In this issue - Nexia TS · 2018-02-27 · In this issue, we had picked an investment outlook...

In this issue:

Investment Outlook

Mergers & Acquisitions: Outlook in Asia

Payment Card Industry: Data Security Standards (PCI-DSS)

Key Legislative Amendments

Outsourcing

Quarter 1 Issue

MALAYSIANTS Asia Advisory Sdn Bhd

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We LISTEN to our clients, THINK on theirbehalf and help guidethem on difficult decisions. We help steer companies towards GROWTH. Ourdomain is ASIA.

Dear Valued Clients and Associates,

It is my upmost pleasure to announce that Nexia TS has won two awards to kick start the year - Financial Advisory Firm of the Year (Singapore) and Corporate Finance Accountancy Firm of the Year in Singapore from Corporate LiveWire and Corpo-rate INTL respectively. On top of that, our firm continues to be ranked among the Top 10 firms in Singapore’s 30 largest accounting firms 2015 ranking.

In this issue, we had picked an investment outlook article by Smith & Williamson where it addresses the concerns that may intensify post 2015. It includes issues such as the deflation looming in the euro zone, further decline in commodity prices and market equity, just to name a few.

The outlook in Asia did not look well for the equities market as their stock indices tumbled. Undetered by the downfall, deal makers celebrated a record high in M&A transactions. Learn the driving factors for this in our article.

Next, we dive deeper into one of the most common data security breaches happening all around the world - credit card frauds. Find out more about the background, requirements and ways to comply with data security standards (PCI-DSS).

The second and final phase of legislative changes to the Companies Act was effected on 3 January 2016. In the next

article, we cover some of the legislative changes to provide you with an overview.

Lastly, in view of the economic downturn, we discuss outsourcing as a cost-saving strategy as an option to better weather the gloomy economic outlook ahead.

Once again, I sincerely thank you for your continuous support.

Henry TanManaging Director, Nexia TS+65.6536 [email protected]

1Introduction

Investment OutlookA monthly round-up of global markets and trendsThis article is extracted from Investment Outlook - January 2016, Smith & Williamson

Investment reviewConcerns from 2015 may intensify

Looking back over an eventful 2015, a cocktail of global concerns has been served up to the markets. Lower economic growth and low inflation have persisted and market volatility has ramped up, with only a handful of markets and asset classes delivering a positive return over the last 12 months. Despite the ever-growing threat of deflation looming in the eurozone, equity and bond markets in the region began the year strongly, reacting positively to the announcement of a QE* programme by the ECB*. ECB President Mario Draghi finally put his words into action, marking the start of a significant monetary policy divergence with the US Fed* and inspiring a rise in interest rates in December. The US dollar, the world’s reserve currency, has risen notably over the past 18 months in anticipation of the Fed beginning to raise rates, while most of the world’s central banks have continued to ease policy. Optimism that the ECB’s liquidity injection could improve the economic prospects of the eurozone was tempered by the emergence of the far left, anti-austerity Syriza party in Greece, again showing the political fragility of the region. Months of extended brinkmanship and a number of false dawns between Greece and its creditors (the so-called ‘Troika’)garnered headlines globally, again raising the risk of a ‘Grexit’(Greece leaving the EU), with the potential ripple effects causing further uncertainty for markets. Although the near-term risk of a disorderly ‘Grexit’ has subsided, the more significant threat of a ‘Brexit’ (Britain leaving the EU) remains at large and is likely to feature heavily in 2016. David Cameron will want to get negotiations with the EU and a referendum wrapped up in 2016 before French and German

elections in 2017 complicate matters further. Economically, the UK was a stand out performer in 2015. A combination of rising wage growth and declining consumer price index inflation helped boost disposable incomes, while unemploy-ment has fallen to levels last seen before the onset of the great financial crisis.

