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GROWING IN A SLOWING ECONOMY:WHAT BUSINESSES CAN DO TO COMEOUT OF A RECESSION STRONGERArticle contributed by:Tah Wee HanDirectorManagementConsulting ServicesDID: 68289184weehan@bdo.com.sgWith the slowing economy, it can beincreasingly difficult to keep your businessfrom sliding into a recession of its own. Justbecause the economy is in a down turn doesnot mean your business has to follow thesame route. There are several things you cando to keep your business going strong andeven achieve growth during a recession.It is important to bear in mind that economicslow downs do not last forever. Do not losesight of, your long-term goals and objectives.It is always a good idea to keep promotingyour business and pay a little more attentionto existing customers. Showing compassionto clients who may also be suffering duringthe economic slow down demonstratesthat you care and that you understand thedifficulties that are being faced. This will oftennot be forgotten when the good time comesaround. Concurrently, keep marketing, andthink of new ways to attract new customers.A crucial mistake many business ownersmake during a slow down is that they becomeparanoid of losing business or not attractingnew business, and in turn do not market thecompany efficiently. This in turn becomes aself-fulfilling prophecy and the business doesbegin to suffer. Advertising in new markets,broadening your target area, offeringincentives, and introducing new products orservices, are some ways to further promotebusiness.At the same time, companies who areventuring overseas may find an economicdown turn presenting numerous opportunitieswhich may not exist during the good times.Don’t let a recession keep you from buildingnew overseas markets. The cost of entrymay be lowered to more attractive levels,competitors may be weakened, local supplierswill be priced keenly to win business andfinding good local staff may less dauntingand more affordable.Keep a keen eye on your competitors. Attimes, opportunities arise from a competitor’sweakened position or even demise. If youplay your cards rights, you are able to pay lowprices to buy over a competing businessthat may be going under, or if you are able tocapture the customers of a competitor thathas already gone under, you may potentiallybe gaining a larger market share.Do not just focus on the external environmentbut also look inwards. During a recession,keep your employees, even though manyother businesses may be laying-off or firingsome of their staff. In the long run, firingand re-hiring often costs companies moremoney than holding on during a down turn.This is also a good time to invest more timein training, especially training for recent newhires. You may also want to consider makingnew hires during a recession. You can dosome “bargain hunting” and possibly grabsome top professionals who have been laidoff or fired from other companies. Thesepeople can be great assets and may helpyour business grow and expand.Finally, always keep track, and manage yourcash flow. Do not keep more inventories thanyou need. Set aside any extra cash you mayhave should you do start to feel the pinch fromdeclining sales. Do not over extend yourselfwith credit. While this is always a good ideain any economy, it is even more importantin times of a recession. If the worse casescenario does happen and you end up goingout of business, the last thing you will wantis to have debt from that business hangingover your head.Implementing any of these tips can helpmake for a stronger business. Do not beoverly affected by ‘coffee shop talk’ asoften conversations with business friendsand contacts may revolve around negativesentiments. Staying on top of facts, knowingyour business fundamentals well, positivemarketing, building goodwill with customersand seizing on opportunities that may arisecan go a long way during hard times. Once therecession begins to lift, you can continue tocarry these practices through and come outstronger in the end - Position your companyto maximise the market opportunities whenthe economy turns around and come outstronger than your competitors.

