AB US special supplement 2015

The magazine for fi nance professionalsABUS Accounting and Business

Think AheadThink Ahead Brain exchange Overcoming the obstacles to skilled migrationInterview Microsoft’s consumer channel CFO Kevin McCarthy

Hack attacker Cybersecurity guru Jonathan HillInterview ACCA USA vice chairman Siobhan Pandya

Special edition US 2015

Card sharpWill chip-based card transactions protect the US?

Acting responsibly Roundtable – when companies go good

Where eagles dareAccountants have a crucial role to play in cybersecurity regulation

Delivery manMark Vale, CFO at UPS, on driving revenues at a truly global organization

Focusing on the key issues for US finance professionals

I am excited to present to you a special Americas edition of ACCA’s Accounting and Business magazine, highlighting

several key issues and trends facing financial and accounting professionals today in the United States and abroad.

ACCA USA is the US branch of the Association of Chartered Certified Accountants, the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. We opened our doors in 2012 to support our members and students in the US and raise the profile of ACCA to key stakeholders, including employers, regulators and influencers across the country.

ACCA USA is headquartered in New York and has an office in Washington, DC, allowing us the opportunity to engage government officials, as well as those stakeholders outlined above. We are at the forefront of issues facing the business profession and general public.

Our efforts focus on three major, business-critical issues: global mobility, corporate social responsibility and cybersecurity. We are committed to participating in the broader discussion on the role and practices of business, including finding the right people, maintaining a secure network, and contributing positively to society.

We have grown our network of thought leaders through key partnerships. For example, ACCA USA and Pace University in New York City host an annual cybercrime symposium and issue joint cybersecurity research each year, and have launched a US-based educational partnership; this the first time ACCA students can study in the US while working towards their Qualification. ACCA also co-sponsors events to drive discussion on issues facing the financial sector and general business, and works with careers website such as Accountingfly to encourage the next generation of business leaders to be proactive in their careers.

Our next stage is to engage you, the reader. We hope that this magazine raises your interest in these issues. If you would like to engage, please get in touch at [email protected]

Warner Johnston, head of ACCA USA [email protected]

Welcome

Contents

4 Interview Kevin McCarthy, chief financial officer, Microsoft Consumer Channels

8 Cyber liability Cybersecurity that balances customer needs with financial controls

11 Digital fraud Catching up with credit card technology

13 Interview Mark Vale, chief financial officer of international operations at UPS

16 Sustainability Roundtable discussion on corporate social responsibility as a fundamental element of business strategy

18 Brains across borders The international business of skilled migration

21 Interview Siobhan Pandya FCCA takes over as ACCA USA vice chairman

22 The virtual professor Dr Kenneth Henry on teaching technology to accountancy students

25 A week in the life Allison Homes, MD of Morgan Stanley’s finance division and global head of compensation and tax controllers

26 Pace of change ACCA USA partnership with Pace University

About AB

Accounting and Business is ACCA’s magazine for professional accountants. Recent issues can be viewed online at www.accaglobal.com/ab. An app version is also available.

Editors: Lesley Bolton, Ruth Fasoldt, Jo Malvern

Designers: Jackie Dollar, Robert Mills

Sub-editors: Dean Gurden, Peter Kernan, Jenny Mill, Vivienne Riddoch

© ACCA 2015The Council of ACCA and the publishers do not guarantee the accuracy of statements by contributors or accept responsibility for any statement they may express in this publication. No part of this publication may be reproduced, stored or distributed in any way without the express permission of ACCA.

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INT_Cover.indd 1 10/02/2015 17:26

3Welcome

US Special Edition 2015 Accounting and Business

‘I start with the Russians, then continue with

the US and Europe by noon

and Asia in the evening’

4 Interview | Kevin McCarthy

Accounting and Business US Special Edition 2015

CV

Path-breakerFor Seattle-based Kevin McCarthy FCCA, the new Microsoft consumer channels CFO, ongoing product innovation is the key to generating energetic business growth

noon, and Asia in the evening,’ he says. ‘It is meetings, meetings and more meetings.’ Since he took over, he has flown 150,000 miles, liaising with staff around the world.

‘I was asked to bring over the expertise I had already proven in manufacturing and managing inventory with Xbox,’ he says.

McCarthy exudes an aura of discipline, epitomizing the saying that success requires the extraordinary execution of an ordinary idea. He is committed to creating product desire through an unbroken demand chain across the group. ‘We drive market share for Windows PCs, Windows phones, Xbox, Office and other retail products through Microsoft consumer channels,’ he says.

He is determined to continue acting as a path-breaker in Microsoft. ‘New ideas don’t just happen,’ he says, adding that he intends to mentor a team faced with complex »

Kevin McCarthy FCCA, the recently appointed CFO for Microsoft’s consumer channels group, is planning to use his expertise in manufacturing and consumer

space management to spin energized growth into what is, he says, ‘already an amazing business model’.

Sitting in his modern office in Microsoft’s headquarters in Seattle, McCarthy says that he literally married into Microsoft. He followed his then girlfriend, whom he had met in Ireland and who was already employed at Microsoft, to Seattle when she was offered a fresh job there in 2000. McCarthy was offered a job around the same time with Microsoft’s Xbox video-gaming brand. His Italian-born girlfriend, who later became his wife, retired in 2010 after 20 years with the global giant.

After graduating with an MBS in finance from University College Dublin in 1995, McCarthy became group financial controller at Toughline Manufacturing, an international manufacturing and rental group, headquartered in Ireland. Five years later, a trip to California sealed his future. ‘I needed something new and enjoyed the experience,’ he recounts. He moved to the US west coast to be controller at Odenberg Engineering and provide full finance functions to international subsidiaries of the Irish manufacturing company. When he subsequently moved to Microsoft as Xbox CFO, he was responsible for managing all financial planning and analysis relating to the Xbox 360 console, Kinect sensors, Xbox Live, accessories and games software.

Xbox exclusiveMcCarthy was a vital team member in the thinktank behind Xbox, seeking to fend off competition for some of its more exclusive features by acquiring tech companies such as id8, VideoSurf, Twisted Pixel and Canesta.

He was invited last year by Amy Hood, executive vice president and CFO for Microsoft, to take over as CFO for Microsoft’s consumer channels group – its sales and marketing division. His job will be to hone sales and marketing activities with resellers, operators and retail partners: ‘Microsoft will be focused on three areas: selling to businesses, selling to consumers and selling to advertisers.’

His new position is a good example of the software company’s desire to match staff with their areas of business and engineering expertise. McCarthy says his mantra is simple: ‘efficiency’. Managing a team of 30 in Redmond and another 200 spread around the globe, he begins his day by dealing with 60-odd emails.

‘I start with the Russians, then with the US and Europe by

2014CFO, Microsoft consumer channels group

2009CFO, Xbox

2003Senior director, entertainment and devicesworldwide retail finance, Microsoft

2001Senior finance manager, MSN subscription revenue

2000Finance manager, home products division finance, Microsoft

1998Became FCCA

1997Controller of US subsidiary of Odenberg Engineering

1992Group financial controller, Toughline Manufacturing, Kildare, Ireland

1989Trainee auditor, OSK/Niall Byrne, Dublin

5


Kevin McCarthy | Interview

Basics

Tips

difference. McCarthy says: ‘The nice thing is, you do see a lot more use of the console in the home. My own house is a perfect example: believe me, up until Kinect, Xbox was never turned on except by me; now, I go home and Xbox is the way my wife and my daughter interact with TV.’

He explains: ‘I was in Italy one summer two years ago, and found my daughter shouting at the TV trying to get it to pause because that’s the way she understands TV works; I had to explain to her, there’s no Xbox there, so there’s no point shouting at the TV.’ He adds that his strategy in terms of Microsoft’s

open-ended, ever-changing challenges. Ongoing innovation is critical to stay ahead of the competition, he says.