Globally, the three key features of 2015 have been theappreciation of the dollar, the further decline in commodityprices (oil in particular) and heightened concerns over Chinese growth. It’s this trio that has hit emerging markets the hardest, particularly those commodity-exporting econo-mies with large amounts of dollar-dominated debt and a reliance on Chinese demand. With Chinese GDP* growth continuing on a lower trajectory, the shock 3% depreciation of the yuan in August added to concerns that Chinese policymakers had lost control of the economic slowdown. This was ultimately the key catalyst for a significant risk-off move over the summer, which saw most equity markets decline over 10%. Weaker demand and excess capacity in China has been a key factor behind the decline in commodity prices over the past year. Oil prices have fallen and remained low, as supply from Saudi Arabia continues to outweigh demand — a deliberate strategy by Saudi Arabia to drive out higher-cost producers in the US and maintain its own market share. It has been the persistence of low commodity prices that has held back global headline inflation levels which, in turn, has been a key factor behind loose global monetary policy. One disappointing aspect has been the lower oil prices, so far failing to translate into significantly higher consumption expenditure as initially anticipated. However, we still believe lower commodity prices remain a positive for consumption and input costs in the developed world.

3Investment Outlook: A monthly round-up of global markets and trends

Looking into 2016, the key risk for markets is likely to be thatthe concerns that emerged in 2015 will intensify.A continued decline in commodity prices and further rise inthe dollar creates a debt-deflation trap in the emerging world. The Chinese slowdown accelerates, negatively impacting corporate confidence and continuing to add to deflationary forces throughout the globe. Lower nominal GDP growth continues to translate into lower company top line revenue growth. As in 2015, the risk of exogenous shocks cannot be ignored, particularly those resulting from ongoing geopolitical concerns. However, there are reasons for investors to be optimistic going into the new year. With US interest rates finally lifted (albeit very modestly) in December, the Fed appears confident that it is tightening into a stronger US economy. Markets remain cautious and the success or failure of the US economy to absorb higher interest rates will be key for the global economy next year. However, if there is stronger-than-expected US data in Q1, we could well see the US yield curve steepen (ten-year minus two-year) and an increase in risk appetite. In this scenario, US equities are likely to perform well after a largely flat 2015. The terminal rate of interest ultimately remains the key factor for markets, firms and households and we expect this rate cycle to be slower and shallower this time. Although concerns over China are unlikely to go away overnight, the economy has shown signs of stabilisation in the second half of 2015 and sentiment has improved. The worst of the downturn appears to be over, particularly with the larger services sector continuing to expand. This will limit the need for any sudden and heavy-handed policy responses from Chinese policymakers. Further stabilisation in China may also be key in any possible turnaround in commodity prices. Any rebound in commodities would be a positive for the much-unloved cyclical sectors that have underperformed in recent years. Overall, the world of lower growth and lower inflation is likely to persist throughout 2016. In this environment, global central bank balance sheets are likely to continue to expand, despite the Fed slowly raising rates. Monetary policy will remain accommodative and financial repression will still be in play. In this scenario, we still believe equities will deliver a superior return over cash and bonds.

Market highlightsEquity markets

It was much ado about nothing for most equity markets in2015. After a strong start to the year, driven by the prospectof a wave of liquidity from the ECB, markets experienced a notable period of turbulence over the summer months.

This was triggered by a number of exogenous shocks, from Chinese yuan depreciation to the VW emissions scandal and the extended Greek saga. In the UK, the theme over the last few years has continued with the more domestically-focusedFTSE 250 notably outperforming the larger FTSE 100 in 2015.The latter, with its larger skew towards commodity and mining stocks, has fallen victim to the rout in the commodity complex this year. In the US the S&P 500 barely kept its head above water in 2015, only bailed out by the outperformance of a handful of large, mainly technology stocks in the latter part of the year. Market breadth has been weak and concerns over high US valuations have persisted. With the Fed finally starting to raise rates gradually and US QE behind us, corporate earnings will once again need to take up the baton as the key driver behind US equity markets over the coming year. Q4 earnings season will again be closely observed at the start of the new year.

