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Issue 1 Volume 17 January 2021 DRIVING BUSINESS SUCCESS MAKING THE PROFESSION TODAY-READY New Institute President Raymond Cheng on how unprecedented events mean CPAs need to be ready for any possibilities PLUS: YOUNG MEMBERS Roundtable discussion on career progression and challenges for young CPAs ACCOUNTANT PLUS Anil Daryanani, Chief Financial Officer at Thakral Corporation Ltd. SECOND OPINIONS What is the best way to motivate employees?

PRESIDENT’S MESSAGE APLUS January 2021 1 It is my greatest pleasure to be your Institute President for 2021. It is a great personal honour for me, after having served on Council for over 10 years, and on various committees since 1998. I look forward to working closely with my two Vice-Presidents, Rosalind Lee and Ken Li, and our fellow Council members to apply our experience to the important task of leading our profession. This last year has been one of disruption, and while the COVID-19 pandemic continues to affect Hong Kong, with dozens of cases daily, the arrival of vaccines from next month brings hope that we will soon turn the corner and begin the recovery. As the Leadership Team set out in our “First Letter to Members” issued in December after the election, the Institute has an important role to play in helping our members to recover from the challenges of the pandemic and harness new opportunities in the future. To effectively help you, we must know your issues and concerns. We must communicate openly and plainly with you, listen to you, and respond to your needs. When I was inaugurated as President of the Institute, I laid out 10 focus areas for the Institute for 2021 and we will work diligently on those areas, which are: implementation of ‘‘one member one vote’’ for the election of the President and Vice-Presidents; anti-money laundering compliance issues; the membership admission process for registration as CPAs; implementing the new Qualification Programme examinations; investigating long working hours; the digitalization of the profession; branding of the profession; global recognition of the Institute and our members; legal and compliance issues for accountants; and career development for members. It’s a long list, but one we are raring to tackle. Indeed, we’ve already made progress on some of these issues. This month, for example, we have clarified the membership admission process by amending the membership application form. Council has also already set up one new task force, the Task Force on Legal and Compliance for Accountants, to help tackle some of these issues, and there are more new task forces on the way. I was interviewed for A Plus this month and discuss more about what we need to do in the year ahead. I hope you will read the interview on page 16 to better understand what we have planned. It is not only the profession that needs to prepare for the recovery. This month I took part in a press conference announcing the Institute’s 2021-22 budget proposals ahead of the Financial Secretary’s Budget Speech in February. The proposals include 21 measures under the appropriate theme ‘‘Preparing for the recovery,’’ across four areas: preparing for the recovery; adapting to the new normal through more extensive digital transformation; public finance and taxation; and environmental measures. You can read more about the proposals in the Source article on page 40. With the year of the ox around the corner I wish you all good fortune, a happy, a healthy and a prosperous year ahead! I hope that the characteristics of the ox, being diligence, perseverance, and a symbol of strength, will lead to a calmer and safer year for all of us. I recorded a video celebrating the Chinese New Year, and the new appointments to the Institute’s committees for the year ahead. The video is available along with some e-fai chun messages and WhatsApp stickers for sharing with your family and friends on the Institute’s website. “ The Institute has an important role to play in helping our members to recover from the challenges of the pandemic and harness new opportunities in the future.” Raymond Cheng President Dear members,

a CONTENTS Issue 1 Volume 17 January 2021 NEWS 01 President’s message 04 Institute news 06 Business news FEATURES 08 Starting over How can businesses use the pandemic as a means for change and even long-term growth? 14 Second opinions What is the best way to motivate employees? 16 Leadership: Raymond Cheng The Institute’s new President on his plans to steer the profession through big challenges and continue to help members succeed 22 How to Steps to improving your corporate disclosures 23 Thought leadership: Peter Picton-Phillipps The Partner and Market Leader of EY Hong Kong’s Financial Services on how companies can do their part in protect the mental health of their employees 24 A platform to transform How the Young Members Committee pledges to develop young members and provide them with a platform to voice out their needs 30 Accountant Plus: Anil Daryanani The Chief Financial Officer of Thakral Corporation Ltd. on how he helped with the diversification of the group’s business 37 Meet the speaker An e-Series course to help companies and employees deal with change management SOURCE 38 Beware of expectation gaps when auditing the financial statements of owners’ corporations in Hong Kong An overview of what auditors should keep in mind when conducting audits of owners’ corporations 24 08Starting over A platform to transform Members from the Young Members Committee discuss at a roundtable how the committee helps to nurture CPAs from the ground up, and how young members can build both their network and soft skills by getting involved

