Assessing the performance of NGOs

MUCH has been discussed about the performance of our corporations — be it those that are listed on the stock exchange or private companies which are also contributing to the nation’s economic growth and employment opportunities.

The performance of not-for-profit organisations (better known as non-governmental organisations or NGOs), however, do not appear to be subject to much scrutiny and rarely attract much attention except of course when they are involved in controversy.

Given the maturity of our society and the complexity of the world we are living in, NGOs play an important role in developing civil society. A lot of NGOs complement the efforts of the government in nation building and some focus on specific areas such as health, education and other areas related to the well-being of the community.

As the name suggests, NGOs are established for these specific causes and monetary gain is not their primary objective.

However, this does not mean that money is not important as the projects and activities of the NGOs need to be funded. Otherwise, the primary objectives may not be achieved.

How do we assess the performance of NGOs?

Please follow this link for full article: http://www.theedgemalaysia.com/commentary/17486-assessing-the-performance-of-ngos.html

Reshaping the professional services sector

AS the services sector continues to grow and becomes more significant in our economic structure, the professional services sub-sector is expected to improve its performance, both domestically and globally.

While the contribution of the professional services sector to gross domestic product (GDP) is relatively small, the significance of this sector in nation building should not be underestimated.

The group of services which anchor this sector such as accountancy, legal, engineering and medical functions are similar to the intermediate products in the manufacturing sector. The quality of services provided by professionals in these disciplines forms critical components in ensuring the competitiveness of other industries and wellness of the nation as a whole.

For example, input from engineering and related services sectors is consumed across a large number of industries from construction, manufacturing, mining and even government services. The legal profession contributes towards the effectiveness of our justice system, which is evaluated when investors are considering their investment options. The integrity of our capital market depends on the quality of information that is disseminated to investors, where our accountants play a major role in the financial reporting supply chain.

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New economy model and entrepreneurship

THE discussion on the new economy model has grown in intensity lately. Although most discussions are still about the concept, the new model, it is said, would be based on innovation and creativity and is supposed to generate high income for Malaysians.

Given the rapid changes in the global economic landscape and growth of economies such as China, India, Brazil and Russia which suck away foreign investments from our region, the future success of this nation cannot be based on the proven formula of yesteryears. There are a number of drivers which require us, as a country, to do things differently, to improve and sustain our quality of life.

What are those factors?

Competition is certainly going to be more intense across all aspects of the economy. As trade becomes more borderless, more players would be participating in the fields where we are competing. The Asean Economic Community for example would create a greater market for Asean companies but this would also bring greater competition.

The competitiveness of an enterprise is determined by the quality and business acumen of the people running and managing the enterprise. This is the next battle, to get great people to lead and serve organisations and businesses. As people become more accustomed to mobile lifestyles, working away from native lands would be very natural. Our best brains need not necessarily remain here and we would be competing to retain them here. This is already happening and would be more challenging in the future as people, especially the smart and gifted, would be able to choose the kind of lifestyles that suit their preference. Nationalism would no longer be an appealing factor.

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Corporate governance — The continuing agenda

Of late we are witnessing new initiatives being introduced to enhance corporate governance in Malaysia. Increasingly, various stakeholders are contributing their bit to shape the competitiveness of our capital market.

The primary initiative perhaps was the announcement made during the launch of the new fund-raising framework and board structure where the regulatory framework has been further refined.

Under the new market-based regulatory approach, the Securities Commission would focus on ensuring compliance with minimum requirements, standards of corporate governance, resolutions of conflict of interest, preservation of public interest and adequate disclosure.

With such approach taken, it would be critical for market participants such as promoters, directors and their professional advisers to ensure market discipline is maintained and appropriate governance standards are adhered to.

The recently launched Malaysian Alliance of Corporate Directors (MACD) has, among others, the purpose of promoting sound corporate governance and influence the conduct of business and public affairs for common good.

It is hoped that MACD and other similar organisations would further enhance the professionalism of directors, who would be the ones setting the standards of governance and steering the future of the companies under their care.

The Audit and Assurance Standards Board and the Ethics Standards Boards of the Malaysian Institute of Accountants (MIA) will also be launched this week.

