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بِسمِ
اللهِ
الرَّحْمَنِ
الرَّحِيمِ Allah, in the name of, the Most
Affectionate, the Eternally Merciful |
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Your
Questions & Comments Don't suppress questions!
Questions are good for your intellectual health!!! |
آپ کے
سوالات و
تاثرات سوالات
کو دبائیے نہیں!
سوالات
ذہنی صحت کی
ضمانت ہیں!!! |
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اردو
اور عربی تحریروں کو بہتر
دیکھنے کے
لئے نسخ اور
نستعلیق
فانٹ یہاں سے
ڈاؤن لوڈ کیجیے
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Risk & Reward –
Balancing Ethics, Risk & Entrepreneurship Don't hesitate to
share your questions and comments. They will be highly appreciated. I'll
reply ASAP if I know the answer. Send at mubashirnazir100@gmail.com . |
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Question: Dear
Mubashir, It’s been
some time and I hope this email finds you well. Further
to my the information below and to the attached document, I wonder if I can
receive your feedback in this respect which would be very useful and I will
pass it on by turn to our Head office in UK. We are
especially concerned with the first three questions, and number six, if this
list looks a bit long Thanks in
advance, Looking
forward to hearing from you before May 16, Best
wishes, Ramy Abboud Country
Manager – ACCA May 2010 |
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Dear Abboud Assalam o alaikum Now a
days, ethics are becoming more and more popular. The response to your
questions is appended below. Please feel free to contact should you've
further queries. regards, Mubashir |
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Ethics
and performance ACCA: Is good
ethics good for business? An ACCA/CFO report in 2007, (summary attached)
suggested a correlation between good ethical behaviour
and good business/financial performance. Is there a causal link? Mubashir: It is a causal link. For example, as a customer, if it
comes to your knowledge that a company X is selling impure food items. Would
you be willing to buy its products? If it comes to your knowledge the
management of company X considers it OK to take others' money be illegal and
unethical means. As a supplier, would you be willing to sell your product to
this company on credit? Ethics
have a direct link with the reputation which has a direct, positive and
causal link with the profitability. ACCA: To what
extent is companies' pursuit of success is tempered by prudence (and within
that by ethical considerations)? Mubashir: The concept of prudence means that while presenting
financial statements, if the Accounting Standards allow two alternatives, we
should select the one which results in less profit because it is not ethical to
raise expectations of financial statement users. They should know the worst
picture. The concept is based on ethical consideration that we should present
true and fair affairs of the company to its stakeholders. ACCA: Is risk
management seen as an aid to business performance or is it seen as a block on
getting business done? Mubashir: Some people perceive Risk Management as a hindrance to
their business decisions. It may be due to wrong attitude of risk and audit
staff. Risk Management does not require a manager to avoid risk. It only
requires that we should have full knowledge of risk and we should make
well-informed decisions within the risk appetite of the owners of the
business. ACCA: Is risk
management carried out in isolation or is there a clear link with company
strategy? Mubashir: Off course, it should have a clear link with the
company strategy. ACCA: How
should we advise people who think that they can get on better in business by
ignoring ethical considerations? Mubashir: Present the above two examples to such people. No
business can be run in long run without a good reputation which is totally dependent
upon ethics. Ethics ACCA: Has there
been a change in approach to ethics since the financial crisis? i.e. is the focus different in 2010 compared with 2007? Mubashir: In order to answer this question, we need to conduct a
research. I can comment generally. Usually, it is human psychology that
people facing financial difficulties ignore ethics. As mentioned in a Hadith,
"I fear that poverty can take a person to infidelity."
This means that financial difficulties may take a person to unethical behaviour. The same is true for the companies who face
financial difficulties in recession. ACCA: What
should be the role of the CFO (Chief Financial Office) and other finance
professionals in setting the right tone? And what should be the role of the Chief
Risk Officer (CRO) or Chief Compliance Officer (CCO)? Mubashir: Setting the right tone is the job of CEO (Chief
Executive Officer) and the Board of Directors. CFO should convey this tone to
his team. CRO or CCO should work as a catalyst to expedite the process of
ethical compliance. You can see detailed job descriptions as: http://www.irmsa.org.za/library/CRO0507.pdf
http://www.ache.org/newclub/career/comploff.cfm
ACCA: To what
extent do, or should, accountants in business take ethical matters into
account in managing risk and making business decisions. Mubashir: Up to full extent. ACCA: How
companies can go about recruiting and developing CFOs and senior finance
staff with a strong ethical compass. Mubashir: By putting the ethics at the top agenda. The ethics
should be communicated and discussed widely in all divisions and departments.
