Accounting News 21-July-07

Accounting news and snippets during the fortnight

‘India can now count on global norms’

Indian companies can expect a series of major revisions in the guidelines for preparing their financial statements in the next four years, until India’s financial reporting standards get fully converged with international norms by April 1, 2011. Read More

Interview with Pervenche Berès on convergence

In this exclusive interview, the chairwoman of the Committee of Economic and Monetary Affairs of the European Parliament talks about the convergence of accounting standards. Read More

Deferred tax under MAT?

For a taxpayer, the determination of correct tax liability is as important an exercise as the legitimate tax planning. In today’s scenario, the determination of correct tax liability poses several challenges. The treatment of deferred tax charge in determining the tax liability under the special provisions of Section 115JB of the Income-Tax Act is one such case. Read More

How to survive summer holidays

The Institute of Chartered Accountants in England & Wales (ICAEW) outlines how small businesses can keep the cash flowing during summer months when many firms are short-staffed. Read More

WNS completes successful ‘Build-Operate-Transfer’ of Finance & Accounting Services Unit for Aviva Global Services

WNS (Holdings) Limited (NYSE:WNS), the parent company of WNS Global Services, a leading offshore business process outsourcing (BPO) provider, today announced it has demonstrated the successful completion of a unique outsourcing model with the handover of a Finance and Accounting Services unit in Sri Lanka to AVIVA, the world’s fifth-largest insurance group and U.K’s largest insurance service provider. Under a “Build, Operate, Transfer” (BOT) Model, more than 300 WNS specialists were seamlessly transferred to Aviva Global Services in Colombo as of July 2, 2007. Read More

Tata Motors bags Award for Excellence in Cost Management

Tata Motors has won the National Award for Excellence in Cost Management fo r the year 2006, conferred by the Institute of Cost and Works Accountants of India (ICWAI). Read More

New logo for CAs unveiled

A new logo for the profession of Chartered Accountants (CA) was unveiled by the Union Minister of Corporate Affairs, Prem Chand Gupta on the 59th Chartered Accountant�s Day. It was on July 1, 1949, that the Institute of Chartered Accountants of India (ICAI) was established with the enactment of the Chartered Accountants Act, 1949. Read More

Industry needs more cost accountants

With a growing demand for cost and management accountants across the country and the professionals playing a more strategic role in an organisation, the Institute of Cost & Works Accountants of India, (ICWAI) Pune chapter has chalked out an expansion plan to improve access of the professional course to more students. Read More

Govt plans bill for valuation professionals

The government is drafting a bill to regulate valuation professionals who analyse companies, shares, debt, assets, brands and intellectual property to arrive at a financial value. Read More

Regards,

Santosh Puthran
AICWA

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Sunil Bharti Mittal from Financial Times…

This article is picked from Financial Times. For more details, please visit www.ft.com

Profile: Sunil Bharti Mittal
By Jo Johnson in New Delhi

Published: November 27 2006 08:48 Last updated: November 27 2006 08:48

One train can hide another, goes the famous warning sign at French railway junctions. The same might be said for Indian entrepreneurs. In a world agog at the success of steel baron Lakshmi Mittal, the Carnegie of the modern era, the extraordinary rise of his unrelated namesake, Sunil Bharti Mittal, chairman of Bharti Enterprises and the czar of Indian telecoms, has gone relatively unnoticed. That is about to change.

Whereas Lakshmi Mittal left India to build up his group overseas and is only now starting to focus on India, Sunil Bharti Mittal, 49, has done exactly the opposite. From an unassailable position of strength in the Indian mobile telecommunications market, where it has a market share of over 25 per cent, Bharti is not only itself going global but also becoming the partner of choice for Fortune 500 companies seeking to enter the Indian market.

Copyright The Financial Times Limited

This article can be found at:
http://www.ft.com/cms/s/4a4dcbbc-7dee-11db-84bb-0000779e2340,dwp_uuid=a6dfcf08-9c79-11da-8762-0000779e2340,_i_email=y.html

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10 Myths on Activity Based Costing

Dear Management Accountants,

Activity Based Costing has not became popular in India to what ever extent it deserve. There are so many Myths as far as this concept is concerned. This concept is developed to ascertain the accurate process cost data on activities and products and can be used for accurate product cost data, cost & OH control , identification and elimination of non- value added activities etc.,.

But in practice, in India, Its adoption is very limited and heared several comments Against its use and the most common are listed below.