So who does Microsoft see as its competition as it heads into 2015? And how has the competitive landscape changed? ‘The key competitors remain alternative platforms and devices, mainly from Apple and Google,’ McCarthy says, explaining how ‘user and usage volumes on mobile devices are increasing worldwide relative to the PC’. He nevertheless points out that the Windows operating system and the Windows Store online sales platform respond to that threat by ‘enabling an even wider range of devices that run Windows’. He adds: ‘Our products compete effectively based on our strategy of providing powerful, flexible, secure, easy-to-use solutions that work well with technologies our customers already have and are available on a device.’

Xbox explosionPart of the team that helped propel Xbox Live since its launch in 2002, McCarthy has steered the games platform’s course for over a decade. Xbox had one million members in 2003, 10 million in 2008, 20 million in 2009, and 46 million and still rising by 2013/14.

McCarthy says that the explosion in membership since 2008 is in part directly attributable to the Xbox acting as an entertainment hub rather than just a gaming console – it is a TV delivery vehicle. ‘In 2008, we introduced the next Xbox experience. This is where we brought the first vestiges of entertainment to Xbox. You can see the difference that has made to the adoption curve of our product, moving from 13 million members to the 46-plus million members we have on the service today. And it has moved beyond gaming. As you can see from the stats, over one-third of the time online in the US for Live is now spent in entertainment applications, not gaming. And that has grown over 100%.’

Microsoft’s Kinect sensing systems, which allow remote activation of Xbox and its entertainment suites, have made a big

* Microsoft’s net income in the year ending June 30, 2014 was $22.07bn and net revenue was $86.83bn.

* The company employed 128,076 people in the fiscal year ending 2014.

* It has subsidiaries in 119 countries.

* It has sold more than 90 million Xbox 360 and Xbox One consoles.

* Created in 2011, Microsoft’s consumer channels group is responsible for worldwide sales and field marketing of the company’s consumer products, sold through retail, resellers or other distribution channels.

* ‘Move from passive participation to active driving of the business. Change is good – leverage it when it occurs.’

* ‘Constantly assess personal productivity – shorten meetings.’

* ‘There is no problem without a solution, no matter how hard it is create a solution. What makes you good at finance makes you good at business.’

* ‘Ask why, why, why. Don’t stop asking after the first why – your leaders won’t.’

6 Interview | Kevin McCarthy


paints to relax. The walls of his office carry a couple of impressive paintings that at a first glance resemble those of abstract artist Mark Rothko. ‘It keeps me sane,’ he laughs. His eight-year-old daughter shares his artistic leanings – a drawing on his whiteboard is hers. ‘She comes in every two or three months to my office and draws something on the corner of that board and I am not allowed to erase it until she next visits,’ he smiles. ■

Frederica Jansz, journalist

Surface tablets will be to demonstrate ‘how powerful the combination of great hardware and great software can be’.

His next move for Xbox, he says, ‘is simply to win back the share we have lost to PS4 by re-appealing to our core gaming customers and by redoing what we did with Xbox 360, and continuing to invest in the experience of the box, making it better every day for gamers’.

And, he says, he aims to establish Windows mobile phones as a viable alternative to Apple and Android.

When he is not working on ambitious marketing plans, he

7Kevin McCarthy | Interview


Cyber liabilityAccountants must work with the authorities and experts to devise effective cybersecurity that balances customer needs with financial controls, says academic Dr Jonathan Hill

these firms, and asking if appropriate cybersecurity measures have been taken, and if executives are properly vigilant. Is cybersecurity another area ripe for government oversight or can regulatory guidance, with penalties for non-compliance, be on its way?

Who is accountable?The anxiety over the theft of personal financial information has spread through the executive suite, from the IT professionals on the front lines to the financial executives who have to make sense of it all. Based on the results of two recent polls by credit card processor TSYS, in the aftermath of the big breaches at Target and Neiman Marcus, approximately 40% of respondents said that they had changed their shopping behavior. Importantly, the majority of respondents believed that the companies should be held accountable for these breaches. Over 60% said they were willing to move their accounts to financial institutions that were capable of providing additional cybersecurity measures.

As the public demands accountability for cybersecurity breaches and the theft of personal information, the conversation turns to who should be held responsible. Former New York State Department of Financial Services superintendent, Benjamin Lawsky, is one regulator who has publicly called for executive accountability at financial services firms as a way to prod executives into action. Some people, including prominent

The hacking of consumer credit card data at prominent companies such as The Home Depot, Target and Neiman Marcus is merely the tip of

the iceberg in the world of cybercrime and cybersecurity. If the largest businesses are prized targets for cybercriminals, so are US federal government computer systems, such as Fannie Mae and the Internal Revenue Service. This also affects technology enterprises such as Google, eBay, AT&T, Verizon and Apple. The Wall Street Journal reported that by July 2014, the biannual reports of 1,516 companies traded on the NYSE or NASDAQ stock market included the words ‘cybersecurity’, ‘cyberattacks, ‘hacking’ or ‘data breach’.

At a time when technology and financial executives share a consensus that the ‘bad guys’, the hackers, are always two steps ahead of the risk management team, accounting professionals need to adopt risk management strategies that are both responsive and resilient in their approach. Government agencies have played a leading role in identifying cyberattacks and developing countermeasures that are shared with industry partners. However, public alarm over repeated breaches of computer networks containing possibly millions of individuals’ confidential financial data has drawn the attention of government regulators. They are focusing their scrutiny on the executives of

8 Cybersecurity | Risk


investors, argue that individuals, especially executives, should be held responsible for data breaches instead of the firm as a whole.

The intense scrutiny on data vulnerability has meant that C-level executives and the individuals who report directly to them have to increase their participation in data breach response and resilience planning. The data breach incident at Target, the third largest retailer in the US, is but one example of the repercussions of a cyberattack: in May 2014, Target’s chief executive, Gregg Steinhafel, became the first CEO to step down over a huge customer data breach. Although data security was, by all accounts, taken seriously at Target, Steinhafel’s resignation shows that both preparedness and resilience are vital parts of the business process today.

Room for improvementThere is an increased public belief that cybersecurity vulnerabilities are due to a company’s lack of investment in appropriate security practices, including response plans, risk assessments of vulnerable areas and continuous monitoring of information systems to detect unusual traffic. According to a 2014 study by Experian Data Breach Resolution, companies have improved their overall preparedness and policies for data breaches compared to the previous year’s study. But while more companies have response plans, over 60% were not considered up-to-date and effective by respondents.

This public demand for accountability could lead to a decision by government regulators that financial executives are liable for, among other things, not following proper information management security controls as specified by the Control Objectives for Information and Related Technology (COBIT) framework and the ISO 27001 information security management standard. If so, accountants will need to take a hard look at how they can influence financial controls and effective cybersecurity.

‘Due to the nature of the profession, accountants tend to have a lot of personal information. Any firm or business that is responsible for personal information is a target for cyberattacks,’ said Catherine Putnam, product manager for portfolio management at Travelers Insurance, in Accounting Today. Therefore accountants must remain vigilant and ensure cybersecurity is a top priority. They can be seen as the gatekeepers of information; they have the ability to recognize irregularities and anomalies, and can red-flag them to the appropriate channels. Corporate accountants and individual firms should incorporate cybersecurity not only to protect against cybercrime, but as an obligation towards their clients’ privacy.

