The Bottom Line - CIMA locations docs/Southern... · PG 1. Note from RVP. PG 3. 2018 Annual...

The Bottom Line

Harvard UniversityMember pursues Harvard

Win amazing prizesCompetition details inside

CNBC seriesHow do you create value in your business?

December 2017 • January 2018 Issue 106

ContentsPG 1. Note from RVP

PG 3. 2018 Annual subscriptions

PG 3. Conference catch up

PG 4/5. Member pursues Harvard

PG 7. Botswana dinner highlights

PG 7. Dates to diarise

PG 7. New student competition

PG 8. Income inequality

PG 9. Value creation and preservation

PG 10. Combating fraud and corruption

PG 12. Ethics in business

PG 13. Breakfast highlight importance of partnerships

TBL December 2017/January 2018 | Pg 1

It is with great pleasure that I introduce the final edition of The Bottom Line for 2017. As the Regional VP, I am proud to be able to say that we have had a successful year. Looking back, a few events come to mind: The CGMA Africa Inaugural Conference, and the CNBC discussion on value creation and preservation. In addition, I must mention the successful yet ongoing transition to the new Association brand that is taking place across the world and in our offices around Africa. Be sure to keep an eye out for the new logos in our offices!

Speaking of Africa, we have seen tremendous success in terms of member growth and student population. Our offices in Botswana, Ghana, Nigeria, South Africa, and Zambia can report on successful recruitment campaigns, face-to-face events, and marketing efforts that ensure the CIMA brand is widely recognised across the continent.

Furthermore, as a continent, we are focusing on aligning our practices in altering how we work, interact, and communicate with our clients. In today’s fast-paced world, the only constant we can be sure of is change. CIMA is a global organisation, and I am confident that the Africa team will find innovative ways to contribute to the global efforts to remain current and relevant. Now more than ever, our students need new skills that will make them employable, our members need resources, and business needs help finding talent. Further, we must address these challenges in the dynamic global village which presents its own set of challenges.

This really excites me, as the alignment of our practices is actually an opportunity to improve our customer experience and for us to:• Make things better for our members, students, customers and stakeholders by eliminating inefficiencies• Redesign business processes to achieve great improvement• Drive new revenue and value • Give our members better strategic and more cost- effective support

So it is with these sentiments that I close off 2017 by commending the entire Africa region on a job well done. Indeed, I believe we have thoroughly engaged our students and members and I look forward to strengthening our working relationship in 2018!

Note from the Regional

Vice President

Badi Promesse FCMA, CGMA, MBA, PgD Man, Dip AIBM (Fin)Regional Vice President: Africa

We would like to thank you for your continued support of CIMA under the umbrella of the Association of International Certified Professional Accountants.

As you are no doubt aware, your annual subs for 2018 are due in January. But did you know that you can pay your subs in instalments? Take advantage of this opportunity to find a payment plan that works for you and retain your CIMA membership, and all the benefits that come with it! What’s more, you have a number of payment options, including an online payment method, CIMA Contact, by post, or direct debit. Be a part of our commitment to elevating the profession, updating the qualification, professional experience requirements, and ensuring we remain relevant. For more information please contact your Customer Services Team on the numbers below:

We have great news for those who were unable to attend the CGMA Africa Inaugural Conference! The entire conference is now available to view via cloud. Learn how to prepare, adapt and lead your organisations in the VUCA world through presentations by renowned industry personalities including:

TBL December 2017/January 2018 | Pg 2 TBL December 2017/January 2018 | Pg 3

2018 subscriptions payment plan

Catch up on the CGMA Africa Inaugural

Conference

Find out everything you need to know about the VUCA world and how leaders intend to take their businesses forward in these extraordinary times. Plus, don’t miss out on the action from the star-studded dinner! To order your video for R300 via a cloud link, please email us at [email protected]

Badi Promesse FCMA, CGMA, MBA, PgD Man, Dip AIBM (Fin)

