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Issue 73 February/March 2012

New governance structure for Africa

Africa Regional Board approved in December 2011
In 2004 the Southern Africa region of CIMA was formed. It aimed to create a cohesive governance structure that would address common issues and explore opportunities for co-operation between all the countries in the Southern African Development Community (SADC). At the time, CIMA had 4 branches in South Africa as well as one in each of Botswana, Zimbabwe and Zambia. The total member and student population was under 6,000. Over the last seven years the region has grown from strength to strength and some of the highlights include: The formation of two new branches: Malawi and Mauritius The introduction of the regional conference held in Zambia and Mauritius The hosting of the World Conference in 2011 in Cape Town The regional governance model being expanded to encompass the rest of the world including Europe, South East Asia and north Asia The first Vice President being elected from the Region (Malcolm Furber in 2011) Member and student numbers more than doubling. The Southern Africa regional board, in conjunction with the Global markets Committee and Council of Malcolm Furber, Vice President. I am often asked these two questions: What, in my view, is the biggest factor behind the success of the SARB? If we had to do something different what would that be? My answers: The close, cohesive and aligned working relationship between staff and board members. We would have gone faster.

CIMA, looked at ways in which to expand the success of Southern Africa to the rest of sub-Saharan Africa. The thinking was to align the governance structure with the Area 10 representation on Council (see last issue of The Bottom Line). A working party under the leadership of Maryvonne Palanduz was formed and consultations were held with branches and member groups as appropriate. In December 2011, the revised governance model was approved and the Africa Regional Board will be officially constituted this year. (continued on page 3)

Africa Regional Board

African Branch Forum (4)

Elected (3)

Co-opted

Ex-officio

Staff (1)

Send your contributions to: The Editor, The Bottom Line PO BOX 745, Northlands, 2116 E: [email protected] T: 011 788 8723 F: 011 788 8724 Design by Design Bandits M: 083 460 3633 Published by BusinessBrief Publishing T: 011 788 0880

CIMA supports two year pilot

CIMA, along with more than 50 other organisations around the world, has signed up to a two-year pilot programme to explore the principles and practicalities of integrated reporting, which could change the way businesses report on their activities. The pilot features leading companies, including Microsoft, HSBC, and Coca-Cola, with further involvement from organisations around the globe such as South African power company Eskom, Russias state-owned nuclear power company Rosatom and CLP, the Chinese utility giant. CIMA has also responded to a key discussion paper from the International Integrated Reporting Committee (IIRC), asserting that a new approach to corporate reporting is required in a changing global landscape. Formed in 2010, the IIRC is an influential cross section of global leaders from the corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors, as well as civil society. It aims to create a globally accepted integrated reporting framework bringing together financial, environmental, social and governance information in a clear, concise, consistent and comparable format. The eagerly awaited discussion paper, Towards Integrated Reporting: Communicating Value in the 21st Century, was published in September, and presents the rationale for integrated reporting. It offers initial proposals for the development of an International Integrated Reporting Framework and outlines the next steps towards its creation and adoption. Nick Topazio, CIMAs head of corporate reporting, and a leading authority on integrated reporting, said, Corporate reporting does not seem to satisfy most of its users. The annual report and accounts have become compliance documents. They have lost their way as communications documents. There is currently much mistrust of commercial organisations, and in many circles the term corporate behaviour has become synonymous with greed, self-interest and detachment from the real world. However there are many companies that have successfully adopted business strategies that are focussed on long-term sustainable profitability, and the corporate reporting system must be allowed to develop to allow effective communication of their stories. To be able to comment meaningfully on the economic, social and environmental influences and impacts of an entitys operations requires integrated thinking and planning within the organisation. The business strategy must recognise not just the importance of short-term profits, but also the need for the organisation to succeed over the medium and long-term. Only once integrated decisionmaking exists within an organisation will it be in a position to produce integrated, as opposed to combined, reporting. CIMA supports the work of the IIRC and the principles of integrated reporting; we see this as a natural extension to our work in driving narrative reporting forward. We have long advocated the integration of strategy, opportunities, risk and performance with a clear explanation of how the organisation makes money - the business model. If there are material issues that may affect long-term business success then they should be discussed openly and completely in the narrative report in an integrated manner. For further information on integrated reporting, please visit www.theiirc.org/

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Issue 73 February/March 2012

CIMA Ofcial Study Resources 20112012 Editions

Our CIMA Official books can help you learn, practise and revise.
CIMA Official Revision Cards

Helping you pass rst time!

