Talents on the move

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Local accountants attracted by foreign greener pastures

By LIZ LEE lizlee@thestar.com.my 

 KUALA LUMPUR: Despite unwavering interest in accountancy courses at universities and colleges, mid-tier accounting and auditing firms are finding it difficult to hire and retain their accountants.

The problem: the outflow of local talents to foreign “greener pastures”.

Baker Tilly International chief executive officer and president Geoff Barnes told StarBiz that something needs to be done about this, as “a strong audit profession underpins an economy with good corporate governance, a strong capital market and an economic environment that can cross borders.”

Barnes said the accounting profession has always demanded the brightest of people globally and that good firms have always had this “war for talent, because we are all looking for the best people”.

Barnes (left) and Heng stressing on the importance of retaining accounting talents.

 

Local member firm, Baker Tilly Monteiro Heng (BTMH) chief executive partner Heng Ji Keng said many Malaysian accounting graduates see better opportunities in Hong Kong, Shanghai, Shenzhen, Singapore and Australia.

Heng added that many graduates left mainly due to the salary disparity. To counter this, he said firms needed assistance from the Government as “a word from the Government is better than a thousand words from practitioners”.

“We need to slowly bridge the gap between the salary we pay here and that offered in the countries attracting our talents. We need assistance from the regulators to impress upon clients that low fees also affect the quality of an auditing job,” Heng said.

A fresh graduate can earn up to RM100,000 per annum in China, around RM85,000 per annum in Singapore while Australian firms pay about RM160,000 per annum. Locally, they would earn about RM30,000 only.



SJ Grant Thornton (SJGT) managing partner Datuk Narendra Jasani said an estimated 500 accounting graduates out of 1,500 from local universities leave the country every year.

Both firms, BTMH and SJGT, said the Government could further benefit the country's accounting profession by liberalising immigration policies.

Heng said the many foreign students studying here could be a good source of accountants for local firms, provided the Government revises the related immigration restrictions.

“We must acknowledge their potential and train them to become qualified professional accountants,” he said.

Both Heng and Jasani suggested that the Government could look into giving foreign students a work permit of three to four years after their studies.

“To avoid disheartening our Malaysian accountants, a quota could be set for firms to employ no more than 20% foreign accountants,” Jasani further suggested.

Heng pointed out that another turn-off for young accountants to begin their career here is the difficulty in getting a licence to practise.

“The accountants have to go through about a decade of university education and training, topped off with a scrutinising interview that tests them on the technicalities of the industry before the Finance Ministry issues a licence,” Heng said.

Specifically, Malaysian accountants need three years for a university degree, three years of working experience, another three years of post-Malaysian Institute of Accountants membership and an interview to determine whether they would qualify for a licence. The tedious process and no guarantee of getting a licence to practise has become a deterrent to young accountants when embarking on their careers.

“We also have to change work procedures. One aspect is to change the audit methodolgy no more ticking and checking all the time but more thought-processing, overviews and comparative analysis which is more suited to the younger generation,” SGJT's Jasani said.

Grant Thorton International chief executive officer Ed Nusbaum said the rapid economic growth and expansion in the entire Asia-Pacific region has caused the shortage of talent.

“The demand is greater than the number of students graduating from universities and qualified experienced talent within the region. Whether you are talking about Malaysia, China or India, we need to attract people to the accounting profession,” he said, adding that dynamic firms also contributed to attracting young accountants.

“Being part of a growing organisation makes (one's career) interesting and employee retention is better because people see opportunities,” Nusbaum concluded.

Don’t Get Caught Holding Dollars When The U.S. Default Arrives!

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Addison Wiggin

Image by Getty Images via @daylife Greece can’t solve a problem of too much debt by taking on even more. We will note, however, that by some measures, the United States is even more deeply in hock than Greece.

Greece’s debt-to-GDP ratio is 143%. America’s is officially 97%. But the $14.3 trillion national debt, stacked up against a $14.7 trillion economy, doesn’t tell the whole story. Look at these numbers:

• $14.3 trillion: “official” national debt
• $5 trillion: Amount Uncle Sam is on the hook for Fannie Mae and Freddie Mac
• $62 trillion: Total liabilities and unfunded obligations for Social Security and Medicare

That doesn’t count the black box of bailouts.

We know how much the Federal Reserve doled out in emergency loans: $16.1 trillion between Dec. 1, 2007, and July 21, 2010. We know that because yesterday the Government Accountability Office completed its first-ever audit of the Fed, made possible largely through the persistence of Rep. Ron Paul (R.-Tex.) making that audit, however incomplete, the law.

What we don’t know is how much of that has been paid back.  “We have literally injected about $5.3 trillion,” said Dr. Paul earlier this month during his questioning of Fed chief Ben Bernanke, “and I don’t think we got very much for it. The national debt went up $5.1 trillion.”

Bernanke did not challenge those figures.

“To get our overall fiscal gap under control,” writes Boston University professor Laurence Kotlikoff in Bloomberg, “the U.S. must cut spending or raise tax revenue by $20 trillion over the next decade, far more than either the president wants or the House Republicans seek.”



Yep: The latest number we see bruited in Washington is $3 trillion. Whatever the final number — and there will be a last-minute deal; there always is — it will be substantially less than $20 trillion over 10 years. The can will be kicked as it keeps getting kicked in Greece.

We note here that the total of outstanding credit default swaps on U.S. Treasuries crested $4.8 billion this week. Uncle Sam has now surpassed Greece in this category.

Measured in year-over-year change, America is number one: Net notional CDS outstanding grew 109%. That means there’s double the bets out there on a U.S. default compared with a year ago.