Regional Vice President, Africa – Management AccountingThe Association of the International Certified Professional Accountants

Kimberly N. Ellison-Taylor CPA, CGMA

Chairman, Association of International Certified Professional Accountants ChairmanAmerican Institute of CPAs

Andrew Harding FCMA, CGMA, CA, MBA

Chief Executive

Management Accounting The Association of International Certified Professional Accountants

Lee Naik

CEOTransUnion Africa

Aarti Takoordeen CA (SA)

CFO JSE

Stephen Van Coller ACMA, CGMA, CA (SA), (Hons), (B.com)

VP: Digital Services, Data Analytics and Business Development

MTN Group

Mike NyinakuFCCA

CEOBeige Group

Stephen Berry

VP: Digital Services, Data Analytics, Business Development

Author - Strategy of the Serengeti.

Botswana+267 (0) 3952362

Ghana+233 (0) 302 503 407

Nigeria+234 14608392

South Africa+27 11 788 8723

Zambia+260 (211) 372 738

Zimbabwe+263 (0) 774 999 384

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CIMA Member pursues Harvard Degree

CIMA Journey beginsMunashe excelled at Management Accounting modules at Unisa. He then realised the CIMA was the best route to follow, based on his passion for Management Accounting. Talking about the benefits of the CIMA qualification, Munashe said, “It’s more of a strategic qualification…more like an MBA.” He emphasised the decision-making skills with which the CIMA qualification equips students. “CIMA helps you make business decisions. It has assisted me to identify who to talk to, and what time and the ability to extract knowledge when making decisions and advising clients.”

Next stop: HarvardCIMA was just the beginning for Munashe. He has applied to complete a doctoral degree at Harvard University. His thesis will focus on management consulting research and innovation for government, corporations, and society. The thesis will investigate a myriad of challenges that corporates, government, and communities face, in an African context. One of the goals of the study is to help Africans lead economically sustainable lives. As a Zimbabwean emigrant living in South Africa, Munashe will also look at how best to improve the emigration process on the continent. In addition, he will complete a Master’s degree in Public Policy and a degree in Law.

Munashe Mupa, ACMA, CGMA, ASA who has excelled in his studies and work is on his way to complete a doctoral degree at Harvard University. Munashe’s story reminds us that a combination of hard work, goal formulation, and education can take one very far in life. Munashe is a classic example of what our students should aspire to be: humble and grounded.

Munashe’s successful journey in academia began with an interest in medicine. “My interest as a young boy was to go into medicine,” he said. “However, when I enrolled for my first year of high school, I changed and decided to take business subjects.” This proved to be a wise move because the young Munashe not only excelled in business studies while at

school, but also developed a passion for accounting. He explains this passion by saying, “I guess it was an inborn thing.” In addition, Munashe’s father was a businessman and had a huge influence on his son’s career decision-making.

Munashe then pursued his accounting degree at Unisa while working as a trainee accountant. However, the young accountant was bored. “I didn’t enjoy it that much,” he recalls. He attributes his growing interest in accountancy at that time to an increase in his responsibilities on the job, including liaising with clients and exploring the consulting side of his position.

Naturally, Munashe has faced many challenges on his road to success, including financing his business, Napthali Consulting and Research Institute, a subsidiary of the Naphtali Holdings Group. He says that the biggest hurdle has been finance.

“Financing my studies…financing my business…that has been the greatest challenge that I have faced.” Recalling his struggles with financing his degree, Munashe said that he worked and studied to pay for his degree. “You just have to sacrifice time. Working and studying has always been a challenge for everybody.” Nevertheless, he maintains that patience is key. “You know with time, things fall in place. Life is always meant to be a challenge anyway,” he said.

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Munashe Mupa ACMA, CGMA

Institute of Management Accounting and Strategy

working together to build a learned South Africa

IMAS provides the CIMA qualification on a full-time, part-time and distance learning basis. We also offer classes and support via online student portal and mobile app.