Whether real or imagined, the widespread dependency on cloud services for enterprise data storage is also a perceived vulnerability in the minds of the public and some regulators. There is a trend among all companies in the US to outsource cloud services. Accounting firms need to understand the »

9Risk | Cybersecurity


As holders of personal

information, accountants must

remain vigilant and ensure

cybersecurity is a top priority

of professionals with advanced offensive and defensive cyber skills. According to a recent CNN report, approximately 20,000 to 30,000 professionals are needed in a variety of industries to adequately equip companies with the human resources to provide cybersecurity. Given the great need for these types of professionals, universities, colleges, community colleges and vocational schools are responding with a multitude of degree opportunities. Federal agencies even offer scholarship programs in cybersecurity that require federal or state employment after completion of the degree, encouraging cybersecurity professionals to enter government agencies.

At risk is personal financial information, through retailers, third-parties, apps and so on, which have account information, credit information and other personal data, as well as people’s individual mobile devices, computers and laptops. To maximize their financial gain, hackers have ‘preferred’ industries: the financial industry can be attacked for either financial gain or political reasons, followed by the retail, energy, aerospace, defense and healthcare sectors. Forgotten are the days of email scams and public wi-fi; cybersecurity is now at a point where all digital devices, regardless of their ownership and location, can and will be attacked if they hold any personal information at all.

Time to take stepsCybersecurity is well on its way to becoming a regulated practice. The US Securities and Exchange Commission is currently deciding what sort of guidance it will provide on cybersecurity standards, while acknowledging the fact that a firm’s cybersecurity strategies and practice must remain undisclosed in order to remain effective. Finding ways to collaborate with the military, law enforcement experts and computer scientists to devise effective cybersecurity that balances customer needs for easy access with appropriate financial controls must now become part of accounting practice.

Although liability and responsibility have yet to be fully defined, since only financial institutions are placed under strict federal data protection laws, accountants should understand how far their services and sub-services are protected against

cyberattacks. In line with the US government’s new-found attention to medical devices and their vulnerability to cybercrime, accountants should take a more proactive approach and arm themselves with the right strategies and plans. The financial ramifications do not discriminate against legal liability, and it is in firms’ best interest to understand what steps can be taken to protect themselves and their clients from data breaches. ■

Dr Jonathan Hill, associate dean, Seidenberg School of Computer Science and Information Systems, and Wenya Chen and Kalterina Latifi, research fellows

liabilities associated with this service and gain more insight into their chosen company’s cybersecurity action plan.

Poacher turns gamekeeperPresident Obama’s executive order in February 2013, ‘Improving critical infrastructure cybersecurity’, warned that hackers sponsored by foreign governments and organized crime syndicates, as well as lone individuals, are probing financial, energy and public safety systems every day.

These hackers are technologically sophisticated proxies for organized crime groups motivated by money and, increasingly, by the militaries of hostile governments intent on causing disruption and destabilization. Financial systems are particularly rich targets. In addition to the threats from these criminals, spies, terrorists and ‘hacktivists’, there is worry about the inside threat represented by both current and former employees who have access to company systems and who may be motivated by money or revenge to jump to the dark side. 24/7 online access, ‘bring your own device’ policies, work-at-home employees and insecure wi-fi connections create vulnerabilities that remain all too easy to exploit. Infamous hacker Cameron Lacroix, whose record includes hacking into celebrity phones, gift cards and credit cards, was recently sentenced to four years in prison despite his cooperation with the FBI in teaching them his hacking tricks. He stated that, upon completing his sentence, he hoped that Target and Home Depot would hire him to protect their systems, adding ‘it’s still very easy to get into’.

Hacking techniques have become more sophisticated and more difficult to detect. The ongoing investigation into the breach at Home Depot disclosed that hackers used a unique, custom-built malware that had never been observed in previous cyberattacks, putting 56 million payment cards at risk.

Playing cardsCybersecurity vulnerabilities exist at both the data storage and transaction levels. Not yet equipped with the latest microchip technology, US debit and credit cards remain at high risk of cyber theft. Digital payment solutions are increasingly accepted by banks and merchants, and card-based purchases resulted in more than $6bn fraudulent third-party charges in 2012, according to the Federal Reserve Bank. In the US, some of this has been attributed to outdated card technology that is, at the time of writing, just beginning to be changed to the widely acknowledged and more secure EMV (Europay, MasterCard and Visa) smart chip cards, which are widely used in Europe. Unlike EMV cards, US swipe cards do not contain a chip for storing encrypted information, making it easier for hackers to steal (see page 11).

One major concern is the lack

10 Cybersecurity | Risk


Half of all global credit card fraud

takes place within the US, even

though it is only home to a quarter

of all credit card transactions

Chipping away at fraudThe US is trying to catch up with the rest of the world in its adoption of secure credit card technology but, as Warner Johnston explains, there’s still a long way to go

takes place within US borders, even though the country is home to only a quarter of all credit card transactions. Skimming the surface, a Pace University report commissioned by ACCA USA

showed that there was rampant abuse, that criminal technology had vastly outpaced security patches and that solutions were urgently needed.

According to The Norton Report, commissioned by Symantec, the global cost of cybercrime escalated to $113bn in 2013, up from $110bn in 2012. It cost each victim an average of $298, a jump from $197 in 2012. A significant portion of that involved payment card fraud, with estimates affixing an $8.6bn annual cost to the US.

It’s not just at small corner stores or random ATMs. As larger household brands – such as SuperValu, Target and Michaels – come under attack, the risk of being victimized is greater »

For half a century, US consumers have been accustomed to swiping and signing when making credit card purchases. But soon the magnetic stripe will go the way

of Pan Am airline and Bear Stearns.Moves are already afoot in the

US to swap the traditional magnetic stripe for a new chip system – the last major market in the world to embrace such technology. It’s long overdue – and it still doesn’t go far enough.

If you live in the US and rely on credit cards, the odds aren’t in your favor: if you haven’t already been victimized, you very likely will be before the transition takes place. In 2014 alone, data breaches occurred in rapid succession, with the most recent sizeable attack on home improvement retailer The Home Depot, in which 56 million debit and credits cards were affected.

Half of all global credit card fraud

▲ Fighting fraud A customer uses her chip-based credit card at a Walmart store in Kansas City, part of a long-overdue switch from magnetic stripe cards

11Digital fraud | Cybersecurity


This is important because data skimmed from cards in Europe is usually sent to the US, where criminals can clone cards and cash out the payment cards. According to Europol, 80% of fraud outside the European Union using EU payment cards occurs in the US, which translates into $1bn in losses.

EMV technology has become the standard in Europe since its introduction 12 years ago. But as other markets revolutionized their systems, criminals set their sights on the US because of its now-antiquated system.

Sadly, until now there has been no mandate for the introduction of EMV in the US, unlike the UK, Canada and Mexico. And its implementation here will yield a substantial liability shift, exacting significant financial tolls that are likely to cause institutions to embrace the change.

Once EMV is fully implemented in the US, non-EMV compliant banks and retailers will be forced to absorb any losses associated with fraudulent transactions. Merchants who do not switch systems could be found liable if fraud happens and they are using a swipe-and-sign system while a consumer’s original card has a chip. In the reverse scenario, if a merchant has a new system but the consumer’s bank hasn’t issued a new chip card to the consumer, the financial institution could be deemed liable.

Yet despite this, acquirers have been procrastinating over implementing EMV-compliant terminals. This is understandable, as the switch requires not just a new way of thinking but considerable costs on many fronts. But that shouldn’t preclude those on both sides of the aisle

from moving swiftly ahead. And sadly, the steps being taken are not enough.

The EMV cards rolled out in the US differ from those adopted abroad, which use chip-and-PIN technology, requiring cardholders to input a PIN in transactions. So far, the US ones contain a chip, but do not require a PIN. This is a good first step but not the only measure institutions here in the US should take to fully protect consumers and data. Chip and PIN represents a necessary next step.

