to develop reporting policies,
frameworks and action plans, and to provide company-wide
leadership in the focus areas of environment, marketplace,
community and workplace. Cross-functional groups ensure that
the business is aligned and appropriate communication channels
are open. When asked about role of senior management in the
process, Yeoman says Brian Roche FCA, as Chief Executive,
recognises that the business has a broader stakeholder base
than is served by compliance reporting.
“Brian is focused on the significant value associated with
this business that doesn’t show up in the numbers, and it’s
BUSINESS
really important for us to be conscious of where those sources
of value are, and how to protect and build them.” The efforts of NZ Post in the reporting area were bolstered
by a New Zealand visit from the Chair of the IIRC, Professor
Mervyn King in June. NZ Post staff attended these presentations,
giving them the opportunity to hear about the Framework and
integrated reporting from a global perspective, and emphasising
the importance of the project.
NZ Post’s 2012–13 annual report has been prepared as
two volumes: Annual Review and Supporting Information.
The annual report includes traditional financial reporting,
but also recognises the value that exists in other areas, such
as the environment (natural capital), staff (human capital),
and expertise (intellectual capital). In line with the principles
of integrated reporting, the new approach to the annual
report focuses on the issues that are most material to the
business, and those that are affected most by the execution
of strategy.
When asked about the key challenges the organisation
faced in implementing integrated reporting, Yeoman says it
was getting started.
“It’s in the important-but-not-urgent bucket, so getting some
air-time around this isn’t always easy.
“One of the challenges as soon as you get into non-financials
is being honest and up front. It is an accountability document,
not a marketing document. There is a tendency to want to tell
people all the good things you’re doing, but you might not
be so keen on telling them when things aren’t going so well.”
Facing up to areas for improvement is a challenge, but it’s
a step to finding out what’s really important to the business,
he says.
The movement towards integrated reporting is an ongoing
and evolving process. Ultimately, it provides the opportunity to
take a realistic measurement of impacts and how the business
is tracking against those.
“Putting that information in place can take time, so don’t expect
it all to be there in one day. Get the balance right and provide
something meaningful without trying to do too much at once.”
KEY STEPS TOWARDS ADOPTING INTEGRATED REPORTING
• Just get started – it will allow your business to evaluate itself
with a different strategic lens .
• Be clear about the reasons and benefits.
• Gain support from senior management.
• Talk to others who have produced an integrated report to
learn from them what works and what doesn’t.
• Use exemplars – the IIRC has created an “Emerging Integrated
Reporting Database” which provides examples of emerging
practice from organisations taking part in its Integrated
Reporting Pilot Programme.
• Create an internal steering group to advise on the process,
rather than leaving it to one champion.
INTERNATIONAL IR FRAMEWORK UPDATE
The draft version of the Framework was released in April 2013
and has had extensive consultation during the year. At the time
of writing, the final version of the Framework is expected to
be released in December 2013. The IIRC’s Pilot Programme is
scheduled to run until September 2014. The IIRC is confident
that, through this collaboration with experienced, practised
and enthusiastic professionals, integrated reporting will gain
momentum.
Gina Cheung CA is Advisory Groups Manager and a member of
the NZICA Technical Services Team.
1. The International Integrated Reporting Council (IIRC)
is a global coalition of regulators, investors, companies,
standard setters, the accounting profession and NGOs.
theiirc.org
DECEMBER 2013
47
BUSINESS
BY GRAHAM TUBB
PROCESS
IMPROVEMENTS
Tax disputes and alternative
dispute resolution.
R
ecently several writers have discussed the desirability
of further refinement to the way in which tax disputes
are conducted, and in particular commented on aspects
of alternative dispute resolution (ADR).
Inland Revenue (IR) has also been considering the effectiveness
of these options.
We view elements of the dispute process (prior to the
challenge stage) as effectively already constituting a form of
ADR, and it is possible to see the whole pre-challenge process
as an ADR model.
A carefully prepared submission sent by NZICA and the
NZ Law Society (NZLS) to IR in August 2008 argued that
the dispute process was stacked too heavily in favour of the
Commissioner, and that taxpayers suffered from “burn off”
due to the costs and complexity involved.
The submission led to very positive discussions between the
two Societies and the Commissioner over the next 12 months,
and resulted in various administrative improvements to the
process, such as extended “opt-out” and shorter notices of
proposed adjustment (NOPAs), as well as some legislative
reforms.
These changes have been included in the IR’s Standard
Practice Statements, SPS 11/05 and 11/06.
While it isn’t feasible here to review progress with all of the
recent changes, it is worthwhile looking at the progress made
with the conference stage, following the exchange of NOPAs
and a notice of response (NOR).
FACILITATED MEDIATION
The NZICA-NZLS submission suggested that the dispute process
would be enhanced by the use of independent mediators at the
conference phase.
Although the request was for someone from outside of IR,
the department proposed, given the expense and the constraints
of the statutory scheme, that appropriately trained independent
senior IR staff could be used in such a role.
The process adopted is a form of facilitative mediation, simply
called “Facilitation”, aimed at ensuring that the parties (the
taxpayer and IR’s Investigations staff, usually supported by Legal
and Technical Services (LTS)) have a common understanding
of the issues in the case, can identify any missing information
or arguments and, where appropriate, resolve the case.
This is not primarily about settling the dispute as such,
48
DECEMBER 2013
but that has certainly been the outcome on many occasions.
About 50 Inland Revenue officers from Office of the Chief Tax
Counsel, Litigation Management Unit, LTS and Investigations
at the senior technical level have received training in mediation
techniques from the Arbitrators’ and Mediators’ Institute of
New Zealand Inc.
The allotment of facilitators is centrally coordinated to ensure
independent and appropriate case allocation. Facilitators ensure
that contact is made with the taxpayer and agent, and coordinate
an appropriate meeting, setting out principled guidelines for
its conduct. The facilitator then chairs the meeting and seeks
to guide the relevant discussions.
Consensus from them is that the process is working very well.
The initiative has generated mostly positive feedback from
the practitioners who have been involved (and we hope that
over time more tax professionals will be involved).
The timeline guide of three months to conduct the conference
has also generally been met (though in practice settlement
discussions often prolong the process).
We strongly encourage practitioners to engage positively
in the process.
Between April 2010 and 15 November 2013 some 385
requests were received, about 60% of all cases which have
gone to conference stage; 105 of those were in the year to 31
March 2013, and 97 since then.
Use of the process is rising.
Non-facilitated cases are often where there is a related or
precedent case already in Court on which these later cases
might depend (and in which a facilitated conference will add
very little value) or where there has been a strong reason to
move the dispute directly through to Statement of Position.
As at 15 November 2013, of the 280 cases which have
BUSINESS
doubt work well in their particular dispute jurisdictions, they
do not have the sort of open disclosure, cards-on-the-table and
dialogue approach mandated in New Zealand.
We have studied these other models but our view is that
the facilitated conference is a form of ADR suitable to New
Zealand needs.
completed facilitation, the outcomes have been:
• proceeded to SOP stage – 45%
• settled/negotiated agreement – 28%
• taxpayer conceded – 11%
• Inland Revenue conceded – 11%.
if the case is precedential,
where a testing of the law is
appropriate, there may be
very little room for variation
of the correct application of
the law
A reasonable percentage of cases, particularly following the
provision of further information or clarifications at conference,
have therefore resulted in some compromise or settlement.
The opportunity to provide feedback to investigators and LTS
staff often proves valuable, sometimes leading to modification
of the case. Facilitators, though not decision makers, are often
able to quietly influence the perspective of the parties.
SPS 11/05 at paragraph 140 onwards has a full description
of the conference process.
OTHER FORMS OF ALTERNATIVE DISPUTE RESOLUTION
Some overseas jurisdictions such as Australia and the UK have
introduced more formal mediation structures. While these no
SETTLEMENT
As mentioned, the question of compromise settlement often
arises during the facilitation process. Facilitators should not
get directly involved in any negotiation which might take place,
but do encourage the parties to take that discussion offline.
Space is insufficient to discuss IR’s settlement processes
in detail, but Interpretation Statement IS 10/07, relating to
sections 6 and 6A, sets out the Commissioner’s view of the law
on settlements. IR has also developed slightly more detailed
internal processes to enable its Investigations and LTS staff to
consider proposals for compromise.
Our experience is that there is sometimes an exaggerated
expectation that cases should be settled prior to challenge in all
circumstances. That is not the case. When IR has undertaken
the investigation properly and is clear on its view of the law,
in particular when the facts are not contentious, its job is to
ensure the correct application of the law.
Accordingly, and particularly if the case is precedential,
where a testing of the law is appropriate, there may be very
little room for variation of the correct application of the law.
However, IR is prepared to, and often does, enter into
settlement discussions during the dispute phase and even
sometimes prior to the issue of NOPAs.
COMPLETION OF INVESTIGATION
As outlined in the SPS, Inland Revenue’s commitment is to
substantially complete its investigation prior to the issuing
of a NOPA.
IR is doing some work to consider whether or not a further
form of brief mediation or facilitation could take place at
this stage. At the moment, we feel that generally the formal
dispute process should still be commenced promptly, given
the pressures of the time bar, which would often rule out any
formal mediation at that stage, though time bar waivers may
be part of the solution here.
However, IR recognises the importance of continuing to
improve the disputes process, has strong national governance
over issues which emerge, and is working to ensure that the
dispute process is made more effective. Evaluation so far
suggests that overall a number of key gains have been made.
The challenge is to build on those. To do that, it will be
critical to have full engagement of, and feedback from, the
tax professional community in the ADR steps already taken.
Graham Tubb is Group Tax Counsel Investigations & Advice
at Inland Revenue.
DECEMBER 2013
49
BUSINESS
EFFICIENT ENERGY
A focus on energy can help the bottom line, says the EECA.
A
s professional business advisers, chartered accountants
can play a key role in helping businesses realise what
energy efficiency has to offer.
Including transport fuel costs, New Zealand firms
spend about $8.3 billion each year on energy. EECA Business
estimates that New Zealand businesses could save $1.6 billion
of this through energy efficiency.