Among developed markets the two outperformers have been the eurozone and Japan, two regions where quantita-tive easing is in full swing. This suggests central bank liquidityremains a key driver behind markets. Looking into 2016, weexpect the eurozone and Japan to continue to outperform inlight of ongoing policy easing. Emerging markets were again hit hard in 2015 by the commodity rout and the rise in the dollar leaving valuations at a large discount to those of developed markets. The key catalysts for a recovery in emerging markets will be a sustained pick up in commodity prices, signs of further stabilisation in China and no further appreciation of the dollar. The commodity-importing markets of emerging Asia (which also have largely current account surpluses) look like a relatively safer bet for those wanting to participate in emerging markets.

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

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2011

2012

2013

2014

2015

Emerging Markets relative to Developed Markets - 12 Month Forward PE Ratio

Emerging Markets/Developed Markets

Source: Thomson Reuters Datastream/Smith & Williamson

Emerging markets relative to developed markets - 12 month forward PE ratio


Fixed income

2015 was a year of recalibration for most developed bondmarkets with the key feature being the divergence inmonetary policy between the Fed and ECB. Governmentbond yields in the US, UK and eurozone have largelyremained at historically low levels, in part reflecting thecurrent environment of lower nominal GDP growth acrossthe developed world. The ECB’s asset purchase programme,which was extended out until at least March 2017 at thecentral bank’s December meeting, has seen government bond yields across the eurozone fall to unprecedented lows this year. By contrast, US treasury yields have drifted higher as markets have begun to factor in a Fed tightening. Two-year yields, which are more sensitive to base rates, have risen around 70 basis points since January. With the first modest interest-rate hike out of the way, markets will again be assessing the path of US interest-rate increases. The Fed will remain data dependent. The key indicator to watch is thespread (difference) between the ten and two-year treasuryyields. The shorter two-year yield rising above the longerten-year (a reflection of growth expectations) has historicallysignalled a recession. The year ended with another rout within the high-yield corporate bond space. Large-scale redemptions and further liquidity issues among a number of large high-yield bond funds saw yields on lower-rated bonds spike in December, fuelling concerns that this could be the ‘canary in the mineshaft’ for a wider market crash, as witnessed in previous cycles. However, the spike in corporate yields has largely been confined to those within commodity-exposed sectors, where the number of defaults has been increasing. Indeed, good-quality, investment-grade corporate bonds have remained relatively stable and default rates are low. They offer an attractive spread over government bonds. The lack of liquidity within the corporate bond space does remain an area of concern. We still see the benefit of holding a small weighting in highly liquid assets, such as UK gilts within a balanced portfolio, even though the potential for capital growth is limited with yields at lower levels.

FX and commodity markets

With monetary policy clearly diverging between the US andeurozone, the Bank of England remains caught in the middleand the outlook for sterling remains more uncertain. So far,Mark Carney has succeeded in keeping rate-hike expecta-tions in the UK relatively well anchored, with dovish forwardguidance. With inflation still near zero, early signs of wagegrowth slowing and the ongoing fiscal squeeze, we don’texpect a change in policy from the MPC* until the middle of2016 at the earliest. This suggests that sterling is likely tocontinue its recent downward move against the dollar, whilestrengthening against the euro. However, looking ahead tothe next year, other forces, particularly the risk of a Brexit,may influence the pound. Our view is that the UK will remainwithin the EU, however as we witnessed with the Scottishindependence vote in 2014, nothing can be taken for granted. Increased uncertainty over the outcome is likely to lead to money exiting the UK and to sterling weakness.The continued fall in commodity prices has been a majorfeature in 2015. The 35%-plus fall in the oil price in particularhas rippled through many asset classes. However, a keyquestion going into 2016 is whether we have reached thebottom. The rhetoric from the Organisation of the PetroleumExporting Countries’ latest meeting in December is that Saudi Arabia, the world’s largest exporter, is intent on maintaining output despite facing a budget deficit of almost 20%. Considering the US rig count has fallen over 60% in the past 12 months, we suspect we could soon be approaching levels where we see the US shale industry buckle. This could be enough for Saudi Arabia to cut output levels, causing prices to rebound. However, it could be another 12 months before we see this. With Iran soon to be free of international sanctions and producing a further 500,000 barrels a day, prices are set to remain low for the foreseeable future.