This year, our financial institutions have an obligation to embark on a comprehensive public education campaign to ensure a smooth transition, and to avoid further delays. Because in the interim, criminals will continue to target the US – and every one of us is vulnerable. The transition to chip and PIN boils down to cold cash and common sense. ■

Warner Johnston is the head of ACCA USA. An earlier version of this article appeared in Accounting Today in 2014.

than ever. A recent Ipsos/Reuters poll found that one in three Americans has noticed fraudulent charges on their credit or debit card statements, and only 38% of Americans reported that their personal information had never been stolen.

This is a war being fought at the ATM, gas pump, and at every retailer large and small, at the intersection of street crime and tech crime. It’s a testament to why the adoption of new chip technology is long overdue.

Data skimmingThe ‘new’ system involves EMV technology, a chip-based means of securing payment transactions developed by EuroPay, MasterCard and Visa, as well as universal use of PINs to increase payment security.

The chip in an EMV card is an integrated circuit, embedded in the card for added security. The chip – which is virtually impossible to clone – enables a card to be used with EMV-enabled devices, including ATM and point-of-sale terminals.

EMV is a two-factor authentication protocol, with the chip and PIN – or in many cases, a signature – authenticating the consumer. Nevertheless, EMV cards can be used globally on devices that do not recognize the chip.

◄ The home frontA worker with a portable check-out device at the Duluth, Georgia branch of The Home Depot chain, which suffered a major data breach last year

For more information:

Read the Norton Report at tinyurl.com/kl5j5yh

Read Skimming the Surface at www.accaglobal.com/ab/180

12 Cybersecurity | Digital fraud


GlobetrotterDemographics, trade blocs and social change are all driving international trade, and helping to oil the wheels is UPS international operations CFO Mark Vale FCCA

Vale believes this is a golden era for his industry: ‘UPS is in a growth sector. People are increasingly buying goods from all over the world and items are being shipped more often. That creates lots of opportunities.’

This is true even in regions with sluggish economic growth, he explains. ‘The European Union has been extremely successful at promoting trade between countries. In addition, more of the goods consumed in Germany, France and the UK are being produced in the former eastern bloc.’

The company’s growth is also being driven by the ‘graying’ of the global population. As citizens age, the demand has been growing for deliveries of drugs and medical equipment – both to hospitals and to people’s houses. On the other side of the demographic spectrum, younger people are increasingly eager for the latest products from all over the world. ‘When I was growing up in the UK it wasn’t always easy to get even a French bottle of wine,’ Vale explains. ‘Now young people expect to be able to purchase products from anywhere on the globe over the internet.’

Overall, the World Trade Organization expects global commerce to increase by 4.7% in 2014 and 5.3% next year – »

Mark Vale FCCA, CFO for international operations at global delivery business UPS, travels even more than the average UPS package. During 26 years at the

company he has lived in seven countries – including Spain, Italy and the US. And in his current job he spends about a third of his time on the road, jetting from the company’s head office in Atlanta, Georgia, to keep tabs on operations throughout Asia and Europe.

‘Part of the joy of working for a company that operates in 220 countries is the opportunity to have a really global career,’ says Vale, who is moving into a new role as global vice president of finance and accounting this year. ‘And understanding different cultures is essential to making UPS successful.’

The 107-year-old company was originally set up in Seattle on America’s west coast as a messenger and delivery service. After several incarnations, it is now at the heart of global commerce. Each year UPS delivers goods worth the equivalent of around 6% of America’s national income and close to 2% of global GDP. The company’s international delivery business, which Vale helps oversee, last year accounted for $12.4bn of UPS’s annual $55bn revenue.

13Mark Vale | Interview


Basics Tips

has been the rising volume of trade between Asian nations. The company’s European businesses have also been growing fast.

‘I spend a lot of time trying to support our business units out in the field,’ Vale says. ‘We need to understand the latest dynamics in global trade and anticipate where the fastest growth will be.’

Finally, the CFO needs to make sure that the international accounting and finance functions operate smoothly. ‘It is really important that we have hired the right people with appropriate skills and experience,’ Vale says. ‘I need to make sure that I find the next generation of UPSers.’ Fulfilling these various functions involves a lot of time in the air. ‘Out of every three months, I typically spend about six to eight weeks out of the United States.’

Vale’s career has been international almost from the start. Born in the UK, he started his career with UPS in London in 1988 after completing his training with ACCA. The ACCA Qualification proved a good professional launchpad, he says. ‘I liked the rigor of the course. It forces people to study so many different aspects of finance – from tax compliance to business strategy and ethics. That can be very demanding, but it also gives you plenty of breadth.’

Spain and ItalyHe soon began his travels, though. In the late 1980s UPS was expanding fast into Europe and Vale moved to Spain to help build up the finance and accounting systems there. He then moved to Italy. ‘Here the challenge was to help turn around a recently purchased business that was good, but not yet living up to its promise.’ By 1996 Vale opted for a job in Ireland setting up a shared services operation. ‘This enabled us to reduce costs and gave us much greater visibility on our operations.’

In 2003 he was promoted again, this time to European strategy director. His job was to develop pan-European strategy and help to direct merger and acquisitions activity around the world.

The following year he took on a new challenge, becoming the

up from just 2.1% in 2013. The company also has other things going for it. ‘To be

successful in this business you need to be a large player with excellent technology, operations and staff, which involves a lot of investment and is not easy to emulate,’ Vale says.

Analysts tend to agree. Morningstar’s Keith Schoonmaker says: ‘The company has crafted a competitive advantage that is unlikely to be matched by any but a few global players. UPS produces returns on invested capital about double its cost of capital and margins well above its competitors.’ Revenue at UPS is on track to climb another 20% to $67bn a year by 2017, according to Thomson Reuters. Net income, meanwhile, is forecast to climb by 47% over the same period. Vale will play a key role in ensuring such rosy predictions come to pass.

As CFO for international operations, Vale oversees a fifth of UPS’s business by revenue. ‘A key part of the job is helping to determine the strategic direction of this part of the company, including where to focus our financial resources and which metrics to use,’ he says. One major opportunity UPS has spotted

1907UPS founded in Seattle, Washington

395,000Number of employees

77,000 Number of employees based outside the US

4.3bnNumber of packages and documents delivered in 2013

16.9m Number of packages and documents delivered every day

96,361 Number of cars, vans, tractors and motorcycles used in operations

237 Number of jet aircraft it has

2,518 Number of facilities – in more than 120 countries

9.4mNumber of customers served daily

47.5m Daily online tracking requests

728Airports served by the company

* ‘Global companies expect employees to be able to relocate in order to prepare for the most senior positions. This also gives them insights that could not be attained through a career spent solely at the head office.’

* ‘Assignments that initially seem very risky can also help you stretch. Many people thought I was crazy to accept certain assignments early in my career, given that the risk of failure was so high. You can often learn more from failures than successes.’

* ‘If you really want to differentiate yourself as a finance person, you can’t afford to shun roles that involve more human interaction. Taking a job in investor relations helped me to develop my communication abilities.’

14 Interview | Mark Vale


2010Made CFO for international operations

2008 Appointed vice president of finance and accounting for Europe, the Middle East and Africa

2004 Became director of corporate investor relations in the US

2003Appointed European strategy director

2000 Appointed financial controller in Belgium

1996 Made financial controller in charge of opening the UPS financial services center in Ireland

1988 Joined UPS in London after graduating in management science from the University of Swansea and finishing his ACCA Qualification

CV

Crunch timeAnother baptism of fire came in 2008 when he was made vice president of finance for Europe, the Middle East and Africa – a position based in Belgium. ‘It was a job I’d always wanted,’ he says, ‘but I was appointed just before the start of the great recession, which forced us to think about our business model very differently.’ He reached his current position in 2010.