Savings from energy efficiency go straight to the bottom
line, they can often be made at no or low cost and have a
typical payback period of two years or less.
Regardless of sector or size most businesses could save
between 10% and 20% on their energy costs.
Because energy efficiency projects are a low-risk investment,
they are a great way to free up capital for investment for things
like R&D. It can mean improved employee safety, reduced
maintenance, more comfortable working conditions, lower
carbon emissions and improved green credentials.
MANAGE WHAT YOU MEASURE
A popular saying in energy management circles that should
resonate with chartered accountants is: “You can’t manage
what you don’t measure.”
Fundamental to good business management is knowing
exactly how much of a resource is being used, what it is being
used for and how much it is costing a business. Because energy
is often regarded as a fixed cost, many businesses aren’t aware
that good energy management could save them as much as
20% on their energy bills.
An example of a company that has benefitted from taking
a strategic approach to energy use is meat processor and
exporter ANZCO Foods.
After putting in place a group-wide energy management plan
across its nine sites only a year ago, ANZCO has already clocked
up $500,000 in savings. ANZCO Foods Managing Director
Mark Clarkson says the energy management programme has
changed the way employees think about how energy is used.
“We now have a strong culture of good energy management
where energy is seen as an opportunity to look for efficiencies
and make savings, rather than simply as a fixed cost.”
A good example is the control of refrigeration plant at
their Waitara processing facility, which for an investment of
employee time only, resulted in $80,000 in annual savings.
Regardless of sector or business size, there is a common
theme in all energy management success stories. It’s commitment
from senior management.
Increasingly business leaders are becoming aware that good
energy use is a potential engine of growth – one that can deliver
on many levels.
50
DECEMBER 2013
By championing good energy management and supporting
the development of business cases for projects, a finance
professional can help their clients or their own organisation
build a strong, competitive position over the long term.
WHERE TO START?
An EECA Business One2Five® diagnostic service can help
unlock the potential of good energy management for firms
spending $250,000 or more on energy every year.
One2Five® includes an in-depth discussion with key
managers that examines their approach to energy. The session
is delivered by a trained facilitator and takes approximately
one hour.
As well as providing tailored reports, a One2Five® session
helps managers understand the impact of energy, carbon and
other resource management issues on their business.
Once the benefits of better energy management have become
a business priority, a monitoring and targeting programme
is a useful first step to identify opportunities.
To help firms get their project over the line, EECA Business
may fund up to 40% of the cost of an energy monitoring
and targeting system (up to 20% of annual energy spend).
BUILDING ENERGY PERFORMANCE
NABERSNZ is a voluntary energy measurement and rating
scheme to measure, rate and improve the energy performance
of office buildings in New Zealand.
Launched earlier this year, NABERSNZ is set to become
an industry standard for benchmarking and improving office
building energy performance.
NABERSNZ offers a free, online self-assessment tool
(nabersnz.govt.nz) which can be used to give tenants and
building owners an idea of how their building or tenancy
might rate.
No matter what business you’re in, EECA Business
can help you make the most of the energy you use
From efficient lighting, to motorised systems and
getting staff on board, you might be surprised at how
many ways you can save energy and reduce costs.
EECA Business offers information, resources, advice
and funding to help you make the most of the energy
you use. To find out more visit eecabusiness.govt.nz
or email [email protected].
GOOD FOR YOUR
CUSTOMERS,
GOOD FOR THE
ENVIRONMENT,
GOOD FOR YOUR
BOTTOM LINE.
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COLUMNISTS
JOHN HAYLOCK ON PUBLIC PRACTICE
who have tried to follow this process and failed.
Why?
Is it something to do with the lack of commitment
of the people concerned? Is it something to do with
Goal setting, performance
the poor quality of the goals and the actions that
were set? Or is the process itself flawed?
planning and happiness.
Oliver Burkeman, author of The Antidote,
John Haylock
questions our cultural focus on goal setting and
is Director at
s one year comes to an end we humans
argues that for many people and businesses it leads
Absolute Certainty
invariably start thinking about the next.
to failure and unhappiness.
Ltd. He can be
Our thoughts turn to what we can do
A key reason Burkeman suggests is that we can
contacted at
better next year – like how to spend more
become fixated on the original goal, refusing to
john@absolutetime with our family, how to exercise more and
change it when it is no longer appropriate. Burkeman
how to improve the performance of our business.
certainty.com
uses the phrase “goalodicy” for this fixation. It is a
We all know the process – set SMART goals
term first introduced by Chris Kayes, a professor
(Specific, Measurable, Attainable, Relevant and
of Management Science at George Washington
Time-bound), develop an action plan outlining the steps
University in Washington DC, who developed the idea
required and then measure and monitor our progress as we
following his experiences on Mt Everest in 1996. Although
complete the actions and achieve our goals.
Kayes was not trying to climb to the summit of Everest he was
You’ve probably heard about the famous study of 1953
in the region when eight climbers died in one day (including
New Zealand guides Rob Hall and Andrew Harris).
Yale graduates. Only 3% of the graduates had formulated
Kayes argues that one of the key reasons for the tragedy
specific life goals. Twenty years later that 3% with goals had
accumulated greater wealth than the other 97% combined.
was that the climbers disregarded the established guideline
There seems no doubt that the planning and goal setting
of turning back if the summit was not reached by 2pm. The
process can, and does, work.
climbers carried on past this guideline (to as late as 4pm). Kayes
Yet for all its success with some people, there are many others
believes they did this because they were fixated on achieving
GOAL CRAZY
A
52
DECEMBER 2013
COLUMNISTS
the goal of reaching the summit of Everest. On the way down
the climbers were caught in a storm in the dark and perished.
This phenomenon of taking unwarranted risks to achieve
a long-held goal is well known to mountaineers – who call it
“summit fever”.
Burkeman gives examples of people and companies that
have become similarly fixated on goals that have become
inappropriate. For example, in the early 2000s General Motors
focused on the goal of building market share – but profitability
crumbled and the company was only saved by a government
bailout.
When it rains, cab drivers
meet their revenue target
much more quickly and
many head home earlier
Perhaps the most interesting and unexpected was a study
of New York cab drivers. When it rains in New York it is
hard to get a cab. The obvious reason is that when it rains,
more people want taxis and so demand is greater than supply.
Burkeman says that when economist Colin Camerer studied
the issue he did find that demand surged when it rained. But
he also found something that confounded standard economics
– the supply of cabs also shrank.
The reason was drivers’ goals. New York taxi drivers rent
their vehicles in 12-hour shifts – it is apparently common
practice to set the daily goal of taking in twice as much in
revenue as it costs to rent the taxi. When it rains, cab drivers
meet their revenue target much more quickly and many head
home earlier.
It appears to confound common sense as they could easily
earn more money on wet days – but many drivers would rather
be somewhere else once they achieve their daily goal. Drivers
earn less money than they could and New Yorkers stand on
footpaths in the rain unable to get a ride.
Burkeman argues that rather than getting fixated on trying
to plan the future and the goals that will help us get there, we
would be much better off accepting that we live and work in an
uncertain world. He believes we should focus on developing the
flexibility necessary to respond to the conditions that we find.
Burkeman also suggests we would be happier if we focus
on living in, and enjoying, the present, and plan less and worry
less about the future.
As for that study of the 1953 Yale graduates that showed
so conclusively the benefit of goal setting. No such study ever
took place. It’s an urban myth.
We’re the people who
set the benchmark.
Since 2003 we have worked tirelessly to ensure
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AI473 NZICA Half Page_CG v2.indd 1
10/16/2013 9:29:27 AM
DECEMBER 2013
53
COLUMNISTS
just 10% are forecasting a fall – the lowest level
we have seen since March 2010.
Contrast that with our neighbours across the
ditch, where only 18% of Australian SMEs saw
revenue improve in the 12 months to August. Only
25% expected to see an increase in the following
12 months and 22% expected a revenue fall.
Exciting times ahead for New
Taking that into account, you appreciate even
Zealand business.
more
how far we have come as an economy.
Scott Gardiner CA
The
Christchurch rebuild has clearly had a lot
is MYOB Executive
e definitely turned a corner in 2013
Director. MYOB is
to do with the positive sentiment – particularly
after several pretty hard years.
an NZICA Business
in the South Island, where the effects are now
During the latter period growth
Partner.
beginning to extend across sectors and through
was uncertain, the international
the wider economy.
As both internal and external migration numbers
environment was, at best, challenging, and New
continue
to rise, boosting population levels that are now
Zealand faced some of the most significant natural disasters
in its history – from earthquakes, to storms and drought.
higher than pre-earthquakes, and unemployment numbers
During the challenging years of recession and recovery, our
fall, we can expect to see even greater economic activity in the
business community has demonstrated extraordinary resilience
region. It’s no surprise that 41% have seen revenue improve
in the past 12 months.
in the face of some once-in-a-generation challenges. Over the
last year, our local SMEs have created a solid platform for
Auckland remains a stalwart of our economic growth,
future prosperity. We’ve shifted from a stop-start recovery
behind a surging Christchurch, with 31% seeing growth.
to sustained growth. And I believe much of it we can expect
Wellington is coming along too, though not at as fast a pace.
to see flowing through the economy at a faster pace in 2014.
With a traditional mindset in place, you would say
Our latest MYOB Business Monitor demonstrates that
businesses within the two dominant economic growth regions
the sector now finds itself in good shape – and is positively
of Christchurch and Auckland are best placed to make the
bullish about 2014.
most of opportunities. On paper they certainly have a greater
We can see this clearly in the revenue of our SMEs, with
prospect of converting business growth plans into action.
But with the increase of online retail, geography doesn’t
30% reporting revenue increases in the 12 months to August,
and 43% experiencing stable revenue. Far fewer too, are seeing
need to be a restriction. Businesses located in other provincial
annual revenue decline – just 24% in our latest survey, down
centres are strongly encouraged to target the upper North
from 27% in March 2013 and 30% in June 2012.