DRIVING BUSINESS SUCCESS About our name A Plus stands for Accounting Plus. It represents a profession that is rich in career options, stays relevant amid rapid changes, and adds value to business. This magazine strives to present the global mindset and varied expertise of Institute members – Accountants Plus. Editor Gerry Ho Email: gerry.ho@mandl.asia Copy Editor Jemelyn Yadao Junior Copy Editor Jeremy Chan Contributors Nicky Burridge, Erin Hale Art Director Ann Lee Registered Office 2/FWang Kee Building, 252 Hennessy Road, Wanchai, Hong Kong Advertising enquiries Advertising Director Derek Tsang Email: derektsang@mandl.asia ISSN 1815-3380 President Raymond Cheng Vice Presidents Rosalind Lee Ken Li Chief Executive and Registrar Margaret W. S. Chan Director of Corporate Communications Dr Wendy Lam Head of Corporate Communications and Member Services Rachel So Editorial Manager Paul Smith Editorial Coordinator Maggie Tam Office Address 37/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Tel: (852) 2287-7228 Fax: (852) 2865-6603 Member and Student Services Counter 27/F, Wu Chung House, 213 Queen’s Road East, Wanchai, Hong Kong Website: www.hkicpa.org.hk Email: hkicpa@hkicpa.org.hk A Plus is the official magazine of the Hong Kong Institute of Certified Public Accountants. The Institute retains copyright in all material published in the magazine. No part of this magazine may be reproduced without the permission of the Institute. The views expressed in the magazine are not necessarily shared by the Institute or the publisher. The Institute, the publisher and authors accept no responsibilities for loss resulting from any person acting, or refraining from acting, because of views expressed or advertisements appearing in the magazine. ©Hong Kong Institute of Certified Public Accountants January 2021. Print run: 7,300 copies The digital version is distributed to all 46,562 members, 18,199 students of the Institute and 2,358 business stakeholders every month. 40 Preparing for the recovery: a summary of the Institute’s budget recommendations A look at the Institute’s budget recommendations to the government ahead of the budget speech 2021-22 43 Technical news WORK-LIFE BALANCE 46 Making the right moves CPA chess and Chinese chess players on the foresight needed to win each game 52 Young member of the month Ronald Tsang, Senior Director at an American Express joint venture 54 Leisure Plus Spotlight on weekend brunches, what members are currently reading and listening to 56 Let’s get fiscal Explain things to adults as if they are five years old, says Nury Vittachi 54 46 Making the right moves Leisure Plus 30 Guiding growth Anil Daryanani, Chief Financial Officer of Thakral Corporation Ltd., on how his CPA skills have helped to grow the group’s investments, and why accountants like him are still learning – even after four decades on the job

NEWS The Hong Kong Institute of CPAs issued its tax policy and budget proposals for 2021-22 under the theme “Preparing for the recovery” this month. The Institute suggested a range of 21 different measures to prepare for the recovery, enhance public finance and taxation, help citizens and businesses to adapt to the “new normal” through more extensive digital transformation, as well as environmental measures to improve the local environment and citizens’ well-being. The Institute estimates that the fiscal deficit for 2020-21 will reach HK$348 billion for the year, while fiscal reserves are expected to stand at HK$812 billion. “Hong Kong’s economy is facing various domestic and external challenges. Like many other jurisdictions, the near-total disruption to lives due to the COVID-19 pandemic and the related restrictions on travel, have had a significant impact on the economy, resulting in the high unemployment rate and budget deficit,” said Institute President Raymond Cheng. “Other challenges ranging from the outmoded tax system, the United States-China trade war, the need for faster digital transformation in light of the ‘new normal,’ and the pressure on public finances, indicate an urgent need for the government to respond.” The unemployment rate for the three months ending December 2020 reached 6.6 percent, the highest in nearly 16 years. “More should be done to support employment and the economy now, through creating jobs in both the public and private sectors, and accelerating the scheduled infrastructure/construction projects to create demand,” said Cheng. To help graduates enter the job market and ensure a sufficiently skilled workforce, the Institute also suggested the government provide salary subsidies to employers for hiring graduates and career transition assistance to eligible people. As the COVID-19 pandemic has revealed the weaknesses of the existing tax system amid the economic turmoil, the Institute once again called for a holistic review of the Hong Kong tax system. “A review of the public finance revenue model has become even more pressing after developments in 2020,” said Eugene Yeung, Convenor of Budget Proposals 2021-22 Sub-Committee. With respect to the importance of investing in technology and infrastructure, the Institute highlighted that some of Hong Kong’s small- and medium-sized enterprises (SMEs) may not be able to afford the cost of digital transformation and effective cybersecurity. “To help SMEs and the business community, the government should consider developing a public cloud infrastructure, upgrading the existing e-government services, and educating the public and SMEs about cybersecurity matters,” said William Chan, Chair of the Taxation Faculty Executive Committee. The Institute also recommended the government support disadvantaged families by subsidizing their Internet subscription plans. The budget proposals are available on the Institute’s website. Read the summary of our recommendations on page 40. New committee appointments confirmed The appointments to the new term of the Institute’s committees, panels and working groups to support the activities of the Council have been finalized. Members can learn about the various committees and their composition for this year on the Institute’s website. In addition, the Institute has established a new Task Force on Legal and Compliance for Accountants to consider challenges faced by members relating to certain legal and compliance matters, and to propose ways that the Institute can help members navigate them. QP December 2020 examinations held successfully The Institute successfully held the final module examinations of the current Qualification Programme (QP) on 28 and 29 December 2020 amid the COVID-19 pandemic. Together with the Final Examination held in November, the entire December 2020 session of the QP has been completed. Preparation for the first offering of the Professional Level of the new QP continues ahead of the June 2021 examination session. Details about the new QP can be found on the Institute’s website. Institute news Business news Institute announces recommendations for the government’s budget 4 January 2021 From left: Eugene Yeung, Convenor of Budget Proposals 20212022 Sub-Committee; Raymond Cheng, Institute President; and William Chan, Chair of the Taxation Faculty Executive Committee