Continued......CAN YOUR RESTRUCTURING APPLYMERGER ACCOUNTING?In most circumstances, the tricky issue is not just aboutthe application of merger accounting for a commoncontrol combination but also the identification of such acombination.One of the common scenarios that might take place is asfollows:In 20X0, UHC was the Ultimate Holding Company and ithad a few subsidiaries, namely Entities A, B, IHC and D.In 20X1, UHC decided to reorganise its group structure bymaking IHC an immediate holding company of Entities Band D. Simultaneously, UHC transferred another subsidiaryEntity E, which it bought from a third party E, to IHC.IHC is then made the listing vehicle and is required toprepare the financial information for IPO.BeforeAfterUHC100% 100% 100% 100%Entity A Entity B Entity IHC Entity DEntity AEntity BUHC100% 100%Entity IHC100% 100% 100%Entity DEntity EAccording to Part IX of the Fifth Schedule to the Securitiesand Futures (Offers of Investments) (Shares and Debentures)Regulations 2005 paragraph 1(1), common control businessis defined as a business which at the time of registration of theprospectus had been acquired by the relevant corporationor any other entity in the group and immediately prior to itsacquisition by the relevant corporation of other entity in thegroup, was held and controlled, directly or indirectly, by aperson who controls the relevant corporation.This is in line with the definition in SFRS 103 which onlyrequires the combining entities to be under control fromthe same source (in this case, UHC) before and after thetransaction and does not require relative interests and rightsof the controlling parties to be the same before and after thecombination.SFRS 103:13 applies to group restructurings wheresubsidiaries or businesses are transferred within a grouphaving the same parent regardless of whether the interestof any minority interest is changed by the combination. Inthis case, Entity B and Entity D were transferred from UHCto Entity IHC where the entities were still under commoncontrol of UHC and would qualify for merger accountingunder the relevant standards and rules.Hence, in view that the underlying concept of using mergeraccounting is that no acquisition has occurred and therehas been a continuation of the risks and rewards to thecontrolling party (or parties) that existed prior to the businesscombination, RAP 12:16 requires the financial statementsof Entity B and Entity D to be included in the consolidatedaccounts of Entity IHC as if the combination had occurredfrom the date when Entity B and Entity D first came undercontrol of UHC.Concurrently, UHC had acquired Entity E from a third party,E, before immediately transferring it to Entity IHC. RAP12:7 indicates that as Entity E was, in substance, acquiredfrom a third party, Entity E’s financial statements are tobe included in the combined financial statements of thebusiness combination under Entity IHC from the date of theprevious acquisition (the date of purchase from the thirdparty, E) using the acquisition values (fair values) recognisedas of the date.Furthermore, RAP12:9 indicates that the businesscombination under Entity IHC will recognise assets andliabilities including goodwill and minority previouslyrecorded in UHC’s books as of the date of acquisition in thecombined financial statements.In conclusion, even if merger accounting were not used forthe purpose of business combinations involving entities orbusinesses under common control, management shoulduse its judgement in developing and applying an accountingpolicy that results in useful information.

GUIDEBOOK FOR AUDIT COMMITTEESIN SINGAPOREArticle contributed by:Kwek Wee HengManagerRisk AdvisoryServicesDID: 68289117weeheng@bdo.com.sgThe Audit Committee Guidance Committee(ACGC) has published its Guidebook for AuditCommittees in Singapore on 30 Oct 08 to assistaudit committees (ACs) of SGX-listed companiesin better appreciating their responsibilities andenhancing their effectiveness in carrying outtheir duties.The industry-led ACGC was established on 15Jan 08 by the Monetary Authority of Singapore(MAS), the Accounting and Corporate RegulatoryAuthority (ACRA) and the Singapore ExchangeLimited (SGX). ACGC was tasked to developpractical guidelines for audit committees tostrengthen corporate governance practices oflisted companies in Singapore.The guidebook was developed with inputs from,and in consultation with industry. Dialoguesessions and focus groups were conducted withthe business community and stakeholder groupsto identify key areas where guidance for ACs wasneeded. This was supplemented with a surveyof AC members on the practical difficulties andchallenges that they face in discharging theirduties, as well as the areas in which they wouldwelcome practical guidance.The guidebook comprises two main sections:• AC Composition• Roles and Responsibilities of ACsThe ‘AC Composition’ section aims to provideguidance for current and prospective AC membersto assess their independence and suitability