Mafia Buzz Issue 3

Accountancy SA

It turns out that “Charles Hattingh’s often controversial column” was again the most popular column in ASA. If you voted for me, thank you so much for your support.

I do not summarise the articles in ASA because you should study them in depth. My objective here is to inform you about the existence of them.

1. 
   The technical legislation section contains a summary of what to expect from the new Companies Act and a notice of how to submit financial statements of retirement funds.
   
2. 
   The technical tax section refers you to the website for details of meetings with SARS tax court judgements. There is also a story about SDL, which expired for entities such as mine as from 1 August 2005.
   
3. 
   It would have been nice had technical accounting told us what the amendments to IAS21 were instead of giving us the history of why the standard was changed. Revised guidance on IFRS 4 has been published.
   
4. 
   On the auditing side, a circular has been published to do with conveyancing, enhanced audit procedures are now required for related party transactions (they still have not solved the accounting problem), and various guides have been withdrawn.
   
5. 
   Peter Cramer tries to defend straight-lining leases. The article is full of omissions and inaccuracies, e.g. the standard does NOT say that leases have to be straight lined and the inflation rate of buildings is NOT less than the average escalation in lease agreements. Peter, you cannot defend this stupid decision. I can assure you that Growthpoint did not decide to go with straight lining because they thought it was the right thing to do. They were bulldozed into this decision by the auditors.
   
6. 
   Charles MacKenzie writes about the administrative burden being experienced by SA global companies regarding tax compliance.
   
7. 
   Jed Michaletos points out that customs and excise was a major contributor to the tax collections because of the strengthening of the Rand and the resultant explosion of imports.
   
8. 
   Andrew West criticises the profession for religiously following IFRS when solving GAAP problems. My friend, if you experienced practice review or the GMP, you cannot afford to think anymore. You follow the rules.
   
9. 
   Various academics write about the poor disclosures on HIV/Aids in financial statements. [You are not allowed to point out these kinds of risks in RSA – you will be seen to be unpatriotic – see Sasol. When is SAICA going to address the accounting issue for Aids? I had to advise recently on how to measure the liability and income statement charge for a company that had a policy of providing anti-retroviral drugs to their staff and their families. I was working in a vacuum.]
   
10. 
    Robert Stretch says that the result of the survey conducted by E&Y on IFRS and tax revealed that deferred tax calculations were the major problems experienced [surprise, surprise].
    
11. 
    Rob Cooper gives us a lesson on leave, absenteeism and the law. [Thank goodness I do not have staff problems anymore!]
    
12. 
    Marc Scheepbouwer gives pointers on financial modelling. He warns against the use of spreadsheets - he says that there is a high possibility of error in them. [Not if you do proper stress testing of them and if you use macros to run them.]
    
13. 
    My article was on the horrors of IFRS and a simple problem of staff empowerment.
    
14. 
    Penelope Webb got a little weird on us in her article. I hope that this is not a sign that old age is creeping in.
    

Financial Mail

Both PwC and Grant Thornton ran adverts in Business Day on 27 February stating that their employees had beaten the national average. PwC said the average was 63% and GT said it was 70%. [What would you like the average to be and I will make a plan.] (10^th, page 90)

A Cape judge ruled that a bursary trust set up in 1920 limited to non-Jewish white males is racist and sexist and must be thrown open to all. (31^st, page 8)

Philip Morris will have to pay one Judy Boeken, widow of a long-time Marlboro smoker, a record $82m damages awarded in 2001, after exhausting all legal appeals. (31^st, page 8)

FinWeek

Nigerian villagers stormed a poultry farm infected with the deadly strain of bird flu and made off with chickens scheduled for protective slaughter. (9^th, page 8)

The staff of a privately owned correctional facility at Makhado (formally Louis Trichardt) went on strike and opened the cell doors housing the inmates. [As much as I love this country I often wonder what hope there is when striking cleaners trash streets, striking security guards trash buildings and striking supermarket staff intimidate shoppers. The risks of doing business in this country go up when investors witness these events.] (9^th, page 19)

Vic de Klerk confirms the idea that value = the future cash flow that an investment can provide discounted at a realistic rate. The concept is so simple and powerful, but investors lost the plot for many years by ignoring it. He uses this idea to check to see whether shares are under or over valued on the JSE and concludes that there is still value in some of the favourite shares on the JSE. Of course, this all depends on the rate of growth projected and how far into the future you are prepared to look. (23^rd, page 24)

Vic de Klerk picked up on my suggestion that you do it yourself when planning a retirement portfolio and supports this idea. So now we have Warren, Vic and Charles saying “DIY!” (23^rd, page 89)

Fortune

Ever heard of the salesman who goes to a sales convention and takes his household curtains to be laundered by the hotel at which he is staying at the company’s expense? [Thought you had heard it all?] (6^th, page 82)

Each year Warren Buffett, in his newsletter to shareholders, sets out words of wisdom on matters to do with investing. This year Fortune quotes him on how wealth can be dissipated by interposing between the investors and the investments people called advisors. [If you have ever attended one of my workshops you will have been told the story about investing R10 000 at 18% p.a. for 40 years on the market v giving R10 000 to an advisor to invest for you who also earns 18% p.a. but keeps 6% p.a. for him or her self and gives you 12% p.a.. Try the maths. If this does not convince you to DIY, nothing will.] (20^th, page 20)

Every now and again, Fortune comes up with an article that persuades me to continue investing in the subscription. Here is a summary of such an article. Fortune interviewed various top performers and here are their “secrets”:

1. 
   I never have a clock in my workroom (Edison).
   
2. 
   Ask yourself the following three questions:
   

• 
  What am I supposed to accomplish in my work?
  
• 
  How do I actually spend my time?
  
• 
  Have I achieved wu-wei, i.e. effortless effort?
  

3. 
   Try to get into the “zone”, i.e. the place where you are calm yet alert, focused yet receptive, achieving without expending too much energy, at the eye of the storm yet drawing from its source. This is “wu-wei”.
   
4. 
   When focusing on a project, avoid interruptions as it takes time to get back into the zone again.
   
5. 
   Being busy is about getting things done, not necessarily the right things done. Being bust is a waste of time and energy.
   
6. 
   Focus on putting decisions into action.
   
7. 
   Be selective in what you do – you cannot do it all. Delegate if you have to.
   
8. 
   Block schedule time for activities.
   
9. 
   Work quality time.
   
10. 
    Do not take your work home with you – allow yourself to distance yourself from the work – helps you to see more clearly.
    
11. 
    Focus on one thing at a time – do not jump from one thing to another.
    
12. 
    Listen.
    
13. 
    Write or type out a prioritized task list.
    
14. 
    Do not have a secretary – cut your dependence on others – be lean and mean.
    
15. 
    Set aside time for strategising.
    
16. 
    Plan well into the future.
    
17. 
    Develop a system to handle emails (delete, archive, set aside time to answer the difficult ones and clear easy ones immediately).
    
18. 
    Get into a routine – doing the same tasks at the same time each day.
    
19. 
    Use downtime to read, e.g. waiting for meetings to start, sitting in an aircraft, waiting for an appointment, etc.
    
20. 
    Get into a routine of doing exercise – it clears the mind and tones the body.
    
21. 
    Manage your energy as well as managing your time.
    
22. 
    Try to minimise the information onslaught by proper planning and sound information systems.
    
23. 
    Do not procrastinate.
    
24. 
    Learn to say “no” if it does not result in goal congruence.
    
25. 
    Leave for home in the evening after a business trip to be back at your desk the next morning.
    
26. 
    When all else fails, just do it! (20^th, page 29)