APLUS Resolution by Agreement Chan Kam Fuk, CPA (practising) and Dominic K. F. Chan & Co. Complaint: Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Review Engagements 2400 (Revised) Engagements to ReviewHistorical Financial Statements. Chan was the sole proprietor of Dominic K. F. Chan & Co. The firm issued an unmodified review report on the interim financial statements of Summi (Group) Holdings Limited and its subsidiaries (collectively, group) for the six months ended 31 December 2018, noting material uncertainty about the group’s ability to continue as a going concern. The group made significant payments for capital expenditures during the period. The payments depleted the group’s bank balances as at 31 December 2018. Most of the payments were for land improvement contracts and were incorrectly classified as “lease prepayments for orange plantations.” The respondents’ working papers reflected: insufficient understanding of the group’s accounting system; insufficient assessment of the impact of the inappropriate classification; and inadequate procedures in relation to impairment assessments. The respondents’ review report also did not include an adequate explanation of management’s responsibility for the preparation of the interim financial statements. Regulatory action: In lieu of further proceedings, the Council concluded the following action should resolve the complaint: 1. The respondents acknowledge the facts of the case and areas of non-compliance with the relevant professional standard; 2. The respondents be reprimanded; and 3. The respondents jointly pay an administrative penalty of HK$50,000 and costs ofthe Institute of HK$15,000. Disciplinary finding Kwok Kam Piu, CPA (practising) Complaint: Failure or neglect to observe, maintain or otherwise apply Hong Kong Standard on Auditing (HKSA) 230 Audit Documentation; HKSA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements; HKSA 500 Audit Evidence; HKSA 550 Related Parties; and the fundamental principle of professional competence and due care in sections 100.5(c) and 130.1 of the Code of Ethics for Professional Accountants. Kwok issued an unmodified auditor’s report on a private company’s financial statements for the years ended 30 April 2017 and 30 April 2018. In carrying out the audits, Kwok failed to obtain sufficient appropriate evidence regarding the company’s balances with its directors and shareholders and on management fee expense. In addition, he did not perform adequate risk assessment on related party transactions, and he failed to identify management fees paid to a director- controlled entity as a related party transaction. Further, Kwok failed to prepare adequate documentation of audit procedures performed on a material amount of dividends paid. These audit deficiencies demonstrated Kwok’s failure to exercise adequate professional scepticism, maintain the required level of professional knowledge and skill, and act diligently and in accordance with applicable professional standards. Kwok admitted the complaints against him. Decisions and reasons: The Disciplinary Committee reprimanded Kwok. In addition, Kwok was ordered to pay a penalty of HK$50,000 and costs of disciplinary proceedings of HK$116,962. When making its decision, the committee took into consideration the particulars of the breaches committed in this case, the parties’ submissions, and Kwok’s personal circumstances and conduct throughout the proceedings. Details of the Resolution by Agreement and disciplinary finding are available at the Institute’s website. Research study on COVID-19 disclosures by listed companies available now The Institute has published a new report on corporate disclosures in relation to the COVID-19 pandemic, undertaken alongside the Best Corporate Governance Awards. The report reviews how Hong Kong-listed companies with 31 March 2020 year-ends communicated the impact of COVID-19 in their annual reports and additional disclosures. It also makes recommendations for how companies should improve their disclosures. For more details, read this month’s How-to column on page 22. Institute launches events app survey The Institute is conducting a survey of members who use the HKICPA Events app with the aim of identifying ways to improve it and create more value for users. App users will have received an invitation email, and a link can also be found in the app. Minutes of the 48th AGM The minutes of the Institute’s 48th annual general meeting (AGM) held on 10 December 2020 are now available for members to read. They can be found in the “Members’ area” of the Institute’s website. Council meeting minutes The abridged minutes from the November and December Council meeting are now available for members to read. They can be found in the “Members’ area” of the Institute’s website. January 2021 5