The only materials officially approved and endorsed by the CIMA Examining Faculty and written by Kaplan expert tutors and subject specialists. For more information visit www.cimapublishing.com Available from:

CIMA Official Study Texts

CIMA Official Exam Practice Kits

[email protected]

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Tel: 021 670 6680

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Tel: 0861 525242

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[email protected] 08600 78839 or 012 366 5400

President to visit Ghana

CIMA President Harold Baird will be the first President of CIMA in recent years to visit Ghana. The branch has been in existence since 1998 and in 2010 CIMA opened its first office there. His itinerary will include: Heeting with Minister of Education Media Interviews Meeting with selected CEOs Visits to Tuition providers and Universities All CIMA members and students are invited to join the President on Tuesday 7th February at Novotel at 6.30 pm to hear more information about the joint venture with the AICPA as well as an update on CIMA. Contact Victoria Ofori-Dankwa on 0302-503407 or email [email protected] for further information and to book your place.

Issue 73 February/March 2012

Another successful year for CIMA in Africa

CIMA Africa continues to grow well and is achieving growth ahead of its international competitors as well as local bodies. In 2011 the student population grew by 23% and members by 10%. This is despite some very tough economic conditions. CIMA members and students already understand the value of their qualification and what is so encouraging is that corporates are buying into the importance of management accounting as well.

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New governance structure for Africa (continued from page 1)

The revision also sees the formation of the Africa Branch Forum which will create a forum for branch committees across Africa to engage with each other and share ideas. This is a key component of our strategy of allowing members to form their own relevant groups at a local level. The Forum will meet for the first time in April this year and will elect four of its members to serve on the Region Board for a two year term of office. Members throughout Africa will now have the opportunity to stand for election onto the Africa Regional Board. There will be three members nominated and directly elected from the membership of the region. They may be from any country within Area 10. All members will shortly receive a nomination form. Maryvonne Palanduz: Chairman The regional board has been characterised by individuals who act in the interest of CIMA and are passionate to further the management accounting profession in Africa. Debbie Tarr: Area 10 rep Our successes in the Area 10 region are underpinned by the collective effort between the leadership team of the Southern African Regional Board and the regional office in crafting and driving the CIMA 2017 strategy forward into Africa as envisaged by the formation of the new African Regional Board to include West and East Africa- synergies exist when strategy and operations are aligned. In order to be eligible for election, you must be either an associate or fellow and you must be nominated by three other members. You must also live within the region. The elections will be held in March and we are hoping for a strong turnout. The term of office of elected Board members will be three years. Ex officio members of the Africa Board will be the Area 10 representative, the Chairman, the immediate past Chairman and any council member with an address in the Region. The Board may also co-opt up to 1/3 of its members if special skills are required.
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Management control for sustainability strategy