“You may not know this, but the U.S. has actually defaulted a number of times already,” writes Chris Mayer this morning. He cites five instances:

• 1779: The government was unable to redeem the continental currency issued during the Revolutionary War
• 1782: The colonies defaulted on the debt they took out to pay for the war
• 1862: During the Civil War, the Union failed to redeem dollars for gold at terms stated by the debt contracts
• 1934: FDR defaults on the debt issued to finance World War I, refusing to redeem it in gold. The dollar is devalued 40% against gold
• 1979: A bureaucratic snafu results in interest going unpaid on some small bills.

“With the exception of 1979,” Chris says, “which was mostly due to administrative confusion — the U.S. simply ran out of money each time. The end result was the dollar had to be devalued. Meaning it lost significant purchasing power.

“My guess is that the U.S. will default again. It may not technically be called that, but the only way for the U.S. to meet its financial obligations is to print a lot of money.”

What does that mean in practical terms?  In Greece, professor Savas Robolis at Panteion University in Athens reckons that by 2015, the average Greek employee and pensioner’s standard of living will have fallen 40% compared with 2008.

Even now, Americans are turning to their credit cards to pay for groceries and gas. According to First Data Corp., the volume of gasoline purchases put on credit cards jumped 39% over the last 12 months.
You don’t want to be the average American in a default scenario, whenever it arrives. Ray Dalio, the head of Bridgewater Associates, the world’s biggest hedge fund, puts that day in “late 2012 or early 2013.”

The Path to Debt in America by Addison Wiggin originally appeared in the Daily Reckoning.

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US debt ceiling: Senate rejects Republican 'cut, cap and balance' bill

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Senate rejects Republican 'cut, cap and balance' bill

 

 "If we don't solve it, every American will suffer," Mr Obama said of the debt ceiling debate

The Democratic-led US Senate has rejected a "cut, cap and balance" bill passed by the Republican-led House.

The bill would have severely cut public spending and forced the government to balance its budget.

 The move highlights divisions within Congress as a deadline nears to raise the US debt limit, analysts say.

On Friday, House of Representatives Speaker John Boehner said a deal to avoid a possible default on 2 August was "not close".

'No agreement'

Republicans and Democrats appeared on Friday to harden their respective positions over the debt issue.

Mr Boehner was quick to quash reports that he was close to hammering out a deal with President Barack Obama.

What happens if US defaults?

Uncharted territory but two scenarios emerge
Worst case:

• Higher interest rates on mortgages, credit cards and loans
• Government unable to pay wages to staff, including military
• Social security cheques stopped
• Turmoil on international markets

Better case:

• Default could be avoided by paying creditors, at expense of slashing spending

Sources: Associated Press, CBS, ABC

"There was no agreement, publicly [or] privately, never an agreement and frankly not close to an agreement," Mr Boehner, a Republican, told reporters following a private meeting with House Republicans.

Meanwhile, Senate Democrats complained they had been left out of negotiations, with some warning the president against an agreement that would disproportionately burden the poor by exacting big cuts to social programmes.

In a town hall-style meeting with voters in Maryland on Friday, President Obama warned that every American would feel the economic pain if Congress failed to reach an agreement to raise the US debt limit.

"If we don't solve it, every American will suffer," he said. "Businesses will be less likely to invest and hire in America. Interest rates will rise for people who need money to buy a home or a car, or go to college."

The US national debt is currently about $14.3tn (£8.8tr), fed by an annual government budget deficit that reached $1.5tr this year.

The US government's authority to borrow money is limited by statute.

Historically, Congress has raised that debt limit as a matter of routine, but this year, the Republican party - buoyed by a group of newly elected hardline fiscal conservatives in the House of Representatives - has demanded steep cuts to the US budget as the price of an increase.

Who owns the $14.3tn debt?

• US government owes itself $4.6tn
• Remaining $9.7tn owed to investors
• They include banks, pension funds, individual investors, and state/local/foreign governments
• China: $1.16tn, Japan: $0.91tn, UK: $0.35tn
• Deficit is annual difference between spending and revenue, $1.29tn in 2010
• Congress has voted to raise the US debt limit 10 times since 2001

Source: US Treasury, May 2011, Congressional Research Service, Congressional Budget Office

The Obama administration has warned the US risks defaulting on its debt if Congress does not raise the limit by 2 August.

In recent weeks, Republican and Democratic congressional leaders have worked with the White House to devise an agreement that would raise the limit while trimming the budget deficit, but the talks have collapsed several times.

Republicans have fiercely resisted Democratic proposals to raise additional tax revenue by closing tax loopholes that Democrats say primarily benefit the wealthy, while Democrats have vowed to protect social programmes for the elderly and poor from Republican-proposed cut backs.

In recent weeks, the White House and a bipartisan "gang of six" senators have floated proposals to trim trillions of dollars over the next decade.

The plans would cut the deficit through a mix of spending cuts and tax increases, but hardline conservative Republicans in the House of Representatives have urged Republican leaders to reject those.

Meanwhile, Senate Democratic and Republican leaders are crafting a fall-back plan that would enable Mr Obama to raise the debt ceiling unilaterally.

The Republican-led House of Representatives approved the "cut, cap and balance" plan on Tuesday of this week.

It would have reduced government spending by cut spending by $5.8tr over 10 years, capped future government spending at a certain percentage of the US economy, and amended the US constitution to require a balanced budget.

Mr Obama vowed to veto the bill, and the Democratic-led Senate on Friday rejected it, saying it would bring about steep cuts in social programmes.

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