NEWS Business CHINESE SHORT VIDEO START-UP TO RAISE UP TO US$6.2 BILLION IN HONG KONG IPO Kuaishou Technology, the world’s second-largest short-video platform, plans to raise as much as US$5.4 billion in what could be Hong Kong’s biggest initial public offering (IPO) since Alibaba’s US$13 billion secondary offering in 2019. The listing will raise between US$4.9 billion and US$5.4 billion, but that could rise to US$6.2 billion if bankers exercise an overallotment option to increase its size, according to a term sheet seen by media. Kuaishou, which is backed by Chinese Internet group Tencent, is marketing shares in a price range between HK$105 and HK$115 a share. Shares are expected to begin trading on 5 February. The Kuaishou IPO has 10 cornerstone investors, including the world’s biggest asset manager BlackRock and Singapore’s sovereign wealth funds Temasek Holdings and GIC. GRANT THORNTON SUED £200 MILLION FOR PATISSERIE VALERIE ACCOUNTING FAILURES Kwasi Kwarteng, the United Kingdom’s new Secretary of State for Business, has pledged to push ahead with reforming the British audit market and to shake up the Big Four firms. The Financial Times reported that according to business officials and senior industry figures, Kwarteng said that audit reform is “one of his initial priorities.” In 2019, government-backed reports into the audit market recommended a series of sweeping reforms including separating it from accounting, and changes to the law around the way auditors report to the public. However, more than a year later, the government has still not consulted on the findings, blaming the delay on the COVID-19 crisis. Donald Brydon, the former chairman of the London Stock Exchange, who carried out one of the reports, recently called on the government to introduce much-needed reforms in the wake of the Wirecard scandal that broke last year. NEW U.K. BUSINESS SECRETARY PRIORITIZES AUDIT REFORM Southeast Asian ride-hailing giant Grab is exploring a listing in the United States this year, reported Reuters citing sources familiar with the matter. Grab’s initial public offering could raise at least US$2 billion, one of the sources said, which would likely make it the largest overseas share offering by a Southeast Asian company. “The market is good and the business is doing better than before. This should work well for public markets,” one source said. The size of the issue and timing have not been finalized and are subject to market conditions, said the sources. Grab has expanded rapidly from its beginnings as a ride-hailing venture in Malaysia in 2012 to become a company worth more than US$16 billion, offering services such as food delivery, payments and insurance in Southeast Asia. Its backers include SoftBank Group Corp and Mitsubishi UFJ Financial Group. Mainland China was the largest recipient of foreign direct investment (FDI) in 2020, with its economy bringing in US$163 billion in inflows, the United Nations Conference on Trade and Development (UNCTAD) said in a report released this month. This is compared with the US$134 billion attracted by the United States last year, making China the top destination for new FDI. China’s gross domestic product grew 2.3 percent in 2020, official data showed, making the world’s second-largest economy the only major country to avoid a contraction last year. Overall, global FDI sunk by 42 percent in 2020 to an estimated US$859 billion, from US$1.5 trillion in 2019, according to the UNCTAD report. US$163 BILLION RIDE-HAILING GIANT GRAB TO CONSIDER U.S. IPO THIS YEAR WAS THE VALUE OF CHINA’S FDI IN 2020 The liquidators of Patisserie Valerie are suing Grant Thornton for £200 million after the British café chain collapsed following suspected fraud. The lawsuit is set to be one of the largest brought against a mid-tier accounting firm in the London courts, reported the Financial Times. Liquidators FRP Advisory said in a report to creditors that Grant Thornton was negligent in the preparation and conduct of financial statements from 2014 to 2017. FRP also said “large accounting misstatements” resulted in Patisserie Valerie’s board “being unaware that the group has insufficient funds to continue to trade.” Grant Thornton said it would fight “rigorously” to defend the claim. Patisserie Valerie collapsed into administration in January 2019 following the discovery of significant accounting irregularities at the company and a £40 million hole in its finances. 6 January 2021

Organizations in the United States are increasingly tasking chief financial officers with managing employee healthcare costs, according to a survey byWillis Towers Watson, released 11 January. The survey found that one-third of finance executives will maintain primary responsibility for their organization’s overall healthcare cost management and strategy over the next three years, compared with 11 percent of human resources executives. This is likely due to the greatly increased cost of healthcare coverage following the coronavirus pandemic, according to the study. Healthcare management is moving increasingly towards the finance department mainly because healthcare programmes are comprising more and more of a company’s budget, and those costs tend to be volatile, Alan Silver, Senior Director of Health and Benefits at Willis Towers Watson, told CFODive. APLUS China Evergrande New Energy Vehicle Group, the developer’s Hong Kong-listed electric car unit, raised US$3.35 billion, signaling its plan to conquer the global electric vehicle (EV) market. The group sold 952.4 million new shares at HK$27.30 each, according to a Hong Kong stock exchange filing. Investors in the group, also known as Evergrande Auto, included Chan Hoi-wan of developer Chinese Estate Holdings and spouse of Joseph Lau Luenhung, as well as Liu Ming-hui, the founder of China Gas Holdings. Each bought HK$3 billion of stake. The buyers agreed to a one-year lock-up on their shares. Evergrande Auto said the funds would be used to invest in research and development, production and paying off debts. According to the South China Morning Post, China is set to become the world’s biggest market for EV when 4 million cars, or one in every five vehicles, will be powered by electricity by 2025. CHINA EVERGRANDE’S EV UNIT RAISES US$3.35 BILLION U.S. CFOS INCREASINGLY TASKED WITH HEALTHCARE MANAGEMENT COSTS FITCH PARTNERS WITH AI START-UP TO IMPROVE DETECTION OF BANKS’ RISKINESS Fitch Ratings, one of the big three credit rating agencies, has partnered with an artificial intelligence start-up in a bid to improve its early detection of misconduct. Last year, Fitch helped lead a US$6 million funding round for New Yorkbased Sigma Ratings, which runs software that sifts through more than 30,000 news sources and 1,000 other databases, such as company registries. Fitch is now a minority owner in the business. The deal comes amid a spate of misconduct at financial services companies in recent years – including the collapse of Wirecard – which had largely gone undetected by regulators, auditors and investors, reported the Financial Times. “Regulators and investors are holding banks more and more accountable and Wirecard was a real wake-up call,” said Marjan van der Weijden, Fitch’s Global Head of Financial Institutions. EY announced its ambition to be carbon negative in 2021 and net zero in 2025. The firm said it will achieve this by significantly reducing its absolute emissions and removing and offsetting more carbon than it emits each year. In a statement, EY set out seven key components of its plans to reduce total emissions by 40 percent and achieve net zero in 2025. Elements of the plan include reducing business travel emissions by 35 percent by fiscal year 2025 against a fiscal year 2019 baseline; and providing teams with tools that enable them to calculate, then work to reduce, the amount of carbon emitted when carrying out client work. “We believe that combatting climate change is a vital element of building a better working world. While this challenge is unique and different for each organization, we are inspired by those that are setting ambitious targets despite the difficulties they face,” says Carmine Di Sibio, EY Global Chairman and CEO. EY PLANS TO BECOME CARBON NEGATIVE IN 2021 More large companies in the United States filed for bankruptcy in 2020 than in any year since the global financial crisis in 2009. Energy, retail and consumer services companies led a total of 244 filings, according to data compiled by Bloomberg, the most since 2009, when 293 U.S. companies sought protection from creditors. Data also showed that 27 bankruptcy filings from retailers marked the worst run for that sector since at least 2008, while 47 energy companies with liabilities of at least US$50 million went bankrupt last year, the most since at least 2008. Bankruptcy experts predict another wave of filings this year as cash runs out for struggling retail companies including gyms and movie theatres. ANNUAL U.S. BANKRUPTCY FILINGS JUMP TO HIGHEST SINCE 2009 The Singapore Exchange has tightened its requirements for listed company auditors following a string of accounting scandals in recent years. Singapore Exchange Regulation (SGX) said on 12 January that changes would increase the standards required of auditors and property valuers that deal with listed companies. “We expect the quality of the market and investor protection to improve as a result,” said Tan Boon Gin, Chief Executive Officer of the SGX. The move follows a series of governance scandals in listed and unlisted companies in Singapore. The number of accounting scandals has sapped liquidity from Singapore’s equity market and weighed on valuations, analysts say, discouraging companies from listing on the bourse, reported the Financial Times. SINGAPORE EXCHANGE TIGHTENS AUDITING RULES January 2021 7