Sustainability has moved from the margins to the mainstream. Concern with the intra-generational justice, inter-generational or global justice and the balance of economic, social and environmental criteria is no longer confined to fringe groups and academics. Sustainability increasingly preoccupies governments as a result of their greater awareness of threats to their national and collective sustainability. In part due to the resultant governmental regulatory ambition but also due to threats to their own sustainability and to opportunities for innovation and cost reduction, companies are increasingly adopting the rhetoric of concern with sustainability. Now we move from the question as to whether business should engage with sustainability, to how these challenges can be addressed. Our report contributes to this latter question area, specifically by focusing on the use of management control for sustainability strategy. Prior research on sustainability and management control has addressed the emergence of sustainability control systems by either focussing on their impacts upon financial and nonfinancial performance or describing and analysing the use of dedicated systems to control for sustainability. Surprisingly little is known either about the relationship between conventional (i.e. more financially orientated) management control systems (MCSs) and sustainability control systems (SCSs). SCSs capture environmental and social issues in a more systematic and broader way than conventional MCSs do and are usually operated by groups other than the finance/accounting team within the organisation. The intention of CIMAs new report is to address this gap and explore how organisations mobilise and configure both types of system and to investigate their respective roles for enhancing sustainability. One main reason for this endeavour is that SCSs are generally viewed as capable of contributing to effective integration of sustainability within strategy only when they inform MCSs rather than when they are used as autonomous strategic tools (Burgelman 1991; Simons, 1995). Short of this, SCSs may remain peripheral to and decoupled from core business activities and fail to reshape strategy. Consequently, there is a danger that sustainability practices can be symbolically adopted, whether for reporting or stakeholder purposes. This danger may also be compounded by the lack of study of the relationships between intra-organisational accounting practices and sustainability management and reporting. The first aim of the conceptual framework of configurations of the strategic integration of sustainability is to highlight more precisely the different configurations that are possible for organisations. The eight configurations we identify are a function first, of the overall levels of integration of sustainability in control systems (high or low) and secondly, whether conventional MCSs and SCSs are used diagnostically or interactively. The second and related aim of the framework is to enable us to empirically track dynamics of sustainability in our case studies and to inform broader envisioning of pathways for the organisational integration of sustainability. The aims of the empirical study are to explore how organisations mobilise MCSs and SCSs in order to advance sustainability and how relations between MCSs and SCSs facilitate or prevent the integration of sustainability within strategy. The goal is to provide managers and accountants with a deeper knowledge of these systems roles in enhancing sustainable development within the corporation. The three research questions are: How do companies mobilise control systems for sustainability strategy, using the concepts of use and integration? How do senior managers, management accountants and sustainability managers interact with each other around the use of control systems in the context of formulation and deployment of sustainability strategy? What aspects enhance and/or hamper the co-operation of senior management, management accountants and sustainability managers through control systems in sustainability strategy-making?

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The full report written by Jeremy Moon, Suzana Grubnic, Christian Herzig and Jean-Pascal Gond, is available in the thought leadership section of www.cimaglobal.com

South Africa technical update

Financial Advisory and Intermediary Services Act : Exemption allowing for independent reviewers or accounting officers An FSP Limited By Product (unless required by law to have its financial statements audited and reported on) is exempt from section 19(2)(a) and (3) to (6) to the extent that reference is made to an auditor, audit or statement or report by an auditor subject to: It appointing an accounting officer approved by the Registrar; The accounting officer certifying and reporting on the financial statements referred to in section 19(1) in conformity with the practices of the accounting officers profession; and Section 19(2) to (6) applying with the necessary changes to the accounting officer, any certification and report by the officer and termination of appointment. The exemption does not apply where an FSP Limited By Product is otherwise required by law to cause financial statements to be independently reviewed by an independent reviewer (whereupon section 19(2)(a) and (3) to (6) apply with the necessary changes).

New training partners

Issue 73 February/March 2012

General Manager Dale Woodcock, CIMA student Grant Stevens and Financial Manager Kevin Lewis of Signature Flight Support Cape Town (Pty) Ltd

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Financial Manager Craig Huggett, ACMA, and CIMA student is Jannie Van der Linde of Clipper Marine Services (Pty) Ltd Training and Management Services (Pty) Ltd

CIMA student Ronel Fourie and Managing Director Elsie Harmse of Africa Skills Village Training and Management Services (Pty) Ltd
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IFAC signs MOU with international donor community