Island and Christchurch regions, and of course other areas
Looking ahead to 2014, the picture is even brighter: 43%
across the country and internationally that need what they
of our local SMEs expect to see their revenue improve, and
are producing.
SCOTT GARDINER CA ON SMEs
LOOKING
FORWARD
W
54
DECEMBER 2013
COLUMNISTS
The time is ripe to be
proactive in marketing and
promotion, and investing
in customer attraction and
retention strategies
The time is ripe to be proactive in marketing and promotion,
and investing in customer attraction and retention strategies.
Our research shows most realise this, with SMEs ranking these
business elements as the first and second most important focus
areas for the next few months.
Although the financial and operational performance prospects
are good, we can’t afford to be complacent. There have been
some fantastic turnarounds, especially in the manufacturing
and wholesale sector where business owners have declared
“crisis averted” – 36% of SMEs now report revenue growth
and just 16% are seeing falls.
Centre
Result:
Past 12
months
revenue
up
Result:
Past 12
months
revenue
down
Expected:
Next 12
months
revenue
up
Expected:
Next 12
months
revenue
down
Christchurch
41%
24%
55%
9%
Auckland
31%
19%
44%
8%
Wellington
29%
24%
34%
15%
But there’s also some remaining weakness in key sectors
like retail and hospitality, and the primary industries.
When you are thinking about the key advice for clients
as we head into 2014, I can’t overstate the importance of
sustainable growth over high growth. We hear time and again
about businesses that over-reach and grow too big, too fast,
without the financial and human resources, the comprehensive
systems and processes to support it.
For your clients and for your own business, now is the time
to take stock of the opportunities and find ways to lock in and
maximise the benefits that will flow from there. And that means
paying close attention to the foundations of good business.
During the summer break and with the “fresh slate” of a
new year, we encourage business owners to take a Business
Reality Check (myob.co.nz/realitycheck) as several hundred
others already have. The online checklist and toolkit help
business operators get to grips with where they’re at, and
what they need to do to get to where they want to be. It’s
also useful for business advisers to use as a guide for clients –
and we know that many of you wear both hats. It’s the best
50 seconds you’ll ever spend.
Those looking at hiring over the coming months – a confusing
time for first-time employers especially – can also look for advice
and tools in our online employer portal (myob.co.nz/employ).
The best tools for success are all about saving money, but
they’re also about saving time and frustration. In a recent
client survey on bank feeds – our new initiative that automates
banking processes – business owners were able to knock an
average of ten hours off their bookkeeping every month.
Considering that many business owners work over 50 hours
a week, that’s about two hours a week that has been freed up
to be doing something elsewhere – whether it’s invested back
into the business or spent with family and friends.
Cloud computing, and with it online accounting, is opening
up a world of possibilities. In late 2013, we were very pleased
to see MYOB cloud-enabled products make up well over half
of our new unit sales. For us that’s an encouraging sign that,
not only are we following the right strategy for our customers,
but we are also putting the best tools into the hands of New
Zealand business owners. We know that businesses using the
cloud are 16% more likely to see a revenue gain. That’s an
important advantage for any business.
Over the next year, we will continue to work closely with
our partners, accountants and a network of developers to do
everything we can to help support a thriving New Zealand
SME economy. It’s going to be an exciting journey, and we
look forward to working with you along the way.
DECEMBER 2013
55
COLUMNISTS
was in the business of erecting buildings. For each
of these issues the availability of the residential
exemption had to be considered. In addition, the
Court had to decide whether the trust was liable
to account for GST output tax on the sales, and
A recent decision of the
whether the trust was liable for shortfall penalties
Taxation Review Authority
for gross carelessness, or alternatively for not
taking reasonable care. considered a number of issues
Partick Flannery
Based on the evidence, and his view that Mr
arising out of a series of
teaches taxation
and Mrs B were not credible witnesses, Judge
at Massey
Sinclair had little difficulty in holding that the trust
property transactions entered
University.
had failed to prove on the balance of probabilities
into by the trustees of the
that the Commissioner’s assessments were not
correct. disputant trust.
In relation to the first issue, the Authority found that
the various explanations provided for the sales and purchases
his case, Trustees of the B Trust v CIR [2013] NZTRA
were not supported by the relevant documentation or other
evidence, and it was therefore a reasonable inference that at
05, illustrates the risks inherent in professional advisers
acting as the independent trustee. the time each property was purchased, there was an intention
The trustees of the trust were Mr and Mrs B, and
on the part of the trust to sell it. an independent trustee who was a solicitor. Mr and Mrs B
On the question of whether the trust was engaged in a
were beneficiaries of the trust together with their children. The
business of erecting buildings, the evidence showed both Mr
and Mrs B had made a considerable financial commitment
evidence showed the trust had bought and sold 11 properties
and investment of effort on behalf of the trust in relation to
over a 12-year period, 10 of which were purchased as vacant
the properties purchased and sold. The trust employed the
sections. The trust built houses on nine of the sections, and
same draftsperson and builder for each property, and Mr B
the trust beneficiaries lived in the properties for periods ranging
organised the sub-trades and finishing of the work beyond
from two to ten months before the properties were sold. The
only exception to this was the last property where the family
the gib-stopping stage. The sections were all located in three
had resided for around two years. streets in three separate subdivisions, and the houses were
The issues to be determined by Judge Sinclair as Taxation
all of a similar size and construction and built on a fixed fee
Review Authority were whether amounts derived on sale of
basis to the same stage. The Authority held that the trust
the properties were income, on the basis that the properties
was engaged in a business of erecting buildings by the time
were acquired with the intention of sale, or because the trust
of the fourth property purchase. PATRICK FLANNERY ON LEGAL ISSUES
A TRUST ISSUE
T
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DECEMBER 2013
COLUMNISTS
The trust built houses on
nine of the sections, and the
trust beneficiaries lived in
the properties for periods
ranging from two to ten
months before the properties
were sold
The trustees contended that the residential land exclusion
should apply to the property sales, as the houses had been
occupied as a family home by the trust beneficiaries. However,
Judge Sinclair accepted the Commissioner’s argument that
each property was only occupied incidentally to the more
significant purpose of sale, and not “primarily and principally”
as a residence. The Judge also considered that in any event,
there was a regular pattern of transactions engaged in such
that the residential exemption was not available.
Given that the Court had already held that the trust was
engaged in a building business from the time of purchase
of the fourth property, it practically followed that the trust
was deemed to be registered for GST from that time. In the
circumstances the shortfall penalty for gross carelessness was
upheld. In view of the evidence, it is not surprising that the
Commissioner’s arguments on all points were accepted and
the assessments and shortfall penalties confirmed. The real
interest of the decision is perhaps in the lesson it provides
as to the risks for accountants and lawyers who agree to act
as independent trustees. In this case Ms X, the independent
trustee, had not been consulted prior to the trust entering
into any of the transactions, nor was she provided with any
explanations for the sales of the properties. While she prepared
trustee resolutions, Ms X took no active role in the day-to-day
running of the trust. Judge Sinclair found that ratification of
trustee decisions occurred both formally by resolution and
informally by way of sanction and approval. Consequently
all the trustees were bound by the actions and decisions of
Mr and Mrs B.
In the result, Ms X was held to be jointly and severally
liable with the other trustees for income tax, GST and penalties
arising for the period during which she acted as trustee. Master their
tax payments.
Provisional tax is an unpredictable beast.
Tax pooling allows taxpayers to:
- reduce their exposure to IRD interest
- increase control over tax payments and refunds
- increase flexibility around settlement payments
Talk to us about how your clients could benefit
from our 10 years of tax management leadership.
Call us on 0800 829 888 or visit www.tmnz.co.nz/corporates/
NZICA/PB/D/HP2013
DECEMBER 2013
57
COLUMNISTS
line the erring client including a face-to-face
meeting with one of its staff. Anxious to tout their
own chummy availability, especially to younger
clientele, these much publicised one-on-ones
nonetheless represent a huge aggregate cost to
banks.
Were the banks simply to pass on these costs,
In the matter of capital
perhaps even calculated on the basis of an industry
formation, one can earn it,
Peter Isaac is a
mean average per infraction, there would be little
financial author
ground for any class action. It is the infliction of
inherit it, steal it, marry it, or
the penalty component that is at issue here.
and commentator.
win it, goes the adage.
The class action against the banks relies on
contract law, and devolves, too, around the
hat about simply getting capital from the
time-honoured question of entities and individuals
bank? Well, no. Banks only dispense money
taking the law into their own hands.
at a price against these existing earnings,
In the sphere of constituted authority this has a particular
inheritances etc.
resonance. For example, from time to time and often in remote
The underpinning role of a bank is to receive deposits.
communities there are outbreaks of systemic lawlessness. Yet
Then to hire out these deposits at a price that covers its own
on each occasion the formation of citizen vigilante groups
is severely and actively discouraged due to what is officially
costs and allows for a profit – to an entity that it believes can
do both of these and, at the conclusion of a pre-arranged
viewed as the still greater danger of elements of the community
time, return the face value of the money.
taking the law into their own hands.
Few other mercantilist sectors enjoy such a simple modus
In the Westminster banking zone we have found, in recent
operandi. This is the reason that banks are determined to mete
times, the British banks making substantial reparations for
the “mis-selling” of “products” in the form of things such
out their own instant justice in the form of their penalties to
as insurance policies which, in the light of day, were found
any entities that transgress their straightforward rules. With
the possible exception of parking wardens, no other group is
not to have been needed by the depositors who bought them.
in such a happy position to do so. Computerisation gives the
The New Zealand class action is of very wide interest
banks the additional ability to deduct instantly and at source.
because it turns on defining the actual cost to a bank of
In the matter of the pending class action it is doubtful if
unauthorised borrowing. In other words, what is the true
there would be any case to answer if in inflicting its surcharge
cost to a bank of giving its money away for nothing? And
what then is the bank multiplier?
the bank merely covered its own costs (in managing the
In the EU and United States there will be interest, in the
exception to what it sees as a contract).