BUSINESS COVID-19 The COVID-19 pandemic and its associated travel restrictions might be expected to have had a significant impact on a private jet management business. But Joyce Kee, Chief Executive Officer of Aegle Aviation, does not view the sharp fall in air travel in a negative light. Instead, she says it gave the company the opportunity to take a step back, review its systems, processes and people, and focus on ways to enhance its offering. In fact, Aegle Aviation, which offers services ranging from handling flight logistics to providing technical support to private jet owners, saw a rise in demand for its consultancy services on jet purchases and maintenance. “This year, we took on new consultancy projects. Apparently, some people are working hard to prepare for the post-COVID economy coming back stronger. We expect more revenue contributions to come from our consultancy projects, as we tap into our knowledge and experience base,” says Kee, a Hong Kong Institute of CPAs member. Even so, Kee adds that Aegle Aviation’s operating model has had to be tweaked on a daily basis during the pandemic, while its team has needed to be more dynamic to stay ahead of the game. While COVID-19 has had a significant impact on economic activity, many businesses are viewing the pandemic as an opportunity rather than a challenge. For some companies, the pause it has provided has enabled them to review their operations ahead of a relaunch once restrictions are lifted, while for others it has acted as a catalyst to change their business model and explore new opportunities. Aegle Aviation is not alone in having to refocus its services as a result of travel restrictions. High-end hotel chain The Hongkong and Shanghai Hotels, which owns The Peninsula in Kowloon, introduced changes as borders were closed and mandatory quarantine periods were introduced, significantly impacting tourist numbers in its markets across Asia, Europe and the United States. Clement King Man Kwok, Managing Director and CEO of The Hongkong and Shanghai Hotels and an Institute member, explains that as a result, the group has been focusing on domestic tourism. “Our business model has not changed as we believe the fundamentals of luxury hospitality do not change over time, but we have developed some innovative staycation packages and dining packages to attract local guests,” he says. Other tweaks include introducing “Peninsula Time,” which allows guests to have their room ready as early as 6 a.m. on their arrival date and checkout as late as 10 p.m. on their departure date. The group has also put in place additional health and safety measures at its hotels. “There is hospital-grade cleaning and disinfecting happening, although we do try to shield our guests from this unromantic reality,” Kwok says. STARTING OVER Crises like the pandemic can be catalysts for change and generate opportunities for businesses to create more value over time. By talking to company leaders, Nicky Burridge finds out what steps companies are taking to ensure a safe and successful relaunch and how they are redesigning business models to get through the disruption or prepare for a post-COVID world Illustrations by Ester Zirilli 8 January 2021

