A Guest Post From Brunei’s Pengiran Izam

Pengiran Izam and I talk on Twitter.  He mentioned he was presenting at the 16th ASEAN Federation of Accountants conference in Brunei and I asked him if he’d like to publish a summary for my readers.

Izam is currently the Head of Corporate Services at BAG Networks Sdn Bhd (Brunei Accenture Group) a market leading IT consulting and outsourcing services provider in Brunei. Pengiran worked and qualified with PricewaterhouseCoopers UK (PwC). He is the first Brunei-Malay to be admitted as an Associate member of the Institute of Chartered Accountants in England and Wales (ICAEW). He is also an Associate member of the Brunei Darussalam Institute of Certified Public Accountants (BICPA).  Pengiran graduated with Honours in Accounting from the University of Manchester.

He has been described by some as a “technocrat”. An Open Source Software (OSS) hobbyist, he enjoys the process of understanding, installing and deploying OSS as a way to enhance his understanding of technology trends.

he is an advocate for best practices in corporate governance and business management. He regularly blogs about technology and business trends on his personal weblog “Relevance Found”.

Here’s his post:

Global economic downturn – why CFOs are in the hot seat

Image credits: tylerdurden

Licensed under Creative Commons license

16^th ASEAN Federation of Accountants Conference (AFA16)

In 1977, the national accounting associations in Indonesia, Malaysia, Philippines, Singapore and Thailand (commonly abbreviated as the IMPST members of the Association of South East Asian Nations (ASEAN) grouping) banded together under the AFA umbrella. Since the `70s, the ASEAN grouping has expanded to include Brunei, Vietnam, Laos, Myanmar and Cambodia. Currently, all 10 ASEAN member countries are represented in AFA.

Once every two years, the Federation hosts the AFA Conference. This year was the first year we hosted the AFA Conference in Brunei. This blog post is a report of the first Plenary session.

The speakers

In the order they presented their points were:

• Puan[1] Haslina Taib, CEO of BAG Networks Sdn Bhd (Brunei Accenture Group).
• Dr Ernest Kan, President of the Institute of Certified Public Accountants of Singapore and Chief of Operations (Clients & Markets) Deloitte & Touche LLP, Singapore.
• Ms Christina Constance Foo, Vice President of the Malaysian Institute of Accountants and co-founder of Priority One Consultancy Services Snd Bhd, a strategic business building consulting firm in Malaysia.

The session was moderated by Mr Daniel Ng, Partner in Charge Deloitte & Touche Brunei.

Puan Haslina Taib

Puan Haslina’s presentation was from the point of view of a CEO who rose through the ranks, from a newly qualified accountant through to a CFO before being promoted to CEO. She discussed points about how the CFO’s seat is getting very hot during non-crisis times anyway: with demanding shareholders, ever-changing regulatory requirements and pressure to produce results.  She also compared and contrasted how the role of the CFO has developed from being a financial watchdog, a functional or reactive member of the executive team to a more strategic analyst deeply involved in executive decisions.

Puan Haslina then made the observation that all Executives (from CFO, to CTO, to COO and CEO) were all in the “hot” seat these days. She finished off her presentation with a general exhortation for accountants to not wait for crisis to happen before taking remedial actions. Accountants should strive to better ourselves, to improve weak or flawed business models and processes on a daily basis. To not wait before it’s too late and a crisis is upon us again.

Dr Ernest Kan

Dr Ernest structured his presentation through a series of mini case studies, and talked about the role of the CFO throughout the financial crisis. Dr Ernest introduced the shakeup at Lehman Brothers, the Bernie Madoff ponzi scheme, the Satyam scandal, the Enron collapse and AIG’s bailout as case studies.

These case studies revealed various failures of CFO’s from the failure to perform fiduciary duties when irregularities were detected (Satyam), failure to identify the impact of over investment in subprime loans and the subsequent over exposure to catastrophic systemic risk (Lehman Brothers), a failure to remain independent from the CEO (Bernie Madoff) and the failure to account for the risk of write-downs or collateral payments for exposure in credit default swaps (AIG).

Dr Ernest then touched on the expectations gap that was widening between public expectations of the CFO’s and their actual roles in industry. Dr Ernest echoed a point mentioned by Puan Haslina, where the increasing regulatory and compliance requirements were the single most important factor that has contributed to the changing role of the CFO.

And how the CFO’s role has evolved: from being a financial steward, to an ethical leader, to a strategic business partner and to an agent of change. In these turbulent times, the public has high expectations of CFO’s to lead corporate governance and be an independent voice on the executive committee. Yet therein lies the rub – for this may be a conflicting role between the CFO and the CEO seats, where the CFO must balance being a strategic business partner to the CEO versus being the independent voice.

A great challenge for CFO’s will be to reconcile their own actions and priorities in a role where remuneration is typically based on financial performance and not necessarily adherence to best practices in corporate governance.

And that at the end of the day, as accountants we are above all, professionals.

Ms Christina Foo

Ms Christina Foo brought a “soft” angle to the CFO debate, focusing on the CFO as a human being. Where in the past CFOs were expected to “just produce numbers to please stakeholders”, they are now also expected to ensure that values are upheld. So CFOS should focus not just on “Corporate Governance” but also on “Human Governance”.

Ms Christina also highlighted how CFOs have the opportunity to revolutionise their roles through championing the sustainability debate. CFOs should capitalise on their position as strategist to ensure companies invest for the long term and in sustainability. Because each of us can in small ways influence business decisions to use scarce resources responsibly for the greater good of society, for our stakeholders and eventually for our shareholders through better cost management.

Question: Any advice for a budding CFO?

During the Q&A I asked this:

I would just like to draw out some of the topics discussed by the panel, before I pose my question.

On the ripple effect that Dr Ernest talks about, where a butterfly flaps its wings in South America and causes a thunderstorm in Central Asia … or where a company loses its Triple-A rating status and investors in Singapore lose 80% of their market value.

And where Dr Ernest quoted a study where CFOs are thought to “not fully understand the wider business issues”.

Where Ms Christina Foo then talked about an opportunity to reposition the CFO role, and where she talked about sustainability reporting.

My question is this: Are the existing accountant training and qualifications sufficient to prepare a young accountant for the hot seat? So what would be the one suggestion you would give to a budding CFO? I am at a bit of a quandary, because in my qualifying years, we never covered topics such as sustainability reporting, or management of exposure to catastrophic systemic risk.

Mr Daniel Ng directed the question to Puan Haslina and the panel, who urged the audience to remember that qualifications and certifications were only a starting point, and that the progression to mastery is not a single event but rather a journey through life.

About

Guest post by izamryan of http://relevancefound.com

Disclaimer: I am currently an employee of BAG Networks but the opinions discussed above are my own and are not necessarily those of my employer.

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[1] “Puan” is an honorific used in the Malay culture, and is roughly equivalent to “Madam” (but not Mrs).