These costs might include the cost of internal clerical
light of the Tobin Tax, in the notion of shifting revenue
intervention, and perhaps the external cost of bringing into
gathering to a tax on bank transactions. After an initial burst
PETER ISAAC ON BANKING
CAPITAL
FORMATION
W
58
DECEMBER 2013
COLUMNISTS
of interest the Tobin scheme ran out of steam because of an
inability to calculate the cost of these very bank transactions.
There will be much sifting of bank pamphlets, literature
and advertising, and much re-running of television promos.
This is because the banking community will want to remind
itself what it has being saying about its customer relationships.
Those undertaking the class action will similarly be
reviewing all this with great scrutiny.
Penalties as deterrents have something in common with
gambling debts. It is that when imposed by non-constituted
authorities they do not carry any water under law. They
cannot be enforced.
Penalties as deterrents have
something in common with
gambling debts. It is that
when imposed by nonconstituted authorities they
do not carry any water
under law
The parking warden’s fine surpasses, of course, the cost
to the municipality of the vehicle exceeding the time allowed.
Like the bank penalty, it is a fine that serves as a deterrent.
Unlike the bank fine/penalty, however, the parking one
fulfils a useful public service in that it frees up the availability
of parking slots to the rest of the driving public and keeps
traffic rolling in the city as a whole. The bank penalty merely
lines the balance sheet of the banks.
Neither is there any warning or pro bono component
because of secrecy imperatives and, indeed, the banking
industry code of conduct forbids publicity on the topic.
Chartered accountants observing this class action as it
wends its way through proceedings will be keen to derive a
useful insight into a great deal of operating costs at exactly
the time that curiosity is growing about why bank charges are
so high in an industry that relies on an electronic backbone
infrastructure.
After all, telecommunications costs to the consumer are
becoming increasingly variable. Banks say that they have a
large human component. But then so do airlines, still another
sector with an electronic backbone in the shape of bookings
systems and which continue to introduce price reductions.
There is also the issue that, unlike those industries which
display a manifest competition among providers, the bank
charges all demonstrate a similar level from all providers
(and this is particularly so with their unauthorised borrowing
rates). It is this tendency to all operate at the same level that
makes the banks so vulnerable to accusations of profiteering.
The comparison between the banking sector and the
airlines and telecommunications sectors is not entirely fair
in that the latter take in money and even transport it. But
they do not actually sell money, which is what the banks do.
Airlines report stowaways. Telecommunications companies
report to the police anyone hitchhiking on their circuits. But
they do not unilaterally impose their own penalty.
Management and cost accountants, and also internal
auditors, understand the complexity of nailing down the true
cost to an organisation of a particular process. This becomes
even more byzantine when it is an exception process – a
departure from the planned state of affairs.
The plaintiff, in this instance the class action proponents,
has the onus of getting the defendant, the bank side, into court.
Several years will go by before the components that make
up the unauthorised borrowing rate are revealed.
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www.rwcityapartments.co.nz/CTA23909
DECEMBER 2013
59
COLUMNISTS
CRAIG ELLIFFE CA AND PETER VIAL CA ON TAX
BEPS FIRMLY ON GOVERNMENT’S AGENDA
The latest developments in New Zealand’s response to
base erosion and profit shifting (BEPS).
I
n last month’s Journal we outlined the
designing the active income exemption for offshore
background to the OECD’s project to counter
Craig Elliffe CA
branches to ensure it does not facilitate profit
base erosion and profit shifting (BEPS).
is Professor of
shifting through repatriation of losses.
We explained how businesses operating
Taxation Law
Thirdly, ensuring tax rules keep pace with
around the globe can operate in such a way that
and Policy at the
changes in the global economy by reviewing the
they pay little or no tax in some countries and
University of
tax treatment of foreign trusts, and exploring
highlighted areas where we believe New Zealand
Auckland & Peter
options for collecting GST on goods and services
bought online.
has relatively robust tax policy settings for dealing
Vial CA is NZICA’s
with potential base erosion and profit shifting.
General Manager
It is clear that the government will have to
Here we discuss the latest developments in New
Tax
undertake a careful balancing act as it tackles the
issues. As noted in the most recent report to the
Zealand’s response to BEPS and highlight some
aspects of the New Zealand tax system that are less
Ministers of Finance and Revenue on BEPS: “Every
robust and that the New Zealand Government may target
proposal needs to be evaluated on its merits taking into account
specifically – either unilaterally or as part of an international
relevant trade-offs. …the benefit of increased base protection
response to the global BEPS issues.
from a proposed reform needs to be weighed against any
The Minister of Revenue announced the government’s tax
adverse implications in terms of overall economic efficiency
policy work programme at the NZICA Tax Conference on
including increases in compliance costs and… evaluated more
8 November. One of the programme’s three areas of focus
generally in the context of all of the government’s priorities
is continuation of the reform of New Zealand’s international
on the tax policy work programme.”
tax rules. The government’s stated aim is to strengthen the
tax rules to ensure overseas companies pay their fair share
OBSERVATIONS ON THE PLANS
of tax in New Zealand without compromising the country’s
It is good to see that the government is focusing some attention
attraction as a place to do business and invest.
on the tax challenges in the digital economy. As part of this
The government has allocated resources to its BEPS projects,
project the government will soon seek views on the GST
which will initially focus on three areas.
treatment of goods and services purchased online from overseas.
The first is preventing profit shifting using related-party
Currently it is possible for non-residents to sell goods and
debt by examining problems with the thin capitalisation and
services to New Zealand consumers over the internet with
transfer pricing rules. Also, by exploring whether New Zealand
very few (if any) income tax or GST consequences.
New Zealand, like all other countries, is struggling to find
should restrict interest deductions on hybrid instruments when
an
answer
to this problem. There are no obvious solutions in
the interest payment is not taxed in the foreign jurisdiction,
terms of either income tax or GST. More work needs to be
and addressing problems with non-resident withholding tax
done. Our rules, like those of other countries, date back to
on interest on related-party debt.
The second is removing tax advantages from certain
concepts of trading developed in the 19th century. These rules
investment vehicles and ensuring the effective taxation of offshore
distinguish trading in a country (taxable because the income
is deemed to be sourced in New Zealand) from trading with
investments by exploring the need for an anti-arbitrage rule for
offshore entities that take advantage of differences between
a country (not taxed because otherwise an exporter would
countries’ tax rules. It will also do this by examining different
have to pay tax in the numerous jurisdictions to which they
export goods).
tax treatments of “look-through vehicles” and structures, and
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DECEMBER 2013
COLUMNISTS
The OECD’s Action Plan proposes to prepare a report on
the digital economy by September 2014 which identifies the
issues and possible actions to address them. It will be a project
of considerable complexity which may require a radical rethink
of existing international tax policy.
As we mentioned last month the New Zealand thin
capitalisation rules are pretty robust and effective. Several
fairly narrow amendments to the current rules are included
in the November Bill and will apply from 2015. The officials’
recent Report to Ministers on BEPS leaves open the option
for the government to consider further changes to the thin
capitalisation and transfer pricing rules over time.
The rules in other countries are different from New Zealand’s
rules and it may be that in the long term our rules are changed
too. Some jurisdictions, such as the United States and Germany,
have “earnings stripping” legislation. The rules in these countries
specify an interest-coverage ratio, such as net interest expense
to taxable income, and limit deductions where the interest
expense exceeds this ratio. Moving to such an approach would
add significant complexity.
It is good to see that the
government is focusing
some attention on the tax
challenges in the digital
economy
Transfer pricing falls under four separate headings in
the OECD’s 15 point action plan and is included in the
government’s work programme. Broadly the current transfer
pricing rules and guidelines that operate internationally are
seen as inadequate. Specific work at the OECD level includes
looking at preventing group companies from moving intangible
property, assessing whether inappropriate returns accrue to
an entity because of the assumption of contractual risk or the
provision of capital, and eliminating transactions that occur
in multinational groups but which would not be found in an
arm’s-length transaction between third parties.
The OECD’s action plan includes work in relation to the
definition of “permanent establishment”. This could have
significant implications for New Zealand and our larger
businesses. Under New Zealand’s double tax agreements, a
business that is not resident in New Zealand but is resident
in a treaty partner country and that carries on business in
New Zealand, is subject to New Zealand tax only if it has a
permanent establishment (PE) in New Zealand through which
it carries on that business – and vice versa.
The PE concept arose out of traditional business models.
However, as global companies have developed business models
based on integrated supply chains and centralised functions,
they have often been less likely to have PEs in the jurisdictions
in which they operate. Furthermore, in circumstances where
they still have PEs, many companies have been able to reduce
profits attributable to those PEs legitimately by using transfer
pricing techniques.
It is neither possible nor appropriate for New Zealand
to act unilaterally in any of these three areas – the digital
economy, transfer pricing and the PE rules – without reference
to international obligations under our double tax agreements.
These are clearly matters that need international consensus.
New Zealand will be at the OECD table cognisant of the
ramifications of any changes for a small, open, capital importing
economy that relies relatively heavily on source-based taxation.
Given that the OECD’s Action Plan includes a review of
harmful tax practices (effectively areas where there is tax
competition between countries), it is probably unsurprising
that the tax policy work programme includes a review of the
foreign trust regime.
A country can make itself an attractive destination for
foreign investment by creating a special tax regime only for
foreigners. The OECD uses particular criteria to illustrate
whether a regime is potentially harmful. These include a nil
(or low) effective tax rate, the ring fencing of a regime to a
particular group of people or for a particular purpose, and
a lack of transparency and exchange of information that
make it difficult for other jurisdictions to identify and obtain
information.
New Zealand’s foreign trust regime does not sit completely
comfortably with these criteria. The regime provides for no
New Zealand taxation on the foreign income of the New
Zealand foreign trust but only applies where the settlements
are made by non-resident settlors. Arguably the foreign
trust regime is less transparent than other regimes. Given
the relatively limited nature of the information collected in
respect of New Zealand foreign trusts, a foreign government
requesting information about its residents who are using such
trusts may be unable to obtain the information it would like.