formembership in the AC. It provides extracts ofkey regulatory requirements and guidelines fromthe Companies Act, SGX-ST Listing Manual andthe Singapore Code of Corporate Governance.The ‘Roles and Responsibilities of ACs’ sectionsis divided further into sub-sections: InternalControls; Risk Management; Internal Audit;Financial Reporting; External Audit; and OtherDuties & Responsibilities (Interested PersonTransactions, Conduct of Meetings, PerformanceAssessment, Whistleblowing, Training). As withthe previous section, it also provides extracts ofkey regulatory requirements and guidelines, aswell as best practices, FAQs and case studies toclarify areas in which ACs often face uncertainty,and to provide practical solutions and guidance toissues ACs commonly face.The FAQs and case studies offer insights on issuessuch as dealing with fraud; the approach ACscould take to oversee a weak control environment;establishing an internal audit function; probingManagement on financial reporting; use of specialpurpose entities/vehicles; reviewing of unusualtransactions, private sessions with internal andexternal auditors; frequency and conduct of ACmeetings; dealing with allegations of bribery, etc.In addition to the FAQs and case studies, theguidebook also provides many useful templatesand information in the appendices such as:sample AC terms of reference, sample fraudpolicy, questions AC might ask Management oninternal control, fraud warning signals, sampleinternal audit activity charter, differences betweenInterested Person Transactions (IPT) and RelatedParty Transactions (RPT), examples of goodpractices for an effective AC Chairman, sample ACself-assessment checklist, and other useful tools.The wealth of knowledge from many experiencedindustry professionals has been condensed intothis guidebook for practioners to better carryout their duties effectively, and to improve thecorporate governance standards in the businesscommunity. Although the guidebook is neithermeant to be exhaustive nor prescriptive, it is avery useful tool and reference for ACs and Boardmembers to be reminded of best practices, as wellas common pitfalls in the business environment.The guidebook can be downloaded from the MASwebsite:h t t p : / / w w w. m a s . g o v. s g / r e s o u r c e / f i n _development/corporate_governance/Final%20inside%20text%20241008cast.pdfIt is also available from the ACRA and SGXwebsites.References:1. Guidebook for Audit Committees in SingaporeAudit Committee Guidance Committee2. Monetary Authority of Singapore Press Releasedated 30 Oct 2008

CPA Games 2008BDO Raffles News & EventsICPAS Silver Medal AwardMr Yeo Ek KhuanMr Yeo is presently a Partner ofBDO Raffles and was recentlyawarded the ICPAS Silver MedalAward at the ICPAS Annual Dinnerand Dance. Mr Yeo has been amember of ICPAS’ Auditing &Assurance Standards Committee(AASC) from 1978 to April 2008. Hewas also awarded the ICPAS MeritAward in 1999 in recognition of hisvaluable and outstanding contributions to the accountancyprofession and the community,Lifelong Learner AwardsChinnu PalaniveluChinnu, a senior auditor in BDO Raffles were among 16individuals who were awarded the Lifelong Learner Awardsby the President himself, Mr S R Nathan. Jointly organisedby Mediacorp Radio and the Singapore WorkforceDevelopment Agency, this award recognises the success ofindividuals who have beaten the odds to triumph in theirjourney of learning. It also pays tribute to those who havemade significant achievements by stepping out of theircomfort zone to learn new skills in order to adapt to thechanging employment landscape. Well done Chinnu!BDO Annual Dinner & Dance 2008RetroThis year BDO Raffles had their D&D to the theme of Retro -Bringing back the 70’s, 80’s and 90’s. A total of 250 staff turnedup with their jazziest, funkiest and most colourful combinationof attire and hair do at the Pioneer Springs Restaurant atSafra Mount Faber. The entertainment programe consisted ofvarious stage games and performances from 5 groups fromthe respective divisions. Alot of effort and teamwork was putin for the group performances and each team walked awaywith a cash incentive. The night ended with the dj spinning.Look out for next year’s D&D. It will be bigger and better!Photos from the eveningManaging Partner, Mr Frankie Chia giving his opening addressCPA Games 2008BDO RafflesLadies Basketball TeamThe last sporting event of the CPA Games ended recently.BDO Raffles participated in a total of 9 sporting events.There was a combination of field and court games and alsoindoor games such as Pool, Carom and LAN Gaming. Ourplayers demonstrated determination and teamwork whenthey battled it out against players from the Big 4 and theother mid tier accounting firms. Our ladies basketball teamsuccessfully made it to the semi-finals and the BDO LANGaming team emerged 2nd Runner Up. It goes to show thatat BDO we encourage all to keep up with a healthy lifestyleand to maintain a vibrant social network and overall generalwellbeing.