ABC systems are too difficult to implements and use:
ABC systems are too costly; and
ABC systems are too complex to understand
Improving our existing system will do the job:
All that we need are more cost centers;
Machine-hour systems save the time; and
A cost system should be kept simple.
We do not need more accurate product costs:
We know what our products cost; and
The market sets prices, so we do not need product costs.
Cost systems play a limited role:
We cannot do anything about fixed costs;
Only manufacturing costs are product costs; and
Product costs are not useful for managing overhead activities.

Now I request the members to examine , discuss and share their views on each and every comment on ABC given above as to whether they are correct or are only myths. Let us have very clear views on this topic since this is a very important tool for Management Accountants.

Having clear views on this topic will help us in Answering & Convincing the World about its utility in case if we intend to Practice in this field.

(Let all of us take this as a Group discussion or a project etc., and start discussing)

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BEST PRACTICE MANAGERIAL ACCOUNTING WITH mySAP™ ERP Financials

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SAP offers the best in management accounting and I could not resist promoting the best ERP solution

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• Leverage best practice cost-accounting methodologies for deeper insight into variances, capacity and absorption models
• Improve the accuracy of internal job costing
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Activity-based costing

• Use template allocations to easily execute complex allocations
• Leverage full integration with logistics and operational systems to assign accurate operational costs

Product costing

• Provide detailed information on production costs
• Calculate COGM and COGS at each step of the production process
• Support product costing in both process and discrete manufacturing environments

Profit center accountingManagement

• Set accurate transfer pricing to better value the internal exchange of goods
• Improve management consolidation and elimination of intercompany profit and losses
• Analyze the profitability of the smallest unit of responsibility and hold employees accountable

Investment management

• Utilize embedded technologies to streamline net present value calculations and planning
• Automatically create a fixed asset master record during construction and capitalize asset underconstruction
• Save time by transferring information from appropriation requests into an internal order to begin the project

Profitability analysis

• Generate greater insights from multidimensional analysis of market segments by product, customer, order, or strategic business unit
• Adapt analysis to multiple businesses and markets

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Bee Sting Therapy

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I wish I was punk rocker…

I wish I was punk rocker….

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hamster

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Mr. Gopalakrishnan Blog

Mr. Gopalakrishnan succeeds Mr.Ratan Tata as Chairman of Tata Sons Ltd., the holding company for many of the Tata Bluechips like

Tata Steel, Tata Motors,Tata Power, Tata Chemicals, Voltas, etc., Possibly he is the first non-Tata person to head the Tata Empire.

The below article written by him is really interesting!

The grass isn’t always greener on the other side !!

Move from one job to another, but only for the right reasons.

It’s yet another day at office. As I logged on to the marketing and advertising sites for the latest updates, as usual, I found the
headlines dominated by ‘who’s moving from one company to another after a short stint, and I wondered,why are so many people

leaving one job for another?

Is it passe now to work with just one company for a sufficiently long period? Whenever I ask this question to people who leave a

company, the answers I get are: “Oh, I am getting a 200% hike in salary”; “Well, I am jumping three levels in my designation”; “Well,

they are going to send me abroad in six months”.

Then, I look around at all the people who are considered successful today and who have reached the top – be it a media agency, an
advertising agency or a company. I find that most of these people are the ones who have stuck to the company, ground their heels and
worked their way to the top. And, as I look around for people who changed their jobs constantly, I find they have stagnated at some

level, in obscurity!

In this absolutely ruthless, dynamic and competitive environment, there are still no short cuts to success or to making money. The only
thing that continues to pay, as earlier, is loyalty and hard work. Yes, it pays!

Sometimes, immediately, sometimes after a lot of time. But, it does pay. Does this mean that one should stick to an organisation and

wait for that golden moment? Of course not. After a long stint, there always comes a time for moving in most organisations, but it is

important to move for the right reasons, rather than superficial ones, like money, designation or an overseas trip.

Remember, no company recruits for charity. More often than not, when you are offered an unseemly hike in salary or designation that

is disproportionate to what that company offers it current employees, there is always unseen bait attached.

The result? You will, in the long-term, have reached exactly the same levels or maybe lower levels than what you would have in your
Current company.

A lot of people leave an organisation because they are “unhappy”. What is this so-called-unhappiness? I have been working for

donkey’s years and there has never been a day when I am not unhappy about something in my work environment-boss, rude

colleague, fussy clients etc.

Unhappiness in a workplace, to a large extent, is transient. If you look hard enough, there is always something to be unhappy about.