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http://www.theedgemalaysia.com/commentary/15910-corporate-governance-the-continuing-agenda.html

The risks in making the right decision

MAKING decisions is something that we do every day. These decisions could be either for ourselves or for the organisations that we serve.

Prudence requires detailed analysis to be performed before a decision is made. This principle is applied across the board, particularly in organisations which carry the mandate of many stakeholders, large corporations and the government.

The decision-making process normally involves layers of people executing a whole range of activities such as preliminary studies, consultations and study visits before a recommendation is made. 

The decision makers would evaluate the recommendations before deciding whether to agree, disagree or make requests for the recommendation to be further refined.

All is well and fine when the environment in which the decisions are made remains unchanged. However, given the world that we are living in now, where change is the only constant, arriving at the right decision may not be that straight forward.

What are some of the issues?

First would be whether the solution is meant for the right problem? Accepting the real problem as the problem is key in identifying the solutions. While this sounds very basic, there are people out there who may find this very challenging. Why? Ego perhaps? 

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http://www.theedgemalaysia.com/commentary/15430-the-risks-in-making-the-right-decision.html

Should financial reporting for Islamic finance be different?

SYARIAH-BASED financial transactions, more commonly known as Islamic finance, have grown in strength and are being accepted beyond their traditional Muslim market. The originally niche solutions to cater for Muslims who wish to participate only in financial transactions which comply with syariah principles are now being offered by traditional financial institutions as far as Europe.

There is no doubt that Islamic finance is growing, moved by promoters in a number of epicentres, Malaysia included. The establishment of the Islamic Financial Services Board, which issues global prudential standards and guiding principles for the Islamic finance industry which includes banking, capital market and insurance sectors, demonstrates the maturity of the industry.

As Islamic finance products become more globalised, the issue whether they should be reported using conventional accounting standards or using a specialised “syariah-compliant” accounting standards becomes something that needs quick resolution.

In 1991 the Accounting and Auditing Organisation for Islamic Financial Institutions or AAOIFI was established to develop accounting and auditing standards for this sector. The thinking behind this was that due to the difference in concepts between Islamic finance and conventional finance, financial transactions based on syariah need to be accounted in such a way to reflect the principles, in harmony with traditional accounting standards. Since AAOIFI was established before convergence became the main stream mantra in accounting standards setting, such an approach was considered appropriate by market participants.

With the establishment of the International Accounting Standards Board (IASB) in 2001 carrying the mission of developing a single high-quality standard for the world, there seems to be some issues pertaining to financial reporting for Islamic finance. 

Given that convergence in accounting standards is gaining momentum and the world is looking forward towards having the International Financial Reporting Standards (IFRS) as the ultimate set of standards, should the standards developed by AAOIFI be abandoned and should IFRS be adopted wholesale by institutions offering Islamic finance products for the sake of convergence?

http://www.theedgemalaysia.com/commentary/14904-should-financial-reporting-for-islamic-finance-be-different.html

Web 2.0, technology and business risks

MOST of us today have heard about Web 2.0 or are involved in one way or another with technological tools based on the concept. Simply, it is about using multiple technological platforms from handphones, laptops and other means to perform functions and activities to serve both personal and business needs.

With technology, the Internet and more ways to access the World Wide Web, businesses are now able to offer more services and values to their consumers while the expectations from consumers keep changing as they have more opportunities to state their preferences and to choose from. 

The level of interactions between organisations and their customers and stakeholders have certainly increased significantly through higher utilisation of technology. Internet banking is just one example. 

Another interesting development is the competition between blogs and traditional media in winning loyalty from audiences. Even our prime minister has his own blog to ensure that the people understand his thoughts and activities in pursuing the 1Malaysia agenda and provide feedback to him.

The way forward is about co-creation — efforts at creating value through interaction between suppliers of products and services and their customers. Now, it is a two-way street instead of consumers being offered products or services which the suppliers thought appropriate to be sold. 

But technological platform aside, the issue that would be pertinent to entrepreneurs and those running organisations would be how far this phenomenon would shape the future of their businesses and organisations? What would be the risks to businesses and organisations by ignoring the development in technology?

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http://www.theedgemalaysia.com/commentary/14385-web-20-technology-and-business-risks.html