Inhouse tailored programmes for finance professionals

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Dates to diariseEvent Date

Kenya Annual Dinner 9 December 2017

Botswana CPD 12 December 2017

South Africa FCMA 25 January 2018Breakfast

Enter our Facebook competition and win!Stand a chance to win amazing prizes in our Facebook competition this December if you are a newly registered CIMA student. We’re giving away awesome prizes each week to students who have registered between October and December! Up for grabs is an iPhone 6 as a main prize and a set of Beats Solo 3 Wireless Headphones every week. More information is available on our CIMA Africa Facebook page here: facebook.com/theCIMACafe

Good luck!

Joy!

Our Botswana branch hosted their annual dinner in honour of their members and students. View the photos from the beautiful event below!

Highlights from the Botswana annual dinner

Celebrate the season. Happy holidays from all of us at CIMA.


Relationship between income inequality and skills deficit

Value creation and the business model

Countries in Africa have some of the highest income inequalities in the world. For example, in South Africa, 10% of the population earn around 55%–60% of all income, compared to 20%-35% in the advanced economies.

While there are many reasons behind income inequality, the quality of education and skills deficit are factors that cannot be ignored because they link directly to low income and the high rate of unemployment. In the past two years, it has become harder to fill positions as the demand of skilled workers reaches its peak. Recruitment surveys report that the most difficult positions to fill during the past two years include: skilled trades, management, accounting and finance staff, sales representatives, secretaries and administrative assistants.

This indicates a clear link between skills deficit, income inequality, unemployment and ultimately poverty.

How can this gap be bridged?

While there are ongoing discussions, debates and protests about wealth distribution from one group of population to another, this should not be viewed as the only solution to getting closer to equality. Improving the quality of education to match the skills in demand is an important part of the solution. One of the factors that fuel unemployment is the lack of compatibility between the education that is acquired by graduates at tertiary institutions, and the actual skills required in the work place. Equally, skill quality is also a considered factor in deciding salaries.

Business professionals and academics use a business model to create long-term value and success in a company. Business models allow stakeholders to create value in an organisation by exploiting business opportunities. Value creation is a term that is closely linked to the business model as the business model is used to show how an entity generates and preserves value in the long-term. In fact, value is at the heart of the business model. In addition, the business model also looks at how a company can deliver value.

There are four parts to the business model: defining value, creating value, delivering value to customers, and capturing residual value for themselves. Each stakeholder has a part in each of the four components and customers are the ones to whom value is delivered.

As an example, in salary surveys comparison among professionals within the finance and accounting industries, professionals who hold the CIMA qualification earn at least 50% more than their peers who obtained their qualification elsewhere. (Ref: Payscale, CIMA salary survey, Robert Walters Salary survey). For example, CIMA students in Zambia can earn up to ZMW140,000. The CIMA qualification, which is both affordable and globally recognised focuses much more on management accounting instead of only finance accounting. To illustrate:

Financial accountants:• Prepare reports based on past performance • Produce required financial information to be used across other roles in a business

Management accountants:• Gather information on revenue, cash flow and outstanding debts to spot trends, gather stats, and write reports that help your company make decisions — from day- to-day management to corporate strategy

• Combine financial and non-financial data to paint a complete picture of the business. Then use that to drive the success of the business

In every industry, the choice of institution is vital in building a desirable portfolio; individuals must take this into consideration. As the battle of inequality continues, we are not completely powerless as individuals in claiming our share of wealth, and it all starts with quality education and a special attention to enhanced, relevant skills.

CIMA students and members earn higher salaries

One should take care when defining value by bearing in mind that the term encapsulates more than just profits and finance. Value is also about people and their needs. Firms that are truly invested in value creation know that drivers of value can be tangible and intangible. Indeed, the move from an industrial economy to a knowledge-and-information based economy increased the importance of intangible value to companies.