At 49 years old, he anticipates dealing with many more challenges. ‘At UPS you can have many careers,’ he says. The diversity of opportunities helps talent retention. ‘That is great for team building. You are often working alongside people who you grew up with in the company. It means that you never want to let people down.’ UPS also helps its managers build up an equity stake in the company. Vale says it helps with keeping them at the company and committed.

Vale plans on getting more involved with UPS’s charitable and environmental work. ‘The company is focused on philanthropy and making sure that our work is ecologically sustainable,’ he says. In March, the company announced it was adding to its fleet 1,000 trucks that run on propane, which burns cleaner than traditional fuels. ‘We have also worked on other energy-saving techniques, such as having our planes taxi on just one engine or working on the routes our trucks take to increase fuel efficiency.’

Meanwhile, the company uses its capabilities to help with the aftermath of natural disasters such as hurricane Katrina. In the five years after the 2005 hurricane, UPS donated more than $2m to the recovery effort and staff volunteered time to help rebuild New Orleans, the city devastated by Katrina. ‘UPS attracts people who want to be part of something bigger than just themselves,’ he says. ■

Christopher Alkan, journalist

director of investor relations, based in the US. ‘This was quite a big departure from my previous roles,’ he admits. ‘I really had to learn how to portray the story of UPS in an efficient and compelling manner to investors on the buy side and the sell side. It taught me a lot about how tough it can be to be a salesperson, but it was also extremely useful in developing my communication skills.’

15Mark Vale | Interview


Nice guys finish firstCorporate social responsibility is moving beyond a PR gambit and turning into a core element of business strategy, as an ACCA USA-sponsored online conversation found

tried to emphasize its ecological concern by rebranding as Beyond Petroleum. This looked like posturing after one of its wells blew up in 2010, discharging around five million barrels of oil into the sea off the US coastline. ‘It was clearly not about going “Beyond Petroleum” on the rigs or refineries,’ said Savitz. ‘BP was a sign of how short-term thinking can hurt a company.’

One of the key problems with corporate responsibility is how to measure progress and assess financial gains. ‘Quarterly profits are easy to measure,’ said Savitz. ‘You can’t put a number on culture.’

Yet a genuinely responsible culture can deliver solid – if hard to measure – gains, including attracting and retaining staff. ‘Starbucks’ fair trade coffee initiative only directly involves a few hundred employees but it helps motivate hundreds of thousands of baristas,’ Savitz argued.

Another consideration is how quickly companies can expect a payback from their benevolence. Companies often have an incentive to start with changes that deliver clear and fast pay-offs, such as using

Big business isn’t always loveable – only a fifth of Americans approve of the behavior of

large companies, which gives them a lower popularity rating than used-car salesmen or head lice.

Yet there is a great deal to be gained from being the good guy. Companies seen as having a positive impact on society and the environment can gain a competitive advantage. The recent flourishing of corporate social responsibility (CSR) was the theme of an online chat sponsored by ACCA USA and hosted by Lane Greene, business correspondent of The Economist.

Evidence that corporate do-gooding can help the bottom line is mounting. A study by the Reputation Institute in New York found that people’s willingness to buy, recommend, work for and invest in a company is driven 60% by their opinion of the business and just 40% by their judgment of the product itself. That should be a powerful incentive to devote plenty of attention to a company’s social standing. CSR can range from taking care of employees and donating corporate expertise to good causes to helping feed the poor and preserving the environment.

Of course, words are cheap and real cultural changes are harder, according to Andy Savitz, a member of ACCA USA’s panel and author of The Triple Bottom Line: How Today’s Best-run Companies Are Achieving Economic, Social and Environmental Success and How You Can Too. CSR skeptics can point to numerous cases of ‘greenwash’ – in which companies try to get credit for being environmentally friendly while taking little meaningful action.

‘It is a long-term project to change a company’s values,’ Savitz told the panel. Oil giant BP, for example, had

▲ Talking headsFrom left: author Andy Savitz, Shannon Schuyler of PwC, Dan Bross of Microsoft, and panel chair Lane Greene of The Economist

‘It is about harnessing

the power of capitalism. It is

about figuring out ways of making money by being

responsible’

16 Roundtable | CSR


Nice guys finish first resources more efficiently. ‘Something as simple as turning off the lights saves money immediately and is good for the environment,’ said Savitz. A paper by Harvard business professor Michael Porter argued that chemical company Dupont had saved $2bn from cuts in energy use between 1990 and 2006. Fast-food company McDonald’s meanwhile had managed to cut its solid waste by 30% by changing the materials it uses to wrap its food.

Sadly, not all rewards from CSR appear so quickly. ‘Often the pay-offs are more diffuse and more uncertain,’ said Greene. ‘For actions that involve upfront expense, the pay-off and costs are frequently out of line.’ A poll taken during the ACCA USA panel debate showed that only 8% of online listeners had enjoyed immediate results from responsibility initiatives. Roughly a third said such gains became apparent only after several years; another third said they had not yet seen any impact.

The most effective and durable programs are the ones integrated into a company’s core business strategy, participants agreed. ‘There is a distinction between pure philanthropy, giving away resources with no real return to the business, and more focused plans,’ said Savitz. ‘These are about harnessing the power of capitalism for the benefit of a company and society. It is about figuring out ways of making money by being responsible.’

‘There is no off-the-shelf good citizenship strategy that fits all companies,’ said Dan Bross, senior director of corporate citizenship at Microsoft, voted the most ethical company in a survey of 100 leading businesses by the Reputation Institute. Bross said Microsoft sought to play to its strengths in devising its citizenship policy. One example is its YouthSpark initiative, which helps young people access technology and training.

The YouthSpark website points out that youth unemployment is significantly higher than that of the adult population. Meanwhile there is a growing gap between those with computer skills and those without. The program aims to provide help for such IT disenfranchised youths. ‘Microsoft’s citizenship program also focuses on other issues in which the company has a particular stake, such as data security, freedom of expression and human rights,’ said Bross.

A similar tailored approach is followed by Apple, which donates computers to schools, boosting its reputation as well as introducing young people to its products. And film production company DreamWorks helps train high school and college students in the skills required in the entertainment industry. Meanwhile oil company Exxon Mobil helps fund road improvements in the poorer countries it operates in, improving both its reputation and its access to resources.

Panelists also agreed that non-governmental organizations were playing an increasingly positive role in citizenship programs. The likes of Greenpeace and Oxfam once had a mostly confrontational relationship with big businesses. ‘Increasingly these NGOs are partnering with companies to help ensure the effectiveness of their social responsibility programs,’ said Shannon Schuyler, head of corporate responsibility at PwC.

She adds: ‘There are new intersections between business and society.’ One example is Oxfam’s Poverty Footprint

methodology, which helps companies understand and measure the effect of their operations on the countries they operate in. The charity says this can highlight real opportunities for enlightened businesses to make a positive difference.

There is also a high degree of self-interest in some of the issues companies focus on. Microsoft, for example, takes an interest in the development of transport systems where it operates. ‘We want to keep employees happy, and part of that is making sure that they get to work easily,’ said Bross. Microsoft also sends out members of staff as volunteer instructors in computer science to help alleviate the shortage of technology graduates, a serious challenge for the company.

In recent years the field of CSR has started to mature, moving beyond being just a PR exercise and a nebulous desire to seem virtuous. Respected business academics, including Porter at Harvard, have spoken about the considerable advantages that CSR can bring to businesses. ‘There has been much more rigor brought to sustainability,’ said Savitz. ‘It is becoming a core part of business strategy.’ ■

Christopher Alkan, journalist

► Stand-up businessMicrosoft has been voted most ethical company

► CSR’s fruitApple enhances its public reputation by donating computers to schools

17CSR | Roundtable


Brains across bordersSkilled migration is a global business but, although it is growing, a number of obstacles stand in its path, as Madeleine Sumption explains

skilled members of their diasporas. Others, such as Brazil, are seeking out foreign professionals with skills that they hope will jump-start economic growth and seed high-skill-intensive industries. As the number of countries facilitating skilled mobility grows, a greater choice of destinations is opening up for the internationally mobile.