The International Federation of Accountants (IFAC), the global organisation for the accountancy profession with members and associates in 127 countries, participated in the signing ceremony of MOSAIC: Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration, a memorandum of understanding (MOU) with the international donor community in December 2011. MOSAIC sets out the basis for improving cooperation and collaboration between IFAC, international donors, and the international development community. The MOU will provide the foundations for increasing the capacity of professional accountancy organisations (PAOs) and improve the quality of financial management systems in emerging economies. IFAC Deputy President Warren Allen spoke at the event, calling the MOU a significant step forward for IFAC, the international donor community, and international organisations. MOSAIC will help our organisations to align activities, focus on building the capacity of PAOs, and contribute to stronger systems of public financial management. Speaking after the signing, Mr. Allen said, Strong PAOs develop and support individual professional accountants in providing high levels of expertise, transparency, and accountability in the production of financial informationthis is critical to decision making in both the public and private sectors and, thereby, supporting economic growth and stability. In addition to IFAC, signatories to the MOU include the Asian Development Bank, Inter-American Development Bank, African Development Bank, World Bank, and donor agencies from Sweden, Finland, the United States, the United Kingdom, New Zealand, and the GAVI Alliance. The signing ceremony took place in Busan, South Korea, at the Fourth High Level Forum on Aid Effectiveness.

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2012 May exam entry

how to enter at http://www.cimaglobal.com/exams Exam rules Please ensure that you familiarise yourself with the exam rules and regulation before you enter. You can read them at www.cimaglobal.com/examrules You will be required to tick that you accept these rules and regulations. CIMA does not make exceptions to the rules.

Dates You can enter online for the May 2012 exams from 1 February 2012 until 5pm GMT on 14 March. We will accept late entries after 5pm GMT on 14 March until 5pm GMT on 21 March, but you will need to pay a one-off late entry fee of 199 as well as the standard fee for each exam paper. How to enter First, log in to your My CIMA area and click on the Enter an exam link, available on your My CIMA home page. You will be asked to log in again this added security measure keeps your details secure. Please follow the instructions on

Regional AGM dates

Please put these dates in your diary now. You will receive an invitation closer to the time. 9 March Zambia 18:00 13 March Botswana 18:00 15 March KZN 08:00 20 March W. Cape 18:00 22 March Gauteng 18:00 30 March Mauritius 18:00 3 April Zimbabwe 18:00 10 April E. Cape 18:00 13 April Malawi 19:00

The resurgence of cost management and profitability analysis

Issue 73 February/March 2012
During the past few years there has been a significant move by organisations to understand and to manage costs better. Recent financial crises have meant that organisations have had to be leaner and meaner to survive. Many of those who have not taken to this way of operating have fallen by the wayside and include some large name brands. As a consequence CFO agendas have moved from restructuring and short term cost reductions to improving efficiency and generating profitable sustainable growth. This requires them to have sound information on which to make decisions with a focus on profitability with transparent and fairly allocated indirect costs. Regulatory pressures particularly in the financial services sector and healthcare has created a need for greater transparency and ability. Government spending has reduced in many countries with expectancy from the electorate that service delivery has to be maintained. This is putting increasing pressure on resource productivity. Management is now required to monitor the profitability and cost of business activities more regularly than before, almost on a continuous basis. This requires accurate segmented profitability information, internal process measurements and clear interactive reporting systems with a single version of the truth and line of sight traceability. Correct alignment of activity measurement through to its impact on strategic KPIs is crucial. With a shift towards a more service orientated society, costs in organisations have shifted from direct to indirect costs. Controlling these costs and the justification of internal charges within the value chain has resulted in the commercialisation of support functions such as human resources, finance and information technology. Many organisations have adopted activity based costing, (ABC), as a means to justify charges and to understand better what drives these costs. Service level offerings in the form of a catalogue exist in some organisations, where the receiving department can choose a level of service tailored to their needs. In some business to business agreements customers are
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demanding transparency of pricing. This is also evident in sustainability reporting where downstream activities are coming under review so that organisations can fully understand the total environmental impact of supplying a product or service for final consumption. Many organisations have been happy in the past to spread allocated costs on a very high level basis such as turnover. With more emphasis being placed on segmented analyses, such as customer and channel profitability, detailed cost analyses using more sophisticated methods of cost allocation such as ABC are being deployed. Scenario planning using more sophisticated modelling, activity based budgeting, and forecasting is becoming increasingly popular. Internal and external benchmarking requires a detailed understanding of activities and associated costs within a process. Without this, correct comparisons cannot be made. Outsourcing decisions and feasibility studies in the creation of shared service centres both rely heavily on this understanding. In these times the need for management accounting resources coupled with their business and IT skills is on the increase. Malcolm Furber FCMA FInstD FCMI MSAIM