But, more importantly, do I come to work to be “happy” in the truest sense?

If I think hard, the answer is “No”. Happiness is something you find with family, friends,may be a close circle of colleagues who have

become friends.

What you come to work for is to earn, build a reputation, satisfy your ambitions, be appreciated for your work ethics, face challenges

and get the job done. So, the next time you are tempted to move, ask yourself why are you moving and what are you moving into?

Some questions are:

* Am I ready and capable of handling the new responsibility? If yes, what could be the possible reasons my current company has not
offered me the same responsibility?
* Who are the people who currently handle this responsibility in the current and new company? Am I as good as the best among

them?
* As the new job offer has a different profile, why have I not given the current company the option to offer me this profile?
* Why is the new company offering me the job? Do they want me for my skills, or is there an ulterior motive?

An honest answer to these will eventually decide where you go in your career- to the top of the pile in the long term (at the cost of
short-term blips) or to become another average employee who gets lost with time In the wilderness?

“DESERVE BEFORE YOU DESIRE” –
Dr.Gopalkrishnan,
Chairman TATA Sons.

Success is not about reaching your destination before everyone, but how you reach your destination

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Where is an Indian University in Top 100

I came an article on Internet ” Why India must invest in intellect ” – Bhanoji Rao

Excerts from his article

India’s competitiveness will, in the final analysis, depend on how well the human resource compares with the best in the world. But none of India’s over 200 universities and 2,400 colleges figures in the top 200 rankings. This can be remedied by encouraging academics to publish in top journals and, more importantly, by using some of the vast forex reserves to disburse fellowships to carefully selected candidates for study abroad. The results of such initiatives will be visible soon enough, says Bhanoji Rao.

Among the top 100 institutions, 51 are located in the US. The UK is second, with 11. The rest of the 38 institutions are distributed as follows: Germany (7), Japan (5), France (4), Canada (4), Sweden (4), Switzerland (3), Australia (2), the Netherlands (2) and Austria, Denmark, Finland, Israel, Italy, Norway and Russia (one each).

India (with over 200 universities and 2,400 professional colleges) does not find a place in the top 100, and not even the top 200. Singapore, with just two state-funded universities, has one in the top 200 and one in the top 400.

In terms of the top 500, India could secure just three places: Indian Institute of Science in the top 300; and IIT, Kharagpur, and the University of Calcutta in the top 500. (Note: The top 500 includes China’s 16 and South Korea’s 9 within the total of 89 from the Asia-Pacific.)

These questions I tried to find out the reason. I already have a accountancy qualification and few years back I thought of pursuing a UK qualification CIMA . I thought it would be an easy exams to pass since I had completed a Indian qualification. It was not like that.

As a I was studying for CIMA, the way the things are explained changed my way of thinking. I realised the course materials and their examination are designed to gear you up to work in industry. I compared the question papers of Company Secretary/ICWAI examinations. I remember, the professors used to stress that ICSI examinations, you should quote the sections of Company Law… and you will get more marks. But in CIMA, they specifically tell, they do not encourage rote learning.

Some other experiences…. CIMA question papers are set in the format of Case Study and all the questions are based on that case study. They stress on application of knowledge and encourage the student to think accordingly. So focus is to develop problem solving approach. The journal that CIMA publishes every month in very good. But our Indian counter parts like ICAI, ICWAI, ICSI are lagging far behind. They have a big brother to take care…. Govt. policies. This was about my experience in accountancy.

When I talk to engineering students and ask them, ” Why do you study Calculus”? Or what is their application… they don’t have an answer to it? What type of education our universities are providing for the students in India?

One of my bosses is an IIT & IIM graduate and Vice President of the company. He is a brilliant person and an effective problem solver. But when he is around among the people similar to his calibre from other companies, you can make the difference in approach of the problem. They are class apart. I really wonder…. how IIT / IIM imparts education to its students…

Where does problems lies in India?

• Are Indian Universities not funded properly?
• Does the industry not work in hand with the business? The courses are structured to meet the needs of the industry.
• Teaching profession is never more lucrative.
• Colleges are mostly owned by the politicians… who are interested in making money
• Our education system encourages rote learning and does not encourage creativity in thinking? The competition to get highest percentage is misdirected.
• The education is too much government controlled. Therefore it takes quite a lot of time to take decisions.
• Reservation system.
• Any other reason.

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How they seal… sell…

How they seal… sell…

I am currently reading the book “Losing My Virginity” by Richard Branson. He started his business and now it is one of the biggest business in the world. The fundamental point is that , how did he manage to grow his business or what are the differential factors that made his business grow in a very competitive market?