Transferring skillsThe potential benefits of skilled migration for destination countries and migrants themselves are generally not disputed. Despite legitimate concerns about the negative impacts of brain drain from developing countries, the research debate on migration in recent years has shifted to emphasize the potential benefits that emigration can bring to a country. For example, emigration may help open up new markets for trade and investment, while the circulation of skilled workers among origin and destination countries offers opportunities to transfer knowledge, technology and business practice back home.

But the benefits of skilled migration depend on mobile professionals’ ability to use their skills productively in destination countries. In practice, skilled workers often face barriers to transferring their skills and experience across borders.

One reason for this is that, inevitably, only a minority of long-term migrants in OECD countries are admitted because they have skills that are in demand at their destination. Foreign workers selected directly by employers for specific vacancies tend to fare well in the labor market, because immigration policies generally channel them into professional occupations and exclude those who cannot find skilled work. But most international migrants qualify to migrate as family members, refugees, or – in Europe – through their entitlement to free movement. Many bring high levels of education. But across immigrant destination countries, these immigrants are generally much more likely to work in less-skilled jobs than workers with domestic qualifications.

Barriers to practicing the profession in which immigrants are trained can arise for several reasons. For example, local

Over the past few decades, skilled migration has become a major global industry. Every year, millions of skilled migrants cross international borders for work,

either for short-term placements or long-term settlement. Across the world, human capital is recognized as an enormously valuable resource – whether among governments seeking economic growth, employers looking after their bottom line or individuals deciding whether to invest in their own education.

Several forces have driven this trend. The gradual shift away from agriculture and other labor-intensive activities, the much reported growth of ‘knowledge-based’ industries such as financial and business services, and the increasingly high skills requirements within occupations have put a premium on high-quality education and training. At the same time, domestic education and workforce training systems in many countries have struggled to keep up with the demands of employers. The reasons for this are debated but are likely to include: underinvestment; high turnover, which reduces employers’ incentives to train their staff; students’ choices, which are not always aligned with the needs of the labor market; and the fact that even the highest-quality education systems often fall short of employers’ ambitious expectations.

The global pool of educated workers has also grown enormously. Some emerging economies are investing in education on a massive scale, even if quality still lags behind quantity in many cases. Growing middle classes in emerging economies are also investing heavily in education abroad. The number of international students worldwide almost doubled between 2000 and 2010 to over four million, according to estimates from the Organisation for Economic Cooperation and Development (OECD). In the US alone, the number of student visas issued to individuals coming from China has risen more than eightfold, from 22,000 in 2005 to 189,000 in 2012.

In other words, both supply and demand for skilled workers across the globe have grown considerably. At the same time, governments around the world have dedicated significant energy to skilled migration policies designed to capitalize on these flows. This includes long-standing players such as Australia and Canada, which have substantially reshaped their immigration policies in recent years, as well as newer ones such as Austria, Sweden and Germany. Emerging economies are also becoming destinations for international migrants. Countries such as Brazil, Mexico and Saudi Arabia have sought to develop human capital at home by funding the education of their nationals abroad, while China and India run several initiatives to attract back highly

18 Global mobility | Skilled migration


employers may wish to avoid the risks of hiring a candidate with unfamiliar qualifications and no local work experience. Immigrants may possess relevant occupational skills but lack the language proficiency a job requires. International differences in education, training and skills learned on the job mean that immigrants may require additional training or work experience but may have few options for filling skills deficits without starting their training again from scratch. And some occupations require licensing or registration, creating barriers to entry in the form of examinations, application fees or supervised training requirements.

Undervalued Immigrant-receiving countries have introduced a wide range of policies to improve the recognition of foreign qualifications. Several of them focus on providing information to help employers understand the nature and content of foreign qualifications. However, employers’ and regulators’ tendency to discount the value of foreign qualifications does not only result from a lack of information. Foreign professionals are often simply not completely interchangeable with their locally trained counterparts. As a result, effectively demonstrating that their training meets local standards may not be enough; they may also require opportunities to fill knowledge deficits without prohibitive time and cost requirements.

In some countries, such as the US, Canada and Australia, a host of public and nonprofit programs has emerged to meet this need. Some provide training or language instruction, local work experience placements or mentoring to guide immigrants through the process of applying for professional jobs. These programs often receive plaudits from participants and evaluators, although they may serve relatively small numbers of people. Good options to gain local qualifications are frequently oversubscribed or not widely available, although they have grown in recent years and governments’ awareness of the problem appears to be increasing.

A rather different approach to improving the recognition of foreign qualifications – particularly in regulated occupations, such as accounting, architecture, engineering and medicine – is known as mutual recognition. This strategy involves agreements between governments or professional regulators to speed up the process of getting a professional license after moving abroad.

Domestic regulations to restrict entry into professional occupations and protect the public from poorly qualified »

19Skilled migration | Global mobility


As trade in services and

skilled migration increases, the

pressure to use human capital

more efficiently ought to grow

occupations. Mutual recognition has also been on the table in trade negotiations between the EU and several counterparts abroad (notably Canada and the US), although the concrete results remain to be seen.

As trade in services and skilled migration increases, the pressure to use human capital more efficiently ought to grow. Labor markets in highly skilled occupations have become more international, and modern economies have come to rely on highly integrated global supply chains. At the micro level, there is an increasingly robust trade in virtual services – delivered entirely online between individuals who will never meet. These developments make it difficult for national regulators to maintain traditional territorial systems of professional regulation, as if mobility did not exist.

Breaking down barriersIn the future, it is possible that globalization will start to break down

barriers to the recognition of qualifications. Local differences in the skills that individuals learn in different countries are inevitable, but curricula and standards in some fields may nonetheless be converging in some fields – particularly in the most globalized ones such as IT, accounting and architecture. A host of new international qualifications has also emerged, driven by independent actors such as universities, professional associations and private companies. Examples include private qualifications issued by organizations such as ACCA or Siemens, or the foreign campuses of universities that have sprung up in Asia and the Middle East. These initiatives have been successful

in part because they exploit market demand from employers and students.

These trends will not eliminate the barriers to transferring skills across borders. For one, formal credentials are often not the only qualification for getting a job; professional experience can be equally or more important. But with enough political will among governments and regulators, and with the help of educators and the private sector, there is plenty of scope for them to be reduced. ■

Madeleine Sumption, former director of research for the International Program at the Migration Policy Institute

practitioners were, in most cases, designed decades or even centuries ago, when policymakers could not have contemplated current levels of global mobility and economic interdependence. These systems are naturally designed with domestic candidates in mind. They are much less equipped to deal with foreign-trained practitioners, who must often undergo time-consuming and expensive assessment or training to demonstrate their competence.

Mutual recognitionTo address this problem, governments and professional associations in several countries have negotiated mutual recognition agreements that set out clear rules for licensing practitioners who move between signatory countries. These agreements are based on the idea that countries may have equally high standards even if their certification processes are not exactly the same. Their goal is to reduce, or in some cases even eliminate, the need for case-by-case assessments when applicants have been trained in systems conferring essentially comparable skills and knowledge.

Reaching agreements on mutual recognition is no easy feat. National governments do not control all the policy levers, often relying on professional associations and local governments’ willingness to participate in negotiations. In many cases, no single organization or government department can be empowered to negotiate an agreement, creating a formidable coordination challenge. In the US, for example, 54 states and jurisdictions make up a complicated patchwork of licensing rules, and in some occupations it can be difficult to transfer a license from another US state, let alone from abroad.