65

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100

105

110

May-2014 Aug-2014 Nov-2014 Feb-2015 May-2015 Aug-2015 Nov-2015

US Corporate Bond Performance

US Investment grade US High yield US High yield energy sector

Source: Bloomberg/Smith & Williamson

US corporate bonds performance75

80

85

90

95

100

1052000

2500

3000

3500

4000

4500

5000

5500

Jan-2014 Apr-2014 Jul-2014 Oct-2014 Jan-2015 Apr-2015 Jul-2015 Oct-2015 Jan-2016

Commodity Prices and the Dollar

S&P GSCI Commodity Index US Dollar Index (RHS, Inverted)

Source: Thomson Reuters Datastream/Smith & Williamson

Commodity prices and the dollar


4

1 month 2015

Oil and gas Basic materials Industrials Consumergoods

Healthcare Consumerservices

Telecom Utilities Financials Technology-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

UK sector performance

Source: Thomson Reuters Datastream/Smith & Williamson as at 31 December 2015

Investment reviewConcerns from 2015 may intensify

Looking back over an eventful 2015, a cocktail of global concerns has been served up to the markets. Lower economic growth and low inflation have persisted and market volatility has ramped up, with only a handful of markets and asset classes delivering a positive return over the last 12 months. Despite the ever-growing threat of deflation looming in the eurozone, equity and bond markets in the region began the year strongly, reacting positively to the announcement of a QE* programme by the ECB*. ECB President Mario Draghi finally put his words into action, marking the start of a significant monetary policy divergence with the US Fed* and inspiring a rise in interest rates in December. The US dollar, the world’s reserve currency, has risen notably over the past 18 months in anticipation of the Fed beginning to raise rates, while most of the world’s central banks have continued to ease policy. Optimism that the ECB’s liquidity injection could improve the economic prospects of the eurozone was tempered by the emergence of the far left, anti-austerity Syriza party in Greece, again showing the political fragility of the region. Months of extended brinkmanship and a number of false dawns between Greece and its creditors (the so-called ‘Troika’)garnered headlines globally, again raising the risk of a ‘Grexit’(Greece leaving the EU), with the potential ripple effects causing further uncertainty for markets. Although the near-term risk of a disorderly ‘Grexit’ has subsided, the more significant threat of a ‘Brexit’ (Britain leaving the EU) remains at large and is likely to feature heavily in 2016. David Cameron will want to get negotiations with the EU and a referendum wrapped up in 2016 before French and German

Yield

FTSE All World 2.6

FTSE USA 2.1

FTSE Japan 1.9

FTSE All Share 3.7

TSE Asia Pacific ex Japan 2.8

FTSE Europe ex UK 3.0

FTSE Emerging Markets 3.8

1 month (%) 3 months (%) 1 year (%)

0.4

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-16 -12 -8 -4 0 4 8 12 16 20

Equity markets by region

Yield

FTSE All Share 3.7

FTSE 100 4.0

FTSE 250 2.6

FTSE Small Cap 2.8

S&P 500 2.2

CAC 40 3.1

DAX 2.7

Swiss SMI 3.2

Japan-Topix 1.7

India-Sensex 1.7

Kong-Hang Seng 4.2

1 month (%) 3 months (%) 1 year (%)