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Top students congratulations

The following students achieved the highest marks in their respective countries for the November 2011 exams. Congratulations! Botswana E1 Enterprise Operations E2 Enterprise Management E3 Enterprise Strategy F1 Financial Operations F2 Financial Management F3 Financial Strategy P1 Performance Operations P2 Performance Management P3 Performance Strategy T4 Part B Case Study Examination F3 Financial Strategy P1 Performance Operations P2 Performance Management P3 Performance Strategy T4 Part B Case Study Examination Zimbabwe E1 Enterprise Operations E2 Enterprise Management E3 Enterprise Strategy F1 Financial Operations F2 Financial Management F3 Financial Strategy P2 Performance Management P3 Performance Strategy Samuel Acquah Paschal Kpiinzie Benedict Sumah Abraham Okine Esso Muryelle Benedict Sumah Albert Badwi Felicia Agbodan Yaw Osei-Tutu Derick Bamba T4 Part B Case Study Examination T4 Part B Case Study Examination T4 Part B Case Study Examination Prabhleen Kohli Barnabas Simwinga Nasilele Ngumbi Maxwell Malekani Hlupo Ziba

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Michelle Pereira Lakshay Thapar Boingotlo Seabo Kopano Galefete Lakshay Thapar Mosetsanagape Moagi Nyasha Gomwe Lakshay Thapar Boingotlo Seabo Saparamadu Harischandra

Ghana E1 Enterprise Operations E2 Enterprise Management E3 Enterprise Strategy F1 Financial Operations F2 Financial Management F3 Financial Strategy P1 Performance Operations P2 Performance Management P3 Performance Strategy T4 Part B Case Study Examination South Africa E1 Enterprise Operations E2 Enterprise Management E3 Enterprise Strategy F1 Financial Operations F2 Financial Management F3 Financial Strategy P1 Performance Operations P2 Performance Management P3 Performance Strategy T4 Part B Case Study Examination

Shungu Chidovi Godfrey Marimbe Washington Kafesu Farayi Mamhare Loice Murombo Vingirayi Chingarandi Chancelles Chinhuru Vingiray Chingarandi Freddy Matsika Paradza Makunde Zvikomborero Mlambo

The following students achieved top 10 status in the global rankings: 7th F2 Lakshay Thapar 2nd P2 Lakshay Thapar 1st E3 Prabhleen Kohli 5th F3 Prabhleen Kohli

Botswana Botswana Zambia Zambia

Kerry-Ann Kean Margaretha Pereira Rendani Muthelo Sinta Spies Margaretha Pereira Wing Hin Chan Mbhekeni Masondo Trevor Mwale and Thomas Amos Wing Hin Chan Levis Shumbamhini

New Book Suppliers

You can buy your CIMA study systems from: Books Botswana University of Botswana Building 115, Main Campus Gaborone T. 355 2272 E. [email protected] Exclusive Books Riverwalk, Gaborone T. 370 0130 Just Books Travel Centre, Opposite Meikles Hotel 5th Floor,Corner Jason Moyo & Third Street, Harare T. 0773 444 712

Zambia E1 Enterprise Operations E2 Enterprise Management E3 Enterprise Strategy F1 Financial Operations F2 Financial Management

Josephat Mzyece Ireen Samate Prabhleen Kohli Philip Wamulungwe Obed Somali