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BUSINESS COVID-19 Seizing the opportunity Louisa Yeung, CEO of Hong Kong recruitment agency KOS International, sees the pandemic as being a significant opportunity for her business. “To me, a downturn is the best time to prove yourself. If we keep doing the basics right and maintain our professional standards, we will be able to stand out among our competitors. Once the downturn is over, we will have an excellent opportunity to take market share and expand, pushing the brand and business to the next level,” says Yeung, also an Institute member. To keep the business going during the downturn, KOS International is focusing on its high margin recruitment services, rather than its payroll and human resources outsourcing operations. It has also expanded its coverage into new industries, such as logistics and supply chain, education, media and manufacturing. The company is also making the most of a surge in demand for technology-based positions as companies scrambled to digitize their operations. It has expanded the technology side of its business, transferring an experienced member of staff to take charge of the sector. “We stay very close to our key clients who are still hiring and ensure they receive top quality recruitment services and market advice. We also offer quality career counselling advice to our candidates by posting video clips on how to handle job searching,” Yeung says. For Shirley Tse, owner of mergers and acquisitions accounting consultancy firm Dikan Solution and an Institute member, the pandemic has also provided an opportunity to expand into new sectors. Tse explains that in the past, time pressures meant it was often difficult to spend a lot of time really getting to know clients. But with the pandemic reducing travelling and time spent commuting to the office, she has been able to spend more time with her clients, which has led to referrals to work with new clients in industries in which she was not previously active. “In the past, you may only have been able to spend one hour with a client but now you can spend three hours with them. It leads to networking and this creates new opportunities,” she says. Despite the opportunities created, this does not mean there were not challenges that needed to be overcome. For Kee, one of the immediate challenges was having to work away from Aegle Aviation’s offices, while keeping abreast of different countries’ travel restrictions and supporting crew who were quarantined or away from home for long periods of time. “Under the low flying mode, we also needed to be more conscious of 10 January 2021

APLUS aircraft maintenance,” she says. IT consulting and support services company Arcotect has seen two major challenges as a result of the pandemic. The first was changing the way it communicated with its existing customers, with the company switching to electronic channels, such as Zoom, email, WhatsApp and WeChat. But more significantly, the pandemic reduced opportunities for it to meet potential new customers. “It has decreased our opportunities to bring in more business and sign-up new customers,” says Dr George Fok, CEO of Arcotect and an Institute member. Instead, he says the company was focusing its efforts on developing new products for when normal business activity could resume. Strong financials Unsurprisingly, maintaining strong financials has been a key factor in surviving the business disruption. “We have been through many crises over the years, although COVID is one of the worst, and because of this, we have always maintained a strong balance sheet and a conservative financial position. We know that all crises will eventually end and that we can overcome adversity if we are well prepared,” says Kwok. In the meantime, The Hongkong and Shanghai Hotels has accessed some government subsidies and, while it is trying tominimize layoffs, it has had to furlough some of its staff. Arcotect has also had to take action. Fok says: “To stay afloat financially, the main tactics were to cut costs and downsize the workforce. The company is also conscious about managing our human resources more effectively and trying to improve the productivity of our staff.” Yeung says KOS International has also kept a tight control on its expenses and ensured it has a good return on investment on all its expenditure. “We still celebrate successes but in a controlled fashion and manner,” she says. Looking after staff Alongside ensuring they maintain sound financials, many companies have also prioritized taking care of their staff. “This is a time to look after people and ensure wellness is a priority. If your people are safe and trust the company, then when we come out of the pandemic, innovation will thrive,” Kwok says. He adds that the mental health impact of the crisis on staff has been a big concern for The Hongkong and Shanghai Hotels, and alongside taking steps to ensure its employees feel safe and protected at work, including introducing extensive guidelines for hygiene standards, and appointing a hygiene manager in all of its hotels to oversee cleaning protocols and regular testing procedures, it has also upgraded its medical benefits to include mental health awareness and treatment. Kee at Aegle Aviation agrees on the importance of taking care of both staff and clients: “Our people are our assets, and protecting our assets has become our number one priority,” she says. In practice, this has meant the company always having first-hand regulatory information at its fingertips, as well as implementing digital transformation to enable remote working. For KOS International, investment in its IT systems has paid off during the pandemic. “We have a world-class business operating system and our billers were able to operate smoothly during the pandemic. We offer flexible work hours, and have closed our office and moved everything online, so that our people will be able to work safely at home,” says Yeung. “In the recruitment industry, people and talent are our core assets.” Accelerating change Tse at Dikan Solution thinks one of the lasting impacts of the pandemic is that it will accelerate changes that were already taking place. “Companies need to shift to digital marketing models. This approach is “To me, a downturn is the best time to prove yourself. If we keep doing the basics right and maintain our professional standards, we will be able to stand out among our competitors.” January 2021 11