-1.3

-1.7

0.2

1.5

0.5

-1.5

-0.9

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3.7

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4.1

10.0

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3.9

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1.8

8.0

0 3 6 9 12 15

1.0

-1.3

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9.2

7.3

6.3

4.1

6.2

18.2

-4.1

-1.7

-10 -5 0 5 10 15 20

Equity markets by country


We continue to favour quality developed market equities, although volatility is likely

Regional equities

US $

Euro €

UK

US

Europe

Japan

Government bonds

UK

US

Germany

Index-linked bonds

UK

US

Corporate bonds

Emerging markets

- N +

Fixed interest

Currencies (v GBP)

- N +

- N +

Important information

Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.

ECB — European Central Bank. The euro area’s central bank which sets key interest rates and monetary policy.

Fed — The Federal Reserve. The central banking system of the US. Sets key interest rates and monetary policy.

FOMC — Federal Open Market Committee. The branch of the Federal Reserve board that determines the direction of monetary policy. It meets eight times a year to set key interest rates.

GDP — Gross Domestic Product. The monetary value

This includes all of private and public consumption, government expenditure, investments and net exports.

MPC — Monetary Policy Committee. The Bank of England’s interest rate and monetary policy setting committee.

QE — Quantitative Easing. An unconventional monetary policy in which a central bank purchases assets (mainly government securities) from the market in order to lower interest rates and increase

institutions to lend to the wider economy.

Bonds — the relationship between price and yield.Yield is the return you get on a bond. When the price of a bond changes prior to maturity, due to supply and demand pressures, so does its yield. When the price of a bond goes up due to demand, the yield goes

of return (coupon) remains relatively constant — and vice versa. A bond’s price and its yield are inversely

prevailing interest rate. When interest rates rise, the prices of bonds fall, thereby raising yields. This is because the older bonds are sold in order to buy new higher-yielding bonds.

House view

Glossary of terms


A Look at the Past YearThe year 2015 did not end well for equities markets in Asia with their stock indices plummeting, especially in the last quarter of 2015. Despite this, dealmakers were celebrating a record high in M&A transactions in the same year. In fact, 2015 saw a new all-time high of 12,762 announced deals with volume of S$1.9 trillion which encompasses transac-tions where targets, acquirers, or sellers are located in Asia. This figure surpasses the previous all-time high of 10,143 announced deals with volume of S$925 billion in 2007, just prior to the global financial crisis.

Source: Bloomberg

The contributing factors to this strong performance were the large deals whose volume increased more than twice the previous year’s figures. Mega deals (deals with a value over S$10 billion) increased 191% to S$374 billion. Deals with value from S$5 to S$10 billion increased 222% to S$241 billion. While deals with value from S$1 to S$5 billion increased 118% to S$531 billion. The two other categories,

deals with value from S$0.5 to S$1 billion and S$0 to S$500 million also showed an increase in volume, albeit in smaller proportion.

There were 7,352 strategic buyers, accounting for 9,811 deals with total deal value of S$1.6 trillion. Other statistics worth mentioning: 47% of the deals were cross border, 61% of the deals were paid using cash, 93% of the deals were S$0 – S$500 million in size, and 99.6% of the deals were friendly bids.

What were the driving forces behind the frenzy of deals? Here are several factors to help answer this.

• Strong balance sheetAfter the last financial crisis, companies had been piling on undeployed cash. Firms were under pressure to employ their large cash reserves in order to earn higher returns for shareholders.

• Low cost of capitalFinancing was cheap. The interest rates had remained very low for nearly a decade. Given the improving US economy, there had been expectations that the Fed would raise the Federal Funds Rate, which was eventually raised on Decem-ber 16th. When the Fed raised the rate, borrowing costs followed suit. With this in mind, firms were going on spend-ing spree to take advantage of the record low borrowing costs while they last. Apart from that, the US dollar was getting stronger – it hit a six-year high against the yen and had soared in value compared with many emerging market currencies. The US stock market also had continued its bull run, setting record high in early 2015. The strong dollar and relative valuations provided the currency for cross-border transactions including outbound transactions to Asia.