CPA Games 2008BDO Raffles News & EventsCatalist for Growth Series31 Oct 2008The Catalist for Growth Series jointly organised by BDORaffles and KhattarWong was held on 31 October 2008. Thishalf day programme was designed to provide participantsthe knowledge and valuable insights on the role of thecontinuing sponsor and how it can help shape and enhancethe environment for growth companies. This was a freeseminar and it was well received with over 40 participants.Market Research Workshop: China21 Nov 2008A half day workshop titled “Market Research Workshop:China” designed to help participants hone their marketresearch skills for better business decision making wasorganised by IE Singapore and co-conducted by BDORaffles. This highly interactive workshop specifically cateredto participants who are interested in internationalising theirbusiness activities in the region, thereby requiring marketresearch skills and analysis to facilitate and streamlinetheir business decisions. A total of 30 participants fromcompanies such as Eu Yan Sang, Keppel Land, SMRT andNTUC were present. Leo Kah Mun, Manager at BDO RafflesManagement Consulting Services presented his views ondeveloping internationalisation strategies and how wecan translate market research findings into market entrystrategies.Financial Reporting Standards:Updates27 Nov 2008The half day seminar was held at M Hotel and was conductedby 2 key speakers from BDO. They were Rick Chan, AuditPartner and Narissa Chen, Audit Technical and TrainingManager. The session included a recap on the main changesin the Singapore Financial Reporting Standards (FRS) andInterpretations of Financial Reporting Standards (INT FRS)which had an impact on financial reporting for annualperiods beginning on or after 1 January 2007.It also included a preview of issued or revised FRS and INTFRS updates issued by the Accounting Standards Council(ASC) which has an impact on financial reporting forannual periods beginning on or after 1 January 2008/2009.The seminar also highlighted upcoming changes in thefinancial reporting environment and touched base on theirimplications on the financial reporting of an entity.Practical Measures for SMEs DuringTurbulent Times28 Nov 2008The Singapore Business Federation (SBF) and SPRINGSingapore organised a seminar on “Practical Measuresfor SMEs During Turbulent Times” recently. Companiesthat attended this seminar were equipped with practicalknowledge on business risk management and how they canmanage their finances to build resilience amidst a volatileglobal economy. Tan Soon Liang, Head of BDO RafflesAdvisory were amogst the guest speakers and he presentedhis topic on ‘Cash Flow and Financial Management forSMEs’.Paradigm Shifts for Singaporean F&BProfessionals in the era of EconomicTurmoil5 Dec 2008To address the emerging issues of a reeling retail economy,BDO Raffles teamed up with Association of Small andMedium Enterprises (ASME) and Enterprise DevelopmentCentre@ASME (EDC@ASME) in the organization of thefirst seminar on internationalization focusing on the foodand beverage (F&B) industry. This seminar discussedhow companies may turn market threats into businessopportunities via expanding beyond local shores.Aptly titled “Internationalisation: Paradigm Shifts forSingaporean F&B Professionals in the era of EconomicTurmoil”, this seminar highlighted strategies on howbusinesses particularly Small and Medium Enterprises(SMEs) could maximize opportunities in stayingcompetitive.The panel forum at the event articulated the financialimplications of the downturn and speakers include FrancisThong, Chief Financial Officer of Waraku Group, William Lim,CEO of Old Chang Kee and Linnie MacKensie, Area Directorfor the Netherlands Foreign Investment Agency in Singaporeand Tah Wee Han, Director of BDO Raffles ManagementConsulting Services. It examined winning platforms andcase studies of businesses that successfully expanded andmaximized resource competitiveness.Although the downtown has introduced a downsizing ofthe economy, many companies at the event were lookingat ways to expand their businesses. This seminar receivedan overwhelming response with more than 100 participatingcompanies.