BUSINESS COVID-19 favoured by the younger generation. I think the pandemic has increased the speed at which companies will bring forward plans in this area,” she says. Tse adds that she has also found working from home to be more efficient than going into the office, and she expects this change to persist after the pandemic. Kwok at The Hongkong and Shanghai Hotels agrees: “Our industry has already been seeing a move towards increasing digitization and robotics, and we are exploring innovative UV sterilization technology and antiviral cleaning equipment, such as using anti-viral coatings and products to test for the presence of viruses, bacteria, allergens and pathogens. There will also be increasing contactless check-in, digital room service orders and communication methods.” He adds that the group has recently launched a system called PenChat allowing contactless communication. “These are all areas which were happening already, but the health crisis has accelerated the need for implementation,” Kwok says. Positioning for the recovery Over the long term, Kwok remains optimistic that demand for luxury hospitality will remain strong, and the group is continuing to position itself to capture this market. “We are preparing our operations for the eventual end of the pandemic by ensuring that our businesses have adapted in terms of technology, and that our staff are well trained and most importantly, safe. We are upgrading our service offering according to requests from our guests,” he says. The group is also continuing to press ahead with three new Peninsula Hotel projects in London, Istanbul and Yangon, as well as the Peak Tram upgrade project in Hong Kong. The company is also reviewing its current hotels. “In our existing hotels we are taking the opportunity to enhance the retail arcade at The Peninsula Hong Kong, and we are reviewing our marketing strategies in Mainland China.” Arcotect has also been preparing for when more normal business conditions resume. “We have been working on upgrading our software products and preparing business proposals in anticipation of business activities picking up again,” Fok says. Kee thinks the current situation creates opportunities for Aegle Aviation which it is looking to harness. “For our business, offering customized charter solutions is an opportunity as it can be perceived as being safer and more accommodative to any personalized travel needs,” she says. Advice for others For companies that have seen a drop in business volumes due to the pandemic, Fok suggests taking the opportunity to revisit the business plan and cost model, as well as working on contingency planning. “The budgetary control and review exercise will have to venture into uncharted waters, such as if total turnover falls by 50 percent, 60 percent and even 80 percent, looking at the likelihood of survival under those circumstances.” He adds that companies should also think about a holistic exit strategy, covering individual product lines, market segments, such as geographies, channels or partnerships, and modes of operations, as well as exiting from the entire business altogether to preserve shareholder wealth, if the potential for new shareholder wealth creation is limited. “An exit strategy is something not many businesses are willing to expend effort on, but it is fast becoming a reality that every business should start drawing up an exit strategy and identify when to trigger it, with monitoring metrics kept under constant review.” Tse at Dikan Solution suggests companies should explore online opportunities, adding that they should focus on what young people want, as they are the future generation of consumers. “If companies do this they can figure out what the new business model is likely to be like,” she says. Yeung at KOS International emphasizes the need to remain agile and look for opportunities to diversify the business. “During downturns, we need to take all possible opportunities to keep our heads above water,” she says. Yeung adds that having a clear and transparent communication style, and keeping staff informed is also important, as well as striking a balance between the business’s interests and looking after employees. Finally, she advises companies to be prepared to do more to help their clients. “We have offered valuable and realistic career advice to candidates who are out of jobs and they will remember us when the market is back to normal.” Executive are more optimistic about the year ahead, according to The Coronavirus Effect on Global Economic Sentiment, a study issued by McKinsey & Company last month. 63 percent of the almost 1,400 executives surveyed from November to December 2020 say economic conditions in their countries will be better six months into 2021, up from 54 percent who said the same in mid-October. “ During downturns, we need to take all possible opportunities to keep our heads above water.” 12 January 2021

APLUS January 2021 13

SECOND OPINIONS: WHAT IS THE BEST WAY TO MOTIVATE EMPLOYEES? SECOND OPINIONS Leadership SABRINA KHAN CHIEF FINANCIAL OFFICER, APTORUMGROUP AND AN INSTITUTE MEMBER There are many lessons to be learned from this pandemic. One such lesson is that a good understanding of human behaviour can be key to implementing staff management strategies. We can see that with the right motivation, some staff members can be productive working from home – but what separates the motivated from the unmotivated? There are four main factors that motivate individuals and teams to engage, increase effort, and achieve goals that go beyond a higher monetary remuneration. Progression: This refers to an individual’s ability to learn and develop himself or herself, to be challenged, and to acquire a sense of achievement. Some require a clearly laid out career path, knowing that their hard work is leading to, for example, a promotion. But for others, progression may be increased responsibility. The perceived level of responsibility delegated to a member of staff gives them a sense of worth and drives them to deliver expected results. Recognition: From a young age, people are conditioned to experience joy from recognition for their hard work and praise for their achievements or good efforts. People want affirmation that they are acting or doing things correctly; they want to know that they are on the right track. Positive reinforcement is a powerful tool to drive people of all ages to push harder in seeking further recognition or praise. Recognition in front of peers further multiplies the level of joy attained from such recognition. Oversight: While this strategy is not on trend in the modern world that we live in, there’s no denying that negative reinforcement techniques do work when used in moderation. The likelihood of being punished or penalized may encourage individuals to put in the additional effort to get a task done. It cannot be used in isolation and must be used sparingly. A mix of positive and negative reinforcement can be considered, depending on the situation at hand. Accountability: Teamwork has multiple benefits within a corporation, and one such benefit is that of accountability. Individuals, when highly integrated within a team and given a key role to play – at least perceived as a key role – will be highly motivated to play their part within that team and in project work. Accountability is a powerful tool whereby a team member feels they cannot let the team down and is even more powerful than the fear of letting themselves down. Bear in mind that this is another form of negative reinforcement, but one that is self-inflicted. 14 January 2021 “ Teamwork has multiple benefits within a corporation, and one such benefit is that of accountability.”