Each of the areas involves a substantial degree of analysis,
international cooperation and then domestic law integration.
The only certainty with the BEPS projects is that we are
likely to see changes both internationally and domestically.
However, don’t hold your breath – it will be some time
before the OECD, the wider international community and
governments, including New Zealand’s, have come up with
solutions and implemented them.
Craig Elliffe CA is Professor of Taxation Law and Policy at the
University of Auckland Business School, and a consultant to
Chapman Tripp, Solicitors. Peter Vial CA is NZICA’s General
Manager Tax and an adjunct lecturer at the University of
Auckland. The views expressed in the article are personal and
not necessarily those of the organisations mentioned.
DECEMBER 2013
61
SMARTMOVE
For example, CCANZ’s remuneration policy is
made up of a number of elements. They offer stock
options, superannuation on top of Kiwisaver,
health insurance, and sales and leadership
incentives.
Another CCANZ remuneration strategy for
the sales team has been to move from yearly to
biannual remuneration reviews. By recognising
staff more than a once a year they have
It’s the season of giving and
Marie August,
experienced significant increases in engagement,
SmartMove
goodwill so I thought it was
with staff are feeling more valued, confidently
recruitment
following business objectives and bringing a
manager
an appropriate time to reflect
positive attitude to work which flows through
on recognising and rewarding
the wider organisation.
CCANZ recognises long service with biannual
staff for their efforts.
“Golden Bottles” awards dinners for staff. After five years
with the company and every five years thereafter staff receive
mployee recognition is a great way to reward high
a commemorative “golden” bottle of coca-cola and certificate.
performers, build team culture and retain talent.
CCANZ also have a monthly “Fantastic Award” where any
One company doing interesting work in this area
staff can nominate a high performer who then gets a gift
is Coca-Cola Amatil New Zealand (CCANZ), a
voucher.
Kiwi-based business and beverage bottler that employs more
These are just a few ideas for staff recognition and rewards
than 1,000 people from Whangarei to Invercargill.
I’m confident that there are many more really great initiatives
Jason Blackmore was recently appointed to the role of
around.
Human Resources Manager – Remuneration and Insights for
One of the important things to understand is what kind of
CCANZ, and has been working on developing a long-term
rewards people want, over and above financial reward. It’s
also important to consider what will work – not all people
remuneration and incentives structure tailored to the company’s
varied roles and overall team culture.
are alike and so thinking through what kind of rewards have
I thought that some of their thinking around rewards would
broad appeal is also a good move.
be interesting to share as I believe it shows that considering
If you’re a member of our LinkedIn group, we would love
retention and recruitment as part of a company’s overall
to hear your ideas and experiences in this area.
strategy is important. CCANZ is a company that is looking
In this festive season what better time to take stock of
at the use of human resources metrics to drive business
your people and recognise their contribution.
forward as well as data and statistics to help get the best
We wish you all a very happy holiday season and look
from their staff.
forward to catching up again in the new year.
BY MARIE AUGUST
STAFF
RECOGNITION
AND REWARDS
E
62
DECEMBER 2013
Financial Recruitment Specialists
FISH WHERE THE FISH ARE
Recruiting
the best for
your business
MARIE AUGUST
RECRUITMENT MANAGER
JEANETTE ROSS-SMITH
FINANCIAL RECRUITMENT SPECIALIST
T +64 4 913 9088
M +64 21 477 528
E [email protected]
T +64 9 917 5934
M +64 27 838 6761
E [email protected]
PEOPLE JUDGE OUR PROFESSIONALISM BY THE WAY WE LOOK
Roseline Kamoto is
assistant manager at
Max Lambton Quay,
and is the company’s
Sales Person of the Year
2013. She loves fashion
and particularly enjoys
offering the latest styles to
customers each week. She says
it’s a pleasure serving customers who recognise
Max’s brand values and that she is lucky to work
for such a great company. maxshop.com
Cathy Davys,
hairdresser and salon
Artistic Director
for Vivo Hair and
Beauty, has worked in
the salon industry for 37
years and loves it more now
than when she started. She enjoys the constant
change and the art of making a guest feel
fabulous. vivohair.co.nz
Deborah Simeon CA Business Advisory Services Manager
Crowe Horwath, Lower Hutt
Deborah Simeon CA is getting married on
Valentine’s Day next year and wanted a makeover
as she knew she needed a change, but didn’t know
where to start or what would suit her. She
admitted she wasn’t putting enough effort
into her look, describing it as “tidy, but plain
and boring”. She was hoping for a look
that was more feminine and pretty. “I’d
like my wardrobe to be more flattering,
and I’d like my hair to have a style that is
easy to maintain and wear out.” Her role
involves meeting with clients, going to
networking events and representing her
company so she needs to look professional
at all times. She describes her hair as thick,
curly and frizzy. “I’d like to be able to wear
my hair out. It’s always tied back in a bun as
I find it hard to manage.” She’s worn her hair
the same way for the past four to five years.”It’s
boring but I don’t know what else to do with
it – I need a new style that is easy to maintain.”
Her weekday makeup routine involves foundation,
eyeliner, blusher and lipstick. She would like a more
natural look that is quick, easy and lasts all day.
Clothing Roseline gave Deborah a tailored look that would
work well for the office and into the evening because
of the print and styling of the dress.
“The dress I chose is a signature Max style that is
updated in new colours and prints each season,” Roseline
says. “Deborah always hides her waist, so this was a great style for her, with
a waist seam and belt to show off her tiny waist, and then a fitted pencil
skirt and high boat neck making it perfect for a corporate environment.”
64
DECEMBER 2013
Faireen Hussain is a senior
beautician, massage therapist
and makeup artist at Vivo
Wellington. The salon strives
for continuous improvement
and has a unique consultation
and follow-up process, and provides
a personal guarantee. vivo.co.nz
Deborah usually plays it safe with colour at work and wears a black suit with
a coloured top to break up the black. “Little did she know that she looks
amazing in colour. The Wedgewood blue dress is vibrant and feminine and
brings out the colour of her eyes,” Roseline says. She also chose a cropped,
short-sleeved jacket from the Tailored for Max work wear range. “This way
Deborah could still show off her figure and it would also be perfect for the
summer months. To finish the look we added our Essential Waist Belt and our
High Street Heels.”
Hair
Cathy considered Deborah’s face shape, lifestyle, likes and dislikes when
deciding on a new look. She says Deborah’s hair is extremely thick, and wavy
with a crimp in it. “We put some long layers through the hair to soften and
try to enhance the curl. Our mission was to try and tame her hair and avoid
going back to the old style of just tying it up.” She says Deborah’s new look
has a structured perimeter, adding weight to the curl and giving her hair a
modern edge. “We created long layers through her hair to bring out some
of the curl. In the front we personalised a side parting to help Deborah style
her hair at home.” She reinvented Deborah’s colour by using foils in natural
golden brown and blonde, aiming for a sun-kissed look. She then applied a
semi-permanent rich red brown through the rest of the hair, deepening her
natural colour a shade to enhance the condition of her hair. Deborah’s hair
needs a lot of hydration, so Cathy recommends the Goldwell Colour Lock to
maintain the colour, and the Goldwell Tame Frizz range for styling.
Makeup
Faireen created a soft, smoky eye for Deborah and enhanced her brows,
using contouring techniques to frame her brow line. She chose a grey/blue
for around Deborah’s eyes to complement her outfit, along with a charcoal
which really made her eyes pop. The lipstick was a natural with a pink hue to
complement her skin tone. Faireen used the Youngblood Brow Artist Kit which
is a powder, creating a softer look than a pencil. She recommends Deborah
use bronzer and a highlighter powder to contour her face. “The darker
bronzer is for receding, so use it around the hairline to give the appearance
of a shorter forehead and under the cheekbone to give definition. Use the
lighter highlighter to accent along the cheekbone and up towards and
around the eye as well as above the eyebrow on the inner corner.”
Essential Short Sleeve Jacket $139
Lizzy Necklace $39
Essential Waist Belt $39
Knitted Chain Cuff $39
Wedgewood Print Signature Dress $149
High Street Heel $149
SHELF LIFE
Summer reading 2013
By Kamala Bain and Christine Busby, Business Information Librarians
Ready for a new start in 2014? Want to get motivated while relaxing on the beach? Check
out some of the library’s latest books on personal development, leadership, human interest
stories, and more. Get in quick, as these books won’t be on the shelves for long.
To request, please contact Library and Information Services, email [email protected] or phone 04 474 7882, citing the item’s
identification number.
DEVELOPING YOURSELF FOR SUCCESS
Sidetracked: why our
decisions get
derailed, and how we
can stick to the plan
by Francesca Gino,
2013
Discusses decision making in a wide range of
contexts, and identifies the reasons why
we often get sidetracked from our original
goals.
Library ID: CA005956
Give and take: a
revolutionary
approach to success
by Adam Grant,
2013
Provides a framework for
success at work and in
life. Examines forces that
shape why some people rise to the top of
the success ladder while others sink to the
bottom. Explores the different ways people
operate in professional interactions.
Library ID: CA006198
Start: punch fear in
the face, escape
average, do work
that matters
by Jon Acuff, 2013
Encourages you to
be successful in your
personal and professional
life and provides advice
on how to achieve this. Discusses different
stages of life – learning, editing, mastering,
harvesting and guiding – and argues that
these stages are no longer tied to your age.
66
DECEMBER 2013
Library ID: CA006191
Mindfulness at work:
how to avoid stress,
achieve more and
enjoy life!
by Dr Stephen McKenzie, 2013
Discusses the principles
of mindfulness and how
they can be effectively
applied in the workplace. Provides practical
examples of mindfulness in action and
discusses how mindfulness can be used in a
range of specific professions.
Library ID: CA006018
Library ID: CA005988
Bounce forward: how
to transform crisis
into success
by Sam Cawthorn,
2013
Describes the successful tools and strategies
used by individuals and
organisations to recover after a crisis.
Includes interviews with business leaders,
teams and individuals, and tells the story
of the author, who experienced a serious
car accident at age 26.