Nonetheless, some significant agreements have been possible. The most extensive mutual recognition agreement is to be found in the European Union, which has created an extensive network of rules reducing national regulators’ discretion to reject EU citizens’ applications for professional licenses and certifications. These rules cover all regulated occupations across 27 countries with a population of more than 500 million people. More recently, Quebec and France have concluded a web of agreements covering around 100

20 Global mobility | Skilled migration


‘The ACCA Qualification

provided a foundation that

would set me up for success in any

business role’

Chairing and sharingSiobhan Pandya, FCCA, ACCA USA vice chairman and continuous improvement expert at Shell Oil Company, explains what being part of ACCA means to her

I have received so much from ACCA – a qualification, a community, a sense of pride. And with my life now set in the US, I continue to receive all of these things, along with a challenge to ensure greater recognition for ACCA in the US. I accept that challenge with focus, motivation and passion. I am one of many ACCA members and students in the global Shell

world, but we all have two things in common: we share our passion for ACCA and enjoy the many benefits of the qualification. ■

Siobhan Pandya, ACCA USA vice chairman (taking over the role of chairman in May 2015), is an active ACCA USA member and is just one of many examples of the diversity, experience, education and passion ACCA members bring to the table

Some say that I give new meaning to the term diverse. I was born and raised in Scotland, worked and lived throughout the UK, moved to and became naturalized in the US, and have Indian parents and an Irish name. Luckily the company that I work for and the qualification that I possess are equally diverse.

I have worked for Shell Oil Company for almost 15 years. It was in my first year that I was introduced to the ACCA Qualification. It provided a foundation that would set me up for success in any business role – in fact, I have already held seven different roles in Shell, ranging from financial accountant to compliance manager to continuous improvement expert (my current role).

With ACCA being a global qualification, I understand and appreciate the challenges of different countries, and this is recognized by my counterparts around the world. I am able to speak the language of international business while demonstrating local application. ACCA gave me confidence and allowed me to earn respect wherever I went. The broad range of subjects covered – including tax, audit and law – means that I can provide valuable input to any decision-making process and be a key asset to my organization. For example, the tax module supported me during a tax project for the UK government; the audit module provided guidance while I was implementing Sarbanes- Oxley. No matter what role I move into anywhere in the world, my ACCA Qualification is always with me, allowing me to showcase my range of experience and knowledge.

Once I had decided that I was going to be an accountant, I wanted to ensure that I was a strong candidate around the world, and this led me to the only truly global qualification – ACCA. It also had a broad range of topics outside of accountancy that would help to enhance my skillset and set me apart from the competition. Another reason for choosing ACCA was that it is not only a family; it is a serious family focused on making me the best that I can be and setting a standard that cannot and will not be compromised. After 10 years as an ACCA member, that standard is still in place and is extremely important to me.

21Siobhan Pandya | Interview


‘When you’re in your teens,

you don’t think your parents

know anything. Sometimes you find out they’re

very smart’

22 Interview | Kenneth Henry


The virtual professorDr Kenneth Henry FCCA doesn’t just teach accountancy students about cybersecurity; he also has to ensure their online learning can withstand the rigors of cyber abuse

a computer scientist. It was his father who urged him to gain an accounting background first. ‘When you’re in your teens, you don’t think your parents know anything. Sometimes you find out they’re very smart people,’ he jokes.

He passed his ACCA exams and waded into the waters of professional accountancy, working as an auditor for Price Waterhouse & Co in Jamaica (as PwC was known before Price Waterhouse merged with Coopers & Lybrand, and where he would also go on to work in Miami). Even as he was building his skills as an auditor, technology was never far from his mind.

‘In the process of trying to understand how the business worked and talking to people who run the IT centers, I realized they could be blowing smoke and I would have no idea if what they were saying was true,’ he recalls. Sensing that expanding his technical knowledge could allow him to better serve »

W hen Dr Kenneth Henry talks to his class of future auditors about technology, it’s the risks – not just the benefits – he wants them to consider. In one exercise

that has become a regular part of his accounting information systems class, he dispatches undergraduates to find the latest technology and imagine how a business might use to it to their advantage. That part comes easily to most of today’s digital natives. What he asks them to do next is trickier.

‘I say, tell me what your risks are. How could someone use them to cause harm to your business, to your customer, or to your stakeholders?’ He chuckles and recalls that his tech-savvy students ‘tend to squawk’ as they are forced to poke holes in their favorite technologies. ‘I don’t get the impression they’re used to thinking about the business risks, and later on the audit risks related to technology,’ notes Henry.

Henry’s students aren’t alone as they learn to navigate a fast-evolving business world, where cybersecurity holes and hacks seem to evolve even faster than new technologies. Effectively, anyone with a digital component to their business – and the accounting professionals who serve them – could benefit from a crash course.

‘Different kinds of industries will have different kinds of security risks,’ says Henry, but no industry can enter the new digital future without confronting new vulnerabilities, particularly to database breaches and fraud. Identity theft in particular is easy to commit virtually. It accounts for $24.7bn in personal losses to Americans each year. Losses to businesses worldwide are estimated around $221bn. A scan of major headlines everyday shows juggernauts such as The Home Depot losing millions of dollars – not to mention consumer confidence – to loose cybersecurity measures. Even the healthcare industry is struggling to protect and verify documents: $28.6bn has been lost to fraud, along with an invaluable amount of confidential patient information.

‘Who absorbs that risk? Who absorbs that loss?’ Henry asks his students, as they look at popular start-ups like Groupon or LivingSocial, two high-profile deal-of-the-day tech companies that draw in millions of users with accessibility and convenience but are also at high risk of being defrauded, both on consumer and merchant sides. He reminds them that these risks become their client’s risks, as reflected in financial misstatements. ‘It tends to generate a tremendous amount of discussion.’

The rise and riseThe discussion may be new to Henry’s students, but it’s one he’s been leading – both internationally and within ACCA – since long before cybersecurity became the latest buzzword.

Born in Kingston, Jamaica, Henry first dreamed of becoming

CV

2000 to presentAssociate professor, Florida International University’s School of Accounting and College of Business

1998-2000Information systems audit consultant to the government of the Kingdom of Saudi Arabia

1992-1998Internal audit manager, US Department of Treasury, Miami-Dade County, Florida

1980-1992IT audit manager, Coopers & Lybrand, US

1973-1980Auditor, Price Waterhouse & Co, Jamaica

* Founding member of ACCA USA; current ACCA council member

* Current member of ACCA’s Governance Design and Market Oversight committees and Global Assurance Forum

* Current ACCA representative member of the International Internal Audit Standards Board

23Kenneth Henry | Interview


accountancy as a global profession, something he believes will only continue to gain value in the current marketplace. ‘It really is the power of the global background,’ says Henry.

His current position in academia allows him to apply his auditor’s perspective to the challenges of an educator. Specifically, he is interested in how cybersecurity will have to evolve to adequately secure computer-based exams.

‘When you have technology involved, the concerns are very different from when you have a paper-based exam and a hard copy textbook,’ says Henry. Some solutions include virtual proctors and other remote-oversight technologies that increase the security of the exam, but these also come at a high cost to the proctoring organization and testing centers.

‘We’re going to worry very seriously about how those [computer-based tests] are administered, how you maintain the security, how you maintain the privacy of the students and so on,’ says Henry at the prospect of shifting hundreds of thousands of ACCA students over to computer-based testing.

As in the world of business or the public sector, educational technology is constantly evolving and changing shape and scope, allowing both new opportunities for students and new loopholes for cheaters and fraudsters. Henry believes the next few years will be critical in forming a strategy for a secure, computer-based ACCA exam that upholds the values of the organization and the privacy of the students. As businesses face new challenges maintaining IT and digital security, so educators will also have to upgrade their technical know-how and learn to assess new risks, fast – or at last one step faster than determined cyber cheaters.