APLUS When talking about motivating employees, what usually comes to mind is undoubtedly salary, promotions and bonuses. While pay has always been critical to motivating employees, is it still sufficient for the workforce today and the future? According to Mercer’s engagement studies, employees are motivated when they can accept the new norm while feeling supported, developed, recognized and rewarded fairly and competitively by their employers. In the past 12 months, employees have been scrambling to understand and come up with new ways of working. As a result of rapid changes in the business environment, job roles and responsibilities have shifted with the creation of new roles to support remote business models. Some of these include e-commerce, data analysts and work-from-home facilitators. Some roles have also been combined to overcome cost constraints. Amid these rapid changes, companies need to proactively review job designs, identify associated gaps in skill sets and provide support and training accordingly. This will allow employees to gain more confidence and security in their jobs and therefore increase motivation at work. Simply benchmarking employees or positions against the market without linking pay and performance is another area companies should be mindful of, especially when motivating top-performers in tough times. While companies may view a bonus as an ample reward for top performers, our recent study shows that the average bonus difference between a high and average performer is just shy of one month’s base salary. Only 23 percent of companies apply more than 50 percent weighting to individual performance as part of their performance evaluation. This could disincentivize top performers from giving their best, especially in roles high in demand roles like data scientists, cybersecurity specialists, etc. Their skill sets may be so unique that other companies are willing to pay a premium to recruit them for their future needs. Motivating employees starts with listening, and companies need to look beyond salaries to design packages that take the motivational drivers of their multi-generation workforces into consideration. They should also rethink traditional compensation strategies to include pay-for-performance and pay-for-skills schemes, which may prove more effective in this new era of work. DEREK YUEN PEOPLE PARTNER, AUDIT, HONG KONG, KPMG CHINA AND AN INSTITUTE MEMBER DENNIS LEE SENIOR CONSULTANT, TOTAL REWARDS, HONG KONG, MERCER Motivation is a key driver of performance and employee satisfaction. As one of the firm’s People Partners, it is my role to establish a work environment that supports and motivates our people to deliver excellence. At KPMG, most of our professional staff are from Gen Y or Z, with the average age in the mid-20s to 30s. Younger colleagues are more motivated in environments where their views are heard and their needs are understood. We focus on a few key areas to keep them motivated, including establishing an environment that encourages teamwork, enabling autonomy in the workplace, setting clear goals, providing support and recognizing achievements. Our people enjoy working with colleagues in a supportive environment that helps them stay positive, despite facing a heavy workload at times. To create a caring culture, we encourage open and honest communication, which is key to promoting respect, and a more productive team. While the pandemic has limited physical contact, it has made communication easier as we stay connected via online tools. In fact, we had flexible work arrangements in place way before the outbreak of COVID-19; the pandemic accelerated our colleagues’ adoption of this model, which offers staff the autonomy to deliver results in ways they deem best. Allowing autonomy at work keeps staff, especially the younger generation, motivated. In turn, they become more proactive in coming up with new ideas to solve problems. Our professionals are often required to multitask, and it is easy for them to get lost without a clear set of goals and coaching. To help them, we provide clear guidance, explain the objectives of each task and encourage staff members to voice out their difficulties. As for personal development, we help colleagues set clear development goals to achieve new milestones. When good outcomes are achieved, positive reinforcement is valued and informal appreciation, such as a “good job!” becomes equally as important as formal rewards. The most effective way to strengthen a recognition culture is to lead by example – always respect and appreciate the work of others. We have also built a “thank you” culture with multiple platforms and awards nomination systems in place, to recognize good work. Overall, we strive to provide the resources and culture for our people to succeed in achieving their goals and grow. In turn, employees will be motivated by a sense of accomplishment. “ Motivating employees starts with listening, and companies need to look beyond salaries to design packages that take the motivational drivers of their multigeneration workforces into consideration.” “ Our people enjoy working with colleagues in a supportive environment that helps them stay positive.” January 2021 15

LEADERSHIP PROFILE Raymond Cheng Photography by Calvin Sit T hrough his 22 years serving the Institute in various roles, Raymond Cheng knows the organization well and the diverse range of issues affecting the profession, from qualification to regulatory compliance to member support. “I think I have a wide understanding of the Institute, how the Institute has grown from a reasonably sized Institute of around 20,000 members 22 years ago to a huge Institute of 47,000 members,” he says. “The first committee I served on was the Financial Accounting Standards committee in 1998. I have basically served on, if not all, most of the committees.” He has always been forthright and issues-focused, and it’s an approach it appears he’ll bring to his year as President of the Hong Kong Institute of CPAs. It is only days into his presidency and he has already announced new task forces – many that he’ll personally chair – to look squarely at the prevailing challenges in a range of areas from governance to the Institute’s relationship with the Financial Reporting Council (FRC), and come up with actionable recommendations. Highest on his list of priorities is helping members through Hong Kong’s worst recession on record, brought by the COVID-19 pandemic. It’s clearly something that has been on the top of Cheng’s mind, as he checks off on his fingers several areas where he thinks the Institute can support members and students. “Let’s start with qualification,” he says, highlighting how the Institute has already done well by successfully holding COVID-secure Qualification Programme (QP) examinations in December. “The students are very happy because they were facing the risk of having no exams for the whole year. That would’ve been very detrimental to their careers, their promotions, to them becoming members.” Cheng points out that the Institute supports current members through HKICPA Source, a career support Last year, COVID-19 brought significant disruption to the personal and professional lives of everyone, including Institute members, and the challenges will likely continue. Aware of the tough journey ahead, the Institute’s new President, Raymond Cheng, is focused on helping members navigate the difficult times, succeed in business and their careers. He talks to A Plus about his top priorities for the year and the groundwork that has already been laid for a more resilient profession LEADING THROUGH UNCERTAINTY 16 January 2021

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