Library ID: CA006470
The slow fix: solve
problems, work
smarter, and live
better in a fast world
by Carl Honore, 2013
Outlines why taking the
“quick fix” is problematical and describes a
new approach to problem solving – work
smarter and find the best way to go about
making a decision while taking your time.
Includes illustrative case studies.
Library ID: CA006121
The success equation:
untangling skill and
luck in business,
sports, and investing
by Michael J
Mauboussin, 2012
Explains how to distinguish between luck
and skill, and how to combine them to be
successful in life and business. Offers suggestions on recognising when something is
the result of luck and when it is the result
of skill, and how this analysis will help you
in your day-to-day life.
Library ID: CA006008
Work with me: how
gender intelligence
can help you succeed
at work and in life
by Barbara Annis
and John Gray, 2013
Explores eight gender
blind spots that create
tension between men and
women at work and in their personal relationships. Discusses the blind spots to provide
insights and solutions that will help break
down barriers between men and women.
SHELF LIFE
FEATURED BOOK
ENTREPRENEURSHIP
Heart to start: the story of a global
start-up plus a guide for turning
your ideas into action
by Derek Handley, 2013
Presents the tale of Derek Handley, an
entrepreneur from New Zealand who has
Find your courage: 12
acts for becoming
fearless at work and
in life
by Margie Warrell,
2009
Discusses strategies for
displaying more courage
in a range of professional and personal
situations.
Library ID: CA006492
Drive: the surprising
truth about what
motivates us
by Daniel H Pink,
2011
Introduces the concept
that the secret to high
performance and satisfaction today is the need to direct our own
lives, learn, create new things and to do
better by ourselves and the world. Includes
examples of companies that are taking a
new approach to motivation.
Library ID: CA006456
Hardwired humans:
successful leadership
using human instincts
by Andrew O’Keeffe,
2011
Explains the instincts
behind human behaviour
in social situations. Explores how leaders can use this knowledge
to make more effective decisions. Includes
examples of these instincts, both in large organisations and in chimpanzee enclosures.
Library ID: CA006116
started several companies worldwide.
Outlines his series of successes, failures,
challenges and risks over the years and
provides a practical, action-oriented field
guide for turning dreams into reality.
Library ID: CA006454
The engagement
equation: leadership
strategies for an
inspired workforce
by Christopher Rice,
et al, 2012
Provides advice for
increasing employee
engagement in an organisation. Explains
the drivers of employee engagement and
how to use improved engagement to reduce
costs and meet organisational goals.
Library ID: CA006155
Execution: the
discipline of getting
things done
by Larry Bossidy and
Ram Charan with
Charles Burck, 2009
Updates “one of the
most influential business
books of our time” which
analysed the discipline of execution and
helped numerous business people to succeed. Demonstrates the authors’ three core
elements of organisations – how to link
together people, strategy and operations.
Includes real world case histories.
Library ID: CA005938
ENTREPRENEURSHIP
Path of the lion: build
your EnQ. Build your
business
by Sandy Geyer, 2013
Outlines the traits and
tendencies of four different types of entrepreneurs, using the African
jungle as a metaphor. Encourages you to
become an entrepreneurial lion. Highlights
the knowledge and motivation required to
gain “entrepreneurial intelligence”.
Library ID: CA006462
The entrepreneur’s
guide to customer
development: a
“cheat sheet” to the
four steps to the
epiphany
by Brant Cooper and
Patrick Vlaskovits,
2010
Presents a framework for starting and building new businesses based on the authors’
insight that “most startups fail because they
didn’t develop their market”.
Library ID: CA005493
Screw business
as usual
by Richard Branson,
2012
Provides advice to entrepreneurs on how “doing
good” can help improve
prospects, profits and
business, and change the world.
Library ID: CA006303
DECEMBER 2013
67
SHELF LIFE
HUMAN INTEREST
Rebel with a cause
by Ray Avery with
Paul Little, 2010
Tells the story of Sir Ray
Avery, Kiwibank New
Zealander of the Year
2010. Explains how he
invented a number of scientific and medicinal solutions for the third
world, and encourages people to change
the world.
Library ID: CA006004
The power of us: New
Zealanders who dare
to dream
by Cameron Bennett,
2012
Presents the stories of
a number of successful
Kiwis from a range of
professions who talk about subjects such
as risk, success, innovation, their work and
being a New Zealander. Includes Phil McCaw, Hugh Green, Derek Handley, Melissa
Clark-Reynolds and Mahé Drysdale.
Library ID: CA006005
Killing Fairfax: Packer, Murdoch and
the ultimate revenge
by Pamela Williams,
2013
Provides a colourful
account of the decline in
fortunes of media company Fairfax. Focuses on the role of James
Packer and Lachlan Murdoch (the sons of
media moguls Kerry Packer and Rupert
Murdoch) in Fairfax’s demise.
Library ID: CA005970
68
DECEMBER 2013
Who killed Scott
Guy?: the case that
gripped a nation
by Mike White, 2013
Recounts the story of
the murder of Feilding
farmer Scott Guy and the
subsequent trial of his
brother-in-law, Ewen Macdonald.
Library ID: CA006002
David and Goliath:
underdogs, misfits
and the art of
battling giants
by Malcolm
Gladwell, 2013
Uncovers the hidden
dynamics that shape
the balance of power
between “the small and the mighty”. Draws
on stories of underdogs in history, science
and psychology to demonstrate how we
misunderstand the true meaning of advantage and disadvantage.
Library ID: CA006117
The spirit level: why
equality is better for
everyone
by Richard Wilkinson
and Kate Pickett,
2011
Explores the impacts of
inequality on a global
scale. Compares international distribution of
incomes to analyse how societies differ and
argues that equality is better for everyone.
Library ID: CA006304
Steve Jobs
by Walter Isaacson,
2011
Provides a comprehensive
biography of Apple cofounder Steve Jobs. Based
on more than 40 interviews with Jobs over two
years, plus interviews with family, friends,
adversaries, competitors and colleagues.
Library ID: CA006019
The new digital age:
reshaping the future
of people, nations
and business
by Eric Schmidt and
Jared Cohen, 2013
Discusses the likely future
impact of communication
technologies on individuals and society.
Written by Google’s Executive Chairman
Eric Schmidt and Google Ideas Director
Jared Cohen.
Library ID: CA006113
LEADERSHIP
The titleless leader:
how to get things
done when you’re not
in charge
by Nan S Russell,
2012
Provides insight on how
to lead people and operate with trust regardless of your position in
an organisation. Discusses behaviours that
will enable you to get results in an evolving
workplace.
Library ID: CA006457
Lessons from the top:
the three universal
stories that all
successful leaders tell
by Gavin Esler, 2013
Discusses the kinds of
stories that successful
leaders tell and what we
can all learn from them. Includes examples
from people such as Barack Obama and
Lady Gaga.
Library ID: CA005991
SHELF LIFE
Leadership
transformed: how
ordinary managers
become extraordinary
leaders
by Dr Peter Fuda,
2013
Uses seven metaphors to
explain material that will
enable managers to transform themselves
into effective and inspiring leaders. Includes
stories and anecdotes while looking at
motivation forces, accountability, coaching,
self-awareness, reflection and transformation.
Library ID: CA006459
Hooked: how leaders
connect, engage and
inspire with
storytelling
by Gabrielle Dolan
and Yamini Naidu,
2013
Discusses how to make
effective use of personal stories in a business context to connect with, engage and
inspire others.
Library ID: CA006013
What keeps leaders
up at night:
recognizing and
resolving your most
troubling
management issues
by Nicole Lipkin,
2013
Examines the underlying psychology that
plays a critical role in significant, recurring
problems in the workplace. Discusses how
to recognise and resolve eight of the most
troubling management issues leaders face
today.
Library ID: CA006020
MARKETING, ADVERTISING AND BRANDS
Digilogue: how to win
the digital minds and
analogue hearts of
tomorrow’s
customers
by Anders SormanNilsson, 2013
Provides insights,
strategies, and tools to help you develop
your brand. Discusses whether the digital
connect will ever fully replace the personal
touch and questions whether customers will
ever fully accept digital.
Library ID: CA006468
Start with hello: how
to convert today’s
stranger into
tomorrow’s client
by Linda Coles 2013
Provides advice and tips
on networking, including
how to shift an initial
conversation with a stranger to a business
relationship. Includes “inspiring” true stories to illustrate the strategies discussed.
Library ID: CA006114
Smart marketing:
build a powerful
brand through “Need
Satisfaction
Marketing”
by Wayne Attwell,
2013
Explains what “Need
Satisfaction Marketing” is and provides
examples and models to help you build
and manage your brand. Illustrates how to
understand a customer’s buying decisions
and provides tips on developing an engagement strategy.
Library ID: CA006115
Ogilvy on advertising
by David Ogilvy,
2011
Provides a unique view of
the world of advertising
from David Ogilvy, who
Time magazine described
as “the most soughtafter wizard in the advertising business”.
Library ID: CA005487
DECEMBER 2013
69
Knowledge Builder is the name for NZICA’s exciting professional development
programme which offers a range of opportunities to help you stay at the forefront
of your career. From conferences and roadshows to e-learning, you can build your
knowledge and hear from experts on a range of industry topics.
CONFERENCES
2014 Corporate Sector Conference: The Accountants One Day Business Update
nzica.com/1day
12 March
SKY CITY CONVENTION CENTRE, AUCKLAND
7 CPD Hours
$670 – Member early bird fee
$840 – Non-member fee
(Early bird fee available until 31 January)
The 2014 theme is Healthy
Business – Leading the Way
with experts presenting on a
diverse range of technical topics
and business issues.
Andrew Thorburn
CEO & MANAGING DIRECTOR, BNZ
(Diversity & what does it mean?)
Lyn Hunt
DIRECTOR, ACCOUNTING CONSULTING SERVICE, PWC
(Financial reporting – key issues and
developments)
Mahe Dysdale ACA
Be sure to get in quick to avoid missing
out, the 2013 conference SOLD OUT.