CPA Games 2008BDO Raffles News & EventsBDO Raffles’ new officeBDO Raffles completed it’s office relocation on June 27.All staff has settled nicely into our new office located at 19Keppel Road, #02-01 Jit Poh Building. The new office wasdesigned from the outset to be open plan and conduciveto a cooperative workspace. Some of the highlights includepurpose-built meeting rooms which can accommodateboth internal and external meetings and a spacious pantry,now affectionately known as the Raffles Lounge. This fullyequippedlounge includes a bar counter, drinks vendingmachine, wine cellar, comfortable seating area, PC’s forInternet access, a reading corner and a pool table.Upcoming eventsBudget Seminar 200911 Feb 2009The annual BDO Raffles Budget Seminar will provide youwith an expert analysis of the year’s Budget speech.The seminar will feature Dr Tan Kee Wee, an economistspecialist and our Head of Tax, Rohan Solapurkar who willbe discussing the important features of the Budget speechand to share his insights on how the proposed tax measureswill impact your business and the community.Who Should Attend:CEOs, CFOs, financial controllers, bankers, investors,accountants, consultants and tax professionals.Date & Time:Wednesday, 11 February 20081.30 pm - 5.00 pmFee:$120 - BDO clients/alumni$150 - publicReception area(Fee includes refreshments, seminar materials and 7% GST)*Venue to be advised*For enquiries on the Budget seminar, contact Jacquelyn :Tel: 68289151Email: jacquelynchan@bdo.com.sgRaffles Lounge

CPA Games 2008BDO International NewsBDO International AnnouncesRevenue for 2008BDO Global Coordination B.V. is pleased to announcethe results of the BDO International network for the yearended 30 September 2008. Total combined fee incomefor all BDO Member Firms, including the exclusivemembers of the US and Spanish Member Firms’Alliances, amounts to US$ 5.145 billion, an increase of9% in the last year.During the year, the network welcomed new MemberFirms in France, Croatia and India and completedmergers in a further 12 countries, including Australia,Belgium, Denmark,Malaysia and Poland.New CEO in BDO InternationalJeremy Newman, who took up the position of CEO ofBDO International in October this year, noted that thisfurther year of strong performance reflects continuedinvestment by BDO Member Firms. “The currentfinancial and economic difficulties will be a challengefor all businesses,” he said. “But I am confident thatBDO International will continue to develop because ofits unrelenting focus on providing the highest qualityadvice and service to its clients, delivered by high qualitypeople in all our Member Firms.”For more information about our services, contact the following divisions:Audit & AssurancePeter Leong peterleong@bdo.com.sg DID: 68289120Business Restructuring ServicesLeow Quek Shiong quekshiong@bdo.com.sg DID: 68289170Business Transaction ServicesRoss Limjoco rosslimjoco@bdo.com.sg DID: 68289125Corporate FinanceTan Soon Liang soonliang@bdo.com.sg DID: 68289169Management ConsultingTah Wee Han weehan@bdo.com.sg DID: 68289184Risk Advisory ServicesChristopher Go christophergo@bdo.com.sg DID: 68289187Tax AdvisoryRohan Solapurkar rohan@bdo.com.sg DID: 68289171Corporate Alliance Pte LtdCorporate SecretarialLim Swe Jian swejian@corporatealliance.com.sg DID: 68289139Outsourcing AccountingLim Siew Ming siewming@corporatealliance.com.sg DID: 68289109BDO Raffles19 Keppel Road#02-01 Jit Poh BuildingSingaporeTel: 65 6828 9118Fax: 65 6828 9111Email: info@bdo.com.sgwww.bdo.com.sg