He writes in his book – when he started his Virgin Records Shop the vision for his business, “We wanted the Virgin Records shop to be an extension of Student (magazine); a place where people could meet and list records together; somewhere where they weren’t simply encouraged to dash in, buy the record and leave. We wanted them to stay longer, chat to the staff and really get into which records they were going to buy. People take music far more seriously than many other things in life. … We wanted the Virgin Records shop to be an enjoyable place to go at a time when record buyers were given a short shrift. We wanted to relate to the customers, not patronise them“. True… now it is a very huge company www.virgin.com

I tried to look at the stores that are in my locality and to find out whether what Mr Branson has been talking about is true?!

1. Around a Pound & Pound Stretcher: The name speaks of itself. The products cost around a pound. Some of them even more. This shop sells items like household articles, toys and small things and they are a few cents cheaper than the supermarket. So, if I as customer, would think about buying some petty household article, I would surely pop into this store to buy it.

2. ASDA : This is one of the biggest supermarkets in UK. And they advertise they are the cheapest in UK and every year they get that award. Surprisingly, all the supermarket in their range compare their store prices with them and try to sell it. But ASDA always wins. What’s there in customers minds… the best products are available in UK at the bargain price. Why not shop there?

The above two are the examples of cheap ones.

3. Waitrose :

They promote themselves selling healthy foods and quality. The price is a little higher than the usual. Why should people go to Waitrose instead of ASDA? How do they do business? Waitrose attracts a different class of people. The stores are smaller than ASDA or Tesco or Sainsbury. The customers of Waitrose are of middle or upper middle class. And they give a similar amount of business to them and visit them quite often.

I like this Supermarket, as they promote quality. And quality comes at price.

Everyone sells. Everyone has different class of customers to cater to. How they try to sell is what matters. These are not tricks but it is a different way of dealing.

4. Jessops. They specialise in selling Cameras and equipment. They advertise they will do a price match. What is it? It is a way of negotiation. How? First you do a research of the camera that you want to buy on the internet and find out the best possible price. Then go to Jessops and when you negotiate for the price….show them the print of the best possible price that you saw on internet (what their competitors are sellingthe same item for!). They will contact their HO and find out whether they can offer it on that price. If they say yes, then they sell it to you at that price, so u bag a bargain on the spot!! Or, if they cannot, then they will quote their final selling price.

This type of selling appeals. It is a win-win situation. As a customer, you do a research of the product that you would like to buy and then pop into Jessops to buy it. (They would not price match the internet retailers).

5. http://www.Amazon.co.uk: I love to shop with this retailer since they are prompt, payments are secure and goods are delivered at your door. You can search their website and get the prices of same products from lowest to highest. They have connections to many retailers who sells the same products and they do the shipments from US, UK or Canada. The sellers save on retailing costs and the customers them on a competitive price compared to brick and mortar retailers. The best things is that you get branded goods at fantastic prices. But how do they encourage customers to buy more. Visit their website and it will always suggest you e.g. people who have bought Ipod and also about x y z different products. And you browse those products as well. And this creates a need to buy another one….Quite tempting.

Last but not the least, I was most impressed by this retailer

6. LIDL . Visit their store and it looks like a dumb store. You will wonder whether you are in a LIDL store or a warehouse? You will always their staff busy stacking the products. No proper racks and they store everything in the product cartons with a price tag on the top of it. The stores sells German foods products and most of the brands are unknown in UK. The prices are lower and quality good. But inspite of all this, you will find a lot of people in this store buying the stuff.

How do they sell? Their strategy is having a promotion sales twice or thrice a week! These promotional items are limited stocks and they are sold at bargain prices. They are advertised in the lidl website and the promotional leaflets kept in the store. Look at the prices of promotional items… Targa DVD player 19.99 last year price £59.99 (it has all the features), Blood Pressure meter £ 9.99 elsewhere it is available for £19.99, Pull overs £ 12.99 and elsewhere it for £19.99 and many more. The funniest part is that they are hardly repeated in the year. So if they advertise, then you have shop for them as early as possible on the day it is promoted otherwise it is unlikely you can get it. So customers keep coming back to their stores otherwise they are not going to get them. When they buy these promotion products, they would buy something else in their stores and become their loyal customers.

Everyone has great ideas. But those who think that they can attract people… do good business.

If you know any stores that has good marketing strategy… please comment this blog and share them.

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