‘You have to keep ahead of them,’ notes Henry. ‘If you move at their pace, you are in trouble.’ ■

Paige Ferrari, journalist

his clients, Henry took a leave of absence to pursue his BSc in computer science from the University of Windsor in Canada.

What followed from there was a career catapulted by Henry’s unique position as a modern accounting triple-threat: a strong foundation in the fundamentals of accounting and auditing standards, knowledge of cutting-edge technology, and an international background that appealed to global clients. That unique skillset took him to work for Miami-Dade county and then to the US Department of Treasury. There, under the umbrella of the US Treasury, he worked as a special IT consultant to the government of the Kingdom of Saudi Arabia from 1998 to 2000 to help develop an internal auditing IT system for the government. ‘A lot of the security-related things that we worry about now weren’t really issues back then,’ he remembers, of days when running anti-virus software was typically the height of network protection. ‘Now we have so much more sophisticated hardware, software, storage, and more sophisticated security concerns.’

Stand-out guyThe broad background that Henry brought to his study of technology and his work abroad is inseparable from his active involvement in ACCA, he says. ‘It’s allowed me to do some things I don’t think I could have done otherwise. That’s what allowed me to take the job in Saudi Arabia,’ he says of his ACCA Qualification. The ACCA exam in particular required him to demonstrate broader business knowledge than the Certified Public Accountant (CPA) exam alone, which made him stand out when ‘they were looking for someone who had more than an audit background’.

He adds that employers then, and now, also hold international experience in high regard. His personal background – with work and study experience in three countries – combined with his ACCA membership demonstrated greater awareness and involvement in

24 Interview | Kenneth Henry


A week in the life of…

Allison Holmesthese are my focus on Wednesdays. Right now, I’m working on a global project that involves compensation. Compensation is the firm’s largest expense – which, with over 55,000 employees, isn’t

surprising – so projects like this are a real opportunity to make a significant difference to the business.

ThursdayMy New York teams are spread out in different offices and I make a point of trying to visit them all regularly. It gives me a chance to catch up on business-as-usual projects at the same time asgetting a different perspective. With so many smart and talented people on the team, there’s never a shortage of good ideas – I see one of the key roles as taking those ideas and making sure they get shared across all my teams.

FridayOn Friday I generally try and spend some time mentoring colleagues around the organization. Morgan Stanley has an excellent, long-standing mentoring program. This involves being matched to someone in the company with a similar background or aspirations and coaching them in their career. I’ve found having a mentor myself hugely beneficial, so it’s great to be able to help others in the same way.

WeekendI’ve got two children, a six-year-old and a 10-year-old, so they keep me busy at weekends, which are full of their activities such as football, basketball, singing and music. When I do get timeto myself, I like to go running or meet up with friends for some food. I’m also part of the Women’s Bond Club in New York, one of the oldest organizations in the world for women in finance. I’ll spend some time at weekends focusing on their charitable giving strategy and connecting with other non-profit organizations. ■

Allison Holmes FCCA is a managing director in Morgan Stanley’s finance division and global head of compensation and tax controllers. She joined the

company in 2000, became CFO of the European equity division in London and then moved to Scotland in 2005 to establish and lead the global finance division in Glasgow, ultimately heading up the firm’s office there. She moved to New York in 2013. We caught up with her to find out what a week as an international senior finance professional really involves.

Monday I’m in the office at 7.30am most days. Investment banking is such a fast-moving environment that no two weeks are the same. And the current pace of change, particularly on the regulatory side, means that agendas and diaries get changed on a daily basis. Mondays are generally spent talking to my internal clients, discussing any immediate issues and ensuring that we are on track with the broader strategic plan for each client.

TuesdayI manage 50 people globally, so time management is a priority for me to ensure I can catch up with key employees in their time zone. Tuesday’s focus is passing on feedback from theprevious day’s client meetings. I’m a strong believer in face-to-face communication – you can’t always build a good relationship over the phone – so managing a global team has its challenges. ACCA is a globally recognized qualification, so my colleagues and clients all over the world know that I’m a finance professional.

WednesdayIn addition to the day-to-day workflow, I also manage some large projects, and

‘I’m a strong believer in

face-to-face communication – so managing a global team has

its challenges’

Allison Holmes | Interview


25

Picking up the PaceNeil Braun, dean of Pace University’s Lubin School of Business, explains how the first ACCA Qualification deal in the US will let students gain professional credentials faster

combined degrees, all fully accredited by ACCA, the Association to Advance Collegiate Schools of Business (AACSB), and US government agencies. Successful completion of an accounting program at Pace will qualify students for exemptions from five of ACCA’s exams. To claim exemptions, students need to submit to ACCA an official copy of their academic transcript from Pace along with the ACCA registration form.

What will the exemptions mean to students? ACCA recognition will enable our students to accelerate their ability to earn certification. Today, the ability to earn professional credentials in shorter time periods and at a reasonable cost drives enrolment. Efficiency of time and money is a great outcome for our students.

Pace is the first school to participate in this in the US. What advice can you offer to those pursuing similar partnerships? At Pace we are focused on student outcomes. Alignment of curriculum with professional certification organizations is one very important dimension of achieving continuous improvement in outcomes. Together with experiential learning, data analytic skill development and coaching to enhance social intelligence, alignment with the needs of employers is critical to success. ■

Arecent landmark partnership between ACCA USA and Pace University linked ACCA’s globally recognized Qualification program to graduate and undergraduate

coursework at the New York-based higher education institution. From the start of the 2015 academic year, both graduate and undergraduate students in Pace University’s Lubin School of Business’s Department of Accounting will be able to complete coursework that will qualify them for specific exemptions from ACCA’s 14 exams; the exemptions will initially include four for graduate courses and five for undergraduate courses.

Why is Pace the first US university to partner with ACCA? Pace University was founded as an accounting institute over 100 years ago. It has evolved into a major university, but its alumni base in the accounting profession remain its foundation. With over 6,000 alumni currently in the profession, including thousands at the Big Four over the years, our global contacts are second to none.

What attracts international students to Pace’s Lubin School? New York City is one of the great cities of the world, offering massive opportunity and a range of experiences. Our five-year program in public accounting regularly achieves close to 100% job placement, and the internship program prepares students to be marketable around the world.

How diverse is Pace’s student population? New York City is a reflection of the world, and Pace University is a reflection of New York City. Virtually every ethnicity, nationality, race, gender identity, musical taste and lifestyle is represented – we have more than 4,000 students from 84 nations. It is a culture where students from all corners of the world feel at home. The beauty of our university culture is that no one feels like an outsider because there is no single dominant culture, and there are clubs and student organizations that provide a sense of belonging around common interests for every walk of life.

What benefits do you see from this partnership? In an increasingly competitive world, it is important to align the education our students receive with the careers they aspire to pursue. We hope this relationship will lead to our students’ education credentials becoming more valuable globally, and also attract more students from around the world to study at Pace.

How will students gain exemptions when studying at Pace? We offer a spectrum of courses leading to BBA, MBA, MS and

26 Q&A | Neil Braun


The magazine for fi nance professionalsABUS Accounting and Business

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Hack attacker Cybersecurity guru Jonathan HillInterview ACCA USA vice chairman Siobhan Pandya

Special edition US 2015

Card sharpWill chip-based card transactions protect the US?

Acting responsibly Roundtable – when companies go good

Where eagles dareAccountants have a crucial role to play in cybersecurity regulation

Delivery manMark Vale, CFO at UPS, on driving revenues at a truly global organization

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AB US special supplement 2015

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