OLYMPIC GOLD MEDALIST
(Creating the Competitive Edge)
+ MORE
Management Accounting Conference
nzica.com/mac
13 March
NZICA, WELLINGTON
7 CPD Hours
$499 – Member early bird fee
$599 – Non-member fee
(Early bird fee available until 31 January)
You will need to find innovative
ways for your business to deliver
added value through strategic
performance. This conference
will demonstrate how you as a
management accountant can
drive innovation and challenge
the status quo.
Bruce Harris CA, MBA, NZIPIM
MANAGER BUSINESS INSIGHTS & DEVELOPMENT,
BALANCE AGRI-NUTRIENTS LTD
(Seeking forecasting excellence to support
decision making)
Stuart Bilbrough CA
RADIUS RESIDENTIAL CARE LTD
(Transforming finance; steps to lifting a
finance team’s skill set towards adding
value)
Carolyn Fowler CA,
VICTORIA UNIVERSITY
(Management accounting and future
change)
+ MORE
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nzica.com/events08004NZICA
‘IF YOU’RE GOING TO PUT IN THE EFFORT, DO IT THE RIGHT WAY,
OUTSTANDING SUCCESS IN ANY CAREER COMES FROM EXPERT
TRAINING, KNOWLEDGE AND INSIGHT. ” Mahe- Drysdale Gold Medal Rower & ACA
Public Sector Conference
nzica.com/2014PubSector
20/21 March
WELLINGTON
11 CPD Hours
$995 – Member early bird fee
$1244 – Non-member fee
(Early bird fee available until 28 February)
The theme is ‘Positioning ourselves for the future’ and will
focus on the following topics:
> discover what the public
sector of the future is going to
look like
> explore how citizens and the
private sector will interact
with the public sector
> learn which skills public servants will need in the future
>understand the dynamic role
of social media in the future
delivery of public services.
Presenters
Dr Karacaouglu
DEPUTY SECRETARY, Macroeconomics,
International and Economic Research /
Chief Economist, The Treasury
Dr Lynn Maher,
DIRECTOR of INNOVATION
Ko Awatea
Cassandra Crowley
CEO, Local Government Online
+ MORE
Course for New Practitioners
nzica.com/cfnp
16 April
INTERCONTINENTAL, WELLINGTON
7 CPD Hours
$799 – Member early bird fee
(Early bird fee available until 16 March)
Essential knowledge to get
started in Public Practice. Now
is the time to get equipped
with the knowledge and tools
you need for your future public
practice career. This conference
is tailor-made for new members
in public practice.
Presenters
Join a team of experts in their areas as
they explore and explain the
significant responsibilities and
standards associated with the
important role. The programme
includes ethical advice on managing
and developing your practice and
building the trust of your client. It also
explains how NZICA can help you to
achieve business success.
ROADSHOWS
DebtCollectionandCreditManagement
nzica.com/debt2014
11-19 February
5 LOCATIONS NATIONWIDE
7 CPD Hours
$350 – Member early bird fee
$395 – Non-member fee
(Early bird fee available until 28 February)
Learn practical strategies and
actions to keep you one step
ahead of your clients.
> Look at debt escalation
strategies and how to deal
with difficult customers
> Explore why you should use
personality profiling
> Look at how and when to use
the Disputes Tribunal
> Learn how to establish the
right terms of trade for your
practice.
Presenter
Kevin Lee is a qualified Chartered
Management Accounting and delivered
courses on debt collection and credit
management for over ten years. In the UK,
Kevin was CFO of two major manufacturing
organisations which relied on a strong
knowledge of credit management and debt
collection for business survival in tough
times.
You will benefit from Kevin’s first-hand
experience of debt collection and credit
management with a number of
organisations.
Winning Finance Teams
nzica.com/winningf
DUNEDIN
WELLINGTON
TAURANGA
HAMILTON
17 FEBRUARY
18 FEBRUARY
20 FEBRUARY
24 FEBRUARY
7 CPD Hours
$225 – Member early bird fee
$255 – Non-member fee
(Early bird fee available until 3 February)
Discover the practices of winning
finance teams including:
> Fast monthly and annual
reporting
> Technology to maximise
efficiency using planning and
reporting tools
> The foundation stones of
quarterly rolling forecasting.
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nzica.com/events08004NZICA
Presenter
David Parmenter FCA (Eng & Wales). David is
a leading expert in KPIs, quarterly rolling
planning, quick month-end processes and
making reporting a key decision based tool.
David has presented in over 30 countries to
help accountants implement and apply
better practices. He has written many articles
in management and accounting journals
around the world and had 4 books published
including “Key Performance Indicators” and
“Winning CFOs”.
eLEARNING
Audit and Assurance Essentials
2014 Trusts
nzica.com/trustsweb14
nzica.com/auditweb
WEBINAR SERIES
WEBINAR SERIES
10-11.30am
10.30am - noon
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Review of current assurance and reporting issues
EARN
UP TO
4 February
18 February
11 March
25 March
6 CPD hours for series
Back by popular demand, this highly practical training is designed
for auditors at all levels. Keep up-to-date with current audit issues.
Management Accounting for
Decision Making
Practical application of aspects of taxation of trusts
in New Zealand
25 February
A practical guide to winding up a trust
6 March
EARN
UP TO
Tax, winding up trusts and more. Keep up-to-date on trusts with
this webinar series. Each webinar includes the opportunity to ask
questions.
Monthly Tax Bites
nzica.com/taxbites
nzica.com/ma4dm
WEBINAR SERIES
WEBINAR SERIES
1-2pm
Emerging trends in management accounting
Costs and Value Creation
Getting more out of your reports
EARN
UP TO
6 CPD Hours for series
3-4pm
27 February
27 March
22 May
3 CPD Hours
Enhance your management accounting knowledge for better
decision making.
Tax Update
Year-end Planning Issues
EARN
UP TO
13 February
20 March
7 CPD Hours for series
You will learn from a variety of expert presenters who will deliver
practical, real life examples that will help you in your role and
organisation.
PROFESSIONAL CONDUCT
Notice of decision and order of the
Professional Conduct Committee
At a meeting of the Professional Conduct Committee of the New
Zealand Institute of Chartered Accountants held in private on 2
October 2013, in respect of an unnamed chartered accountant,
the Committee found that the following matters would otherwise
warrant being referred to the Disciplinary Tribunal.
In his role as a chartered accountant in public practice the
member:
1. improperly authorised payment of his accounting fees,
without presenting the invoices to the company or obtaining
the prior consent of fellow directors, in breach of the
Fundamental Principle(s) of Integrity and/or Professional
Behaviour; and/or
2. failed to complete in a competent, professional, and timely
manner work which he had been engaged by the company to
perform, in breach of the Fundamental Principle of Quality
Performance and/or Rule 9: Due Care & Diligence and/or
Rule 10: Timeliness of the Code of Ethics, namely he:
a) provided misleading and/or incorrect statements; and/or
b) failed to provide financial information to assist the directors in understanding the financial position of
the company; and/or
c) failed to sign an appropriate letter of resignation; and/or
3. in his role as accountant for the company, failed to respond
in a timely manner or at all to communications from the
company and third parties during the transition process, in
breach of Rule 10: Timeliness and/or Rule 14: Professional
Conduct of the Institute’s Code of Ethics.
In this complaint, the member was a co-director of a business
which had a significant daily cash turnover. The member
assumed the role of providing administration services for the
business and invoiced these services through his chartered
accountancy practice.
In relation to the particulars, the Committee was of the
opinion that Board approval of forecast expenditure for annual
accounting fees was not sufficient to approve specific invoices.
The Committee did not consider that having access to the
bank statements was sufficient for the directors to understand
the financial position of the company. The Committee considered
that there had been an expectation gap between the parties
about what was meant to be done, but noted that it was the
member’s responsibility to ensure that an engagement letter
was completed which would set out the parties’ respective
expectations.
The Committee considered that statements made by the
member that the administration was operating smoothly were
74
DECEMBER 2013
not correct in the particular circumstances described to it.
The Committee felt that the member had offered to do work
which he and his office were not competent to do, and that
the services provided were not sufficient for a cash business
of this nature.
The Committee also considered that the member had
not displayed the required level of professional behaviour in
dealing with the issues that arose. For example, he had ignored
correspondence from the superseding accountants regarding the
provision of accounting records for the company as none had
yet been created. The member acknowledged that he should
have advised the accountants that there were no such records.
The Committee considered that that there were serious
shortcomings in the member’s behaviour that gave rise to
legitimate concerns by the complainant.
The Committee considered that matters were serious enough
to warrant referral to the Disciplinary Tribunal, however, in
this case it was minded to offer the member a consent order.
In reaching this decision, the Committee was of the opinion
that, while the member had taken on work for which he was
not competent, paid invoices without proper authorisation,
and his professional behaviour had fallen below the acceptable
standard, the behaviour had arisen in the context of unusual
and isolated circumstances and there was an acknowledged
gap in the expectation of the parties.
With the consent of the member, the Committee made the
following orders, which shall be entered on the member’s record:
1. that the member return $4,600 being the fees paid by the
company that were not properly authorised;
2. that the member receive a reprimand;
3. that the member pay costs to the Institute of $3,415.
The Committee considered it was in the public interest
to direct publication of its decision and the orders made. It
felt there was benefit in the profession understanding that
members should not take on work for which they do not have
the requisite competence.
In accordance with Rule 21.6B, the Committee’s orders
will be published in the Chartered Accountants Journal, and
on the Institute’s website, without mention of the member’s
name and locality.
David Barker
Chairman
Professional Conduct Committee
PROFESSIONAL CONDUCT
Notice of decisions of the
Disciplinary Tribunal
At a hearing of the Disciplinary Tribunal held in public
on 21 October 2013 at which Paul James Lawrence, a
suspended chartered accountant of Rotorua, was not in
attendance and not represented by counsel, the member
pleaded guilty by correspondence.
The charge and particular as laid were as follows.