Our panel of industry experts unpacked this report in the South African context at the live studio recording of the CGMA CNBC Management Accounting Series on 5 December at the Johannesburg Stock Exchange in Sandton. The discussion featured prominent business leaders, including Adrian van der Merwe, Partner Financial Services at Ernst & Young South Africa; Munashe Mupa, Managing Director at Naphtali Consulting & Research Institute; and Tumelo Chaka, Executive Director at Senate Capital. The discussion was hosted by Gugulethu Cele, Senior Anchor and Financial Journalist at CNBC Africa.

From Left: Tumelo Chaka, Munashe Mupa, Adrian van der Merwe, and Gugulethu Cele.

How do firms deliver value to customers?

Companies deliver value to customers by providing them with goods or services that meet, their needs which have been identified by the company. To make this simpler, companies identify customer segments which can be compared to markets at which they promote their products. These segments are defined by age, gender, income, cultural practices, previous purchase history, and brand interaction. Companies then spend much time and resources in delivering value to customers through communication, distribution, and sales channels. Companies would do well to keep in mind that consumers shop in different ways today, and should not ignore the opportunities presented by ecommerce, social media, and viral marketing.

So how does the concept of value and the business model link to management accounting?

Companies do not create value in isolation. Instead, value creation is part of a wider environment. A firm’s environment hugely impacts decision-making and can even compel a company to evolve. Accounting starts with the collection of information which is then cleaned down, assessed, and presented to stakeholders to aid with decision-making. Further, managers are bombarded with details and figures every day and they require the insight of their management accountants to sift through the data to produce something that can be used to aid sound decision-making. Thus the role of the accountant can be expanded to include providing deeper insight. The CGMA Global Management Accounting Principles provide finance professionals with the building blocks to “inform to transform” – provide data that will help organisations reach their full potential, thereby benefiting employees and customers.

Watch the panel discussion on CNBC Africa on 14 December at 19:00


Combating fraud and corruptionThe World Bank defines fraud and corruption by differentiating between a “fraudulent practice” and a “corrupt practice”. A fraudulent practice is an act, misrepresentation, or omission that knowingly misleads a party in order to obtain financial or other form of benefit or to avoid an obligation. Corruption is the practice of offering, giving, receiving, or soliciting of anything of value to improperly influence the actions of another party.

Recent major international examples of fraud such as the FIFA scandal have cast a spotlight on fraud, corruption, and ethics. These incidents of fraud and corruption have caused many citizens around the world to distrust their governments and leaders. To illustrate, the Organisation for Economic Co-operation & Development (OECD) reports that over half of the citizens in developed countries do not trust their governments (Keeping Business Clean, 2013:6).

How has fraud and corruption been addressed?

This apparent increase in fraud cases across the world has urged many countries to review and strengthen their laws against bribery. In fact, this was a focus topic at the G7 and G20 meetings, which also highlighted the attempts by some parties to conceal illegal and questionable activities. Indeed, the 2016 Global Anti-Corruption Summit in London resulted in the first global declaration against corruption. However, more effort needs to be made to address fraud at a micro level.

Identifying fraud and corruption

Despite international acknowledgement of a fraud crisis, only 57% of organisations have specific anti-corruption guidelines (Keeping Business Clean, 2013:15). Firms urgently need to establish an anti-fraud strategy. Such a strategy would encompass fraud prevention, fraud detection, fraud deterrence, and fraud response.

Fighting fraud

Finance directors are most concerned with the low-level fraud that affects their companies.

Top 5 tips to address fraud

In conclusion, leaders can no longer afford to turn a blind eye to the rise in cases of fraud. This is an uncomfortable topic and as such is often overlooked. Nevertheless, world leaders have started to include fraud in their agendas. Company management ought to follow suit, especially since there are a myriad of effective ways of combating fraud in firms.

Luckily there are ways to address fraudulent activities.

Sources: Barman, T & Marc-Thrasybule, N. 2017. “Keeping business clean. A CGMA guide to countering fraud and corruption.” CGMA. Available from: www.cgma.org.