Ethical issues must be taken care off seriously. While hiring staff, background
checks for ethical behviour are important. ACCA: Does
incentive-based remuneration support or impair ethical performance? Mubashir: Sometimes, yes. As I've seen in my career, people
manipulate their financial statements to adjust it to earn more bonus and
commissions. It becomes hard to maintain neutrality in the financial
statements. ACCA: How do we
know if we are being ethical? Mubashir: By paying heed to our inner voice i.e. conscience
which is called نفس
اللوامة in Arabic. This is the first built-in control which is
extremely powerful. If we train our people for not ignoring the reminders of
our conscience, we can develop a good ethical climate. Risk Management ACCA: Are risks
considered purely in terms of mitigation or in relation to the possible
benefits which may accrue in taking them? Mubashir: There are four strategies to Risk Management: Avoid;
Transfer; Mitigate; or Accept. Any of these strategies is acceptable under
Risk Management if it fits within the Risk Appetite of the Top Management /
Business Owners. ACCA: Should
financial institutions have as different approach to risk management from
other companies? Mubashir: Financial Institutions are highly conscious about the
risks because probability and impact of their risks is very high. For example,
credit risk, information risk, compliance risk is
very high in case of financial institutions and insurance companies. Due to
this reason, they are usually more matured in risk management as compared to
other companies. ACCA: Does incentive based remuneration support or impair risk
management? Mubashir: Both possibilities are there under different
circumstances. If ethical environment and financial reporting is strong and
neutral, incentive-based remuneration will support risk management and
ultimately the corporate goals. If ethical environment is weak, it will
impair the risk management as well as the corporate goals. ACCA: What is
meant by the terms ‘risk appetite’ and ‘risk tolerance’? Mubashir: Risk Tolerance is a part of Risk Appetite. The later indicates
the attitude of business owners / top management about taking or avoiding
risks. Risk Tolerance depicts the maximum allowable limit for taking risks. Ethics, Risk
Management and Compliance ACCA: Does
compliance activity ever frustrate sensible risk management? Mubashir: It should not. If there is some specific case, please
share the information, then I can comment on it. ACCA: To what
extent does external regulation need to direct individual businesses'
approach to ethics and risk management? If regulators stress the importance
of ethics within prudent risk management (and enforce this), would businesses
be more prepared to take ethics and risk management more seriously than if
there was little regulatory interest? Mubashir: Up to some extent. Law and regulations have their own
limitations. You cannot force an unethical person to be ethical in the long
run. The best control is metaphysical i.e. change the attitude of a person to
pay heed to the built-in control of conscience in his / her personality.
Regulations support it, but complete reliance on regulation is a big mistake.
Unethical people invent different ways to avoid any ethical requirement of
the law. ACCA: To what
extent does the growing focus on risk management, post-credit crunch, now
include ethical and cultural risk rather than just compliance? Mubashir: Ethical and Cultural Risk is always high in difficult
financial situations. Therefore, this risk must be included in any Risk
Management Program. |
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مصنف
کی دیگر تحریریں قرآنی
عربی
پروگرام / سفرنامہ
ترکی
/ مسلم
دنیا اور ذہنی،
فکری اور نفسیاتی
غلامی
/ اسلام
میں جسمانی و
ذہنی غلامی
کے انسداد کی
تاریخ / تعمیر
شخصیت
پروگرام /
قرآن اور
بائبل
کے دیس میں / علوم
الحدیث: ایک
تعارف / کتاب
الرسالہ:
امام شافعی کی
اصول فقہ پر
پہلی کتاب کا
اردو ترجمہ و
تلخیص
/ اسلام
اور دور حاضر
کی تبدیلیاں / ایڈورٹائزنگ
کا اخلاقی
پہلو سے
جائزہ / الحاد
جدید کے مغربی
اور مسلم
معاشروں پر
اثرات / اسلام
اور نسلی و
قومی امتیاز / اپنی
شخصیت اور
کردار کی تعمیر
کیسے کی
جائے؟
/ مایوسی
کا علاج کیوں
کر ممکن ہے؟ / دور جدید
میں دعوت دین
کا طریق کار / اسلام
کا خطرہ: محض ایک
وہم یا حقیقت / Quranic Concept of Human Life Cycle
/ Empirical
Evidence of God’s Accountability
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