Charge
THAT in terms of the New Zealand Institute of Chartered
Accountants Act 1996 and the Rules made thereunder, and
in particular Rule 21.30 the member is guilty of:
(1)Misconduct in a professional capacity
Particular
IN THAT in the member’s role as a chartered accountant
and as an employee of a chartered accountancy firm, he:
(a)altered his employer’s Authority to E-file tax return forms
after they had been signed by adding tax credit claim
forms (IR526) that he had prepared in the names of his
employer’s clients which contained false donation details
and specified payment of donation rebates to his personal
bank accounts and, by doing so, he fraudulently obtained
over $280,000 from the Department of Inland Revenue.
Decision
Dishonesty of the nature and degree demonstrated by the
member is incompatible with membership of the Institute.
Penalty
Pursuant to Rule 21.31(a) of the Rules of the New Zealand
Institute of Chartered Accountants the Disciplinary Tribunal
orders that the name of Paul James Lawrence be removed
from the Institute’s register of members.
Costs
The Professional Conduct Committee seeks full costs of $9,561.
The Tribunal’s general approach is that the starting point is
100% of costs, noting that the Institute already bears the cost
of abandoned investigations and costs up to the Professional
Conduct Committee’s decision to hold a Final Determination.
There are no mitigating factors such as excessive or
unnecessary expenses incurred or demonstrated evidence of
hardship (inability to pay).
Pursuant to Rule 21.33 of the Rules of the New Zealand
Institute of Chartered Accountants the Disciplinary Tribunal
orders that Paul James Lawrence pay to the Institute the sum
of $9,561 in respect of the costs and expenses of the hearing
before the Disciplinary Tribunal, the investigation by the
Professional Conduct Committee and the cost of publicity.
No GST is payable.
Suppression Orders
Pursuant to Rule 21.52 (b) of the Rules of the New Zealand
Institute of Chartered Accountants the Disciplinary Tribunal
orders the suppression of the name of the member’s then
employer and its clients.
Publication
In accordance with Rule 21.35 of the Rules of the New
Zealand Institute of Chartered Accountants the decision
of the Disciplinary Tribunal shall be published on the
Institute’s website and in the Chartered Accountants
Journal, New Zealand Herald and the Rotorua Daily Post
with mention of the member’s name and locality.
Right Of Appeal
Pursuant to Rule 21.41 of the Rules of the New Zealand
Institute of Chartered Accountants which were in force at
the time of the original notice of complaint, the member
may, not later than 14 days after the notification to the
member of this Tribunal’s exercise of its powers, appeal
in writing to the Appeals Council of the Institute against
the decision.
No decision other than the direction as to publicity and the
suppression orders shall take effect while the member remains
entitled to appeal, or while any such appeal by the member
awaits determination by the Appeals Council.
R J O Hoare FCA
Chairman
Disciplinary Tribunal
21 October 2013
DECEMBER 2013
75
PROFESSIONAL CONDUCT
Member guilty of conduct unbecoming an accountant,
negligence and/or incompetence in a professional capacity and
breaches of the Institute’s Code of Ethics
At a hearing of the Disciplinary Tribunal of the New Zealand
Institute of Chartered Accountants held on 6 – 8 August, 16
October and 1 November 2013, Ian Leslie Stevenson, a chartered
accountant of Tauranga, was found guilty of charges under the
New Zealand Institute of Chartered Accountants Act 1996 and
the Rules made thereunder relating to conduct unbecoming an
accountant, negligence and/or incompetence in a professional
capacity that has been of such a degree and/or so frequent as to
reflect on his fitness to practise as an accountant and/or tends to
bring the profession into disrepute, and breaches of the Institute’s
Code of Ethics.
The Disciplinary Tribunal orders that the name of Ian Leslie
Stevenson be removed from the Institute’s register of members
and that he pay to the Institute the sum of $60,000 in respect of
costs and expenses.
No decision other than the direction as to publicity and the
suppression orders shall take effect while the member remains
entitled to appeal or while any such appeal by the member awaits
determination by the Appeals Council.
The Disciplinary Tribunal’s full decision can be found on the
Institute’s website nzica.com/dt.
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RJO Hoare FCA
Chairman
Disciplinary Tribunal
New Zealand Institute of Chartered Accountants
1 November 2013
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Member guilty of breaches of the Institute’s Rules and/or
Code of Ethics
At a hearing of the Disciplinary Tribunal of the New Zealand
Institute of Chartered Accountants held in public on 23 October
2013, a member pleaded guilty to a charge under the New Zealand
Institute of Chartered Accountants Act 1996 and the Rules made
thereunder relating to breaches of the Institute’s Rules and/or
Code of Ethics.
The Disciplinary Tribunal orders that the member be censured
and that he pay to the Institute the sum of $8,057 in respect of
costs and expenses.
No decision other than the direction as to publicity and the
suppression orders shall take effect while the member remains
entitled to appeal or while any such appeal by the member awaits
determination by the Appeals Council.
The Disciplinary Tribunal’s full decision can be found on the
Institute’s website nzica.com/dt.
For further information contact
Professor Craig Elliffe on [email protected]
Or visit: www.commerciallaw.auckland.ac.nz
RJO Hoare
Chairman
Disciplinary Tribunal
New Zealand Institute of Chartered Accountants
23 October 2013
76
DECEMBER 2013
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DECEMBER 2013
77
REAR VIEW
BY SIMON O’CONNOR FCA
LESS IS NOT MORE
Short auditor rotation periods
may harm, not support, good
quality audits.
N
ZX should amend the rigid listing rule requiring
audit partners to rotate off public issuer engagements
after only five years.
This could align New Zealand with UK and
Australian regulations, allowing the five-year period to be
extended to seven under certain circumstances.
The debate in the UK and Europe has moved from
mandatory audit partner rotation to mandatory firm rotation,
which has been adopted in the Netherlands.
This issue has not reached New Zealand, where the
discussion is focused on the mandatory five-year rotation of
individual audit partners within a firm.
So how do the arguments stack up?
Undoubtedly there is a risk in long-term audit relationships
of a partner being “captured” by a client. The familiarity issue
is real if, for example, one partner works with an audit client
for, say, 10 to 15 years.
And independence is fundamental to establishing the
credibility of the audit opinion. Partner rotation reduces the
familiarity threat that goes with a long-standing audit relationship
and allows, on a regular basis, a fresh pair of eyes to re-challenge
the approach and, therefore, enhance audit quality.
But a five-year partner rotation is too short.
In the New Zealand market, with its relatively small pool of
industry and experienced audit partners, there is a high risk of
audit quality being compromised by a shorter turnaround, with
a partner spending two of the allowed five years transitioning
either in or out of the engagement.
Even if the audit partner is industry-familiar, they are likely
to spend only four of those five years (80% of their time)
performing the role at an optimal level.
So is such a short rotation mandate the right quality answer
for New Zealand?
With auditors now regulated by the Financial Markets
Authority, fewer firms can meet the requirements to audit
public issuers.
78
DECEMBER 2013
Even if you take the Big Four firms, then overlay the different
industries requiring audits, it’s an ever-decreasing pool of
experience and skill. Most non-Big Four firms are no longer
valid options for listed entities, and market scuttlebutt indicates
some smaller firms are reassessing whether they want to remain
in the audit business.
Short rotations in a smaller market mean an incoming audit
partner may not match the depth of industry understanding of
the partner being replaced.
Short rotations in a smaller
market mean an incoming
audit partner may not
match the depth of industry
understanding of the partner
being replaced
The reality is that the smaller the country, the smaller the
firms, and the smaller the pool of suitable partners to build the
depth of partner experience necessary to execute a quality audit.
There is a strong groundswell of opinion among directors
that five years is too short in a market the size of New Zealand.
David Jackson, an independent director who chairs the
audit committees at Fonterra Cooperative Group Ltd and
Nuplex Industries Ltd, says five years is too short for businesses
operating internationally, where the auditor is required to travel
extensively to acquire a deep understanding of the clients’
global businesses.
“The reality is the auditor only just gets to know the business
and he’s gone,” he says.
REAR VIEW
Directors are considerably more focused on audit quality
than a decade ago. They are more engaged with the audit
partners because the level of risk is now so much higher.
The regulation of auditors, including partner rotation, had
its genesis in the scandals that ripped through the American
financial community between 2000 and 2002. The high-profile
and spectacular corporate frauds at Enron, WorldCom
and Tyco exposed significant problems within the auditing
profession, culminating in the passing of the Sarbanes-Oxley
Act (SOX) in July 2002.
Just three weeks earlier, WorldCom revealed it had
overstated its earnings by more than US$3.8b during the
previous five quarters, largely by improperly accounting for
its operating costs.
Senator Paul Sarbanes, in a 2004 interview, characterised
the greatest mischiefs as:
• auditor conflicts of interest and lack of independence
• inadequate regulatory oversight
• weak corporate governance
• stock analysts’ conflicts of interest
• inadequate disclosure provisions
• grossly inadequate funding of the Securities & Exchange
Commission.
Prior to SOX, accounting firms also performed significant,
and lucrative, non-audit and consulting work for companies
they audited.
But auditor regulation worldwide has been significantly
strengthened in the past ten years. And boards of directors,
specifically audit committees, have lifted their game and
improved their oversight of financial reporting in the face of
pressure from regulators and investors.
This has been recognised in the UK and in Australia, with
some relaxation of the partner rotation rules to suit their markets.
It is now time for NZX to reconsider the issue from a New
Zealand perspective and review listing rule 3.6.3(f), ditch the
requirement to rotate audit partners after five years and, at the
very least, bring our rules into line with Australia and the UK.
There is scant empirical evidence that short rotations boost
audit quality. In fact, most research suggests quality drops
when auditor tenure is shorter – largely because it is expensive
and difficult for partners to gain client-specific knowledge.
The issue should be high on NZX’s agenda if it wants to
meet the market’s needs and truly aims to enhance the quality
of audit in New Zealand.
Simon O’Connor FCA is Auckland Managing Partner
for EY New Zealand.
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DECEMBER 2013
79
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