Provide direction from the topThis involves developing an anti-fraud policy that communicates that fraudulent activity will not be tolerated.

Identify key risksIt might be difficult to believe that some organisations do not even prioritise fraud identification. To evaluate how well a company is doing in detecting internal fraud, management must benchmark against similar companies.

Promote an anti-fraud cultureTop management must be highly involved in setting the tone for what is acceptable and what is not. Employees must also be encouraged to report fraud.

Encourage whistle-blowersWhile employees should be able to raise their concerns via management, alternative routes must be available. Furthermore, the identity of whistle-blowers must be kept secret, especially if the whistle-blower requested it.

Use technology to fight fraudEmployers should consider investing in tools that will enable them to analyse large quantities of data quickly. This is especially relevant in the current age of an increased need for cybersecurity.

Chart a new learning path without limits.Welcome to the CGMA Store — designed to keep you one step ahead. It offers an extensive range of CPD resources in leadership, strategy, communication, risk and technology.

You can choose from live webcasts, video and audio presentations, online self-study courses and e-books in a range of categories, including:

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© 2017 Association of International Certified Professional Accountants. All rights reserved. CGMA is a trademark of the Association of International Certified Professional Accountants and is registered in the United States and other jurisdictions. The design mark is a trademark of the Association of International Certified Professional Accountants. 21656B-UK

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The importance of ethics in

business

Ethics is a branch of philosophy that involves creating, assessing, and applying a system of moral principles. The word is derived from the Greek word “ethos”, meaning habit, custom, or character. Ethics is typically a study used to assist with moral dilemmas.

Business and ethics

A business is a complex environment, so it is not unexpected that moral dilemmas might appear from time to time. Business ethics are a set of guidelines that are meant to assist employees address business-related dilemmas sufficiently. Business ethics apply to all facets of business, from how a business produces and delivers products to interacting with suppliers, customers, employees, and society. Unethical practices harm businesses and have a major impact on the economy. Due to these implications, many businesses emphasise the importance of cultivating a culture of ethical behavior not only to avoid penalties but also because corporate responsibility and ethical practices lead to sustainable value creation. Furthermore, business ethics can have a huge effect on brand reputation.

The role of the accountant

A company’s accounting and finance department has the best opportunity to lead by example, setting the tone for an ethical corporate environment. Indeed, the nature of the accountant’s job requires ethical behavior. For example, management and shareholders rely on accountants to present an accurate and fair view of the company. Fortunately, there are ways in which accountants can lead their organisations in the right direction:

1. Top leaders must set an example2. The company’s core values must be reinforced and communicated to employees3. The right tone must be established4. Management must provide support to staff who want to report unethical practices5. Management must develop a shared code of ethics

CGMA designation holders have the potential to be key influencers in their organisations. They have a duty to lead by example and encourage their colleagues to do the same. Given that they are governed by the principles of the code of ethics of the Association of International Certified Professional Accountants in leading ethically. Ultimately, CGMAs must combine their accounting skills with the requirements of the code of ethics.

The CIMA office in Johannesburg, South Africa hosted a breakfast with CIMA accredited tuition providers. Badibanga Promesse, FCMA, CGMA chaired the event. He discussed the newly formed Association with attendees, the new brand, and the importance of building partnerships and remaining relevant in a dynamic industry. Among the benefits of building successful partnerships in our industry is improving:

• Brand visibility• Brand awareness• Brand relevance• Partnerships• Value creation and preservation

In conclusion, business not only has a moral duty to instill an ethical environment but doing so will also enhance employee engagement, teamwork, and innovation.

Breakfast highlights importance of successful partnerships

Sources: Ethical Lens. CIMA Roundup of responsible business issues – October 2017. Ethical Performance. Driving value from an ethical culture. 2017. Verschoor, C.C. 2017. “Proven ways for accountants to instill ethics in companies.” Accounting Today. Available from: http://bit.ly/2rUh9OX

T. +27 (0) 11 788 8723/ 0861 CIMA SA | E. [email protected]

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