Mergers & AcquisitionsOutlook in AsiaThis article is authored by Olyvia (Manager, Valuation & Transaction Services, Nexia TS)

9M&A Outlook in Asia

• Low-growth macroeconomic environmentWith the low global inflation rates and the inability of companies to achieve price increases, firms were finding it difficult to pursue top line revenue growth through business-as-usual. In the absence of organic growth, compa-nies had to turn to M&A to boost the top line as well as the bottom line via cost cutting and synergies.

Outlook for the Year AheadWhat is the prediction for M&A activity in 2016? To help answer this trillion dollar question, we need to look at the main drivers for the M&A fever in the past two years. Globally, M&A activities have been fuelled by the search for growth amid the sluggish economy. As one expert puts it, the theme for the current M&A cycle is about disinflation, deflation, and cost-efficiency. Companies around the world have been pursuing M&A in an attempt to reduce costs, from overheads to taxes, to overcome stagnating consumer prices and flat sales. In general, M&A cycles last between four to five years. Many experts believe that we are not at the peak of the M&A cycle yet as we are still at the initial trajectory phase of economic growth post global financial crisis. As per Robin Rankin, the Co-Head of M&A at Credit Suisse puts it: M&A activity tends to correlate with GDP growth.

Another main driver was the relatively easy access to debt financing. Even though the Fed raised the Federal Funds Rate by a quarter point last December, the interest rates remain relatively low. Furthermore, the Fed's statement suggested that rates would remain historically low well into the future, saying it expects only gradual increases. Therefore, it will take a while for the increase in borrowing costs to have an effect on M&A activity.

IntraLinks Deal Flow Predictor (DFP) predicted that M&A activity levels in Japan and Southeast Asia will increase whereas the outlooks for North Asia and South Asia are more uncertain. IntraLinks is a provider of software and services, including Virtual Data Rooms (VDRs), for managing M&A transactions, private equity fund raisings and corporate development. It forecasts the volume of future M&A announcements by tracking early-stage M&A transactions that are in preparation or have reached the due diligence stage. These early-stage deals are six months away from their public announcement, on average. The latest IntraLinks DFP data showed that the early-stage deal activity in Japan and Southeast Asia has increased 55% and 11% respectively in the last quarter of 2015. This indicates that we can expect continued strong growth in M&A deal announcements in the first half of 2016. Early-stage deal activity in North Asia and South Asia has increased 21% and 14% in the last quarter of 2015 and deal announcements are expected to increase in second quarter of 2016 following a flat or declining activity in first quarter of 2016.

Although there are some mixed reviews especially due to the concern of China’s currency and equities market, the majority of the experts agree that deals are not going away in 2016. We at Nexia TS take a similar view that the good times for M&A are here to stay, at least for a while.

To support you in your M&A activities, our consultants at Nexia TS Advisory can advise on financial and tax due diligence issues, corporate restructuring, fund raising options and buyer/investor sourcing both in the Singapore and regional markets.

CONTACTSFor more information, please contact:

Ms Grace LuiDirectorValuation & Transaction [email protected]

Mr Ross Y. LimjocoDirectorAssurance and M&[email protected]

Ms Karen LauAssociate DirectorValuation & Transaction [email protected]

Ms OlyviaManagerValuation & Transaction [email protected]

Payment Card IndustryData Security Standards (PCI-DSS): Does your business have to comply?

Credit card is one of the most popular payment option nowadays, as it offers the convenience of not having to bring cash everywhere. Not to mention that your money does not have to leave your bank account at the point of transaction. Despite of the benefits that it offers, credit card is also one of the most popular target for fraudsters, mainly because of the lack of controls by merchants to verify the identity of the credit card user.

Target breach¹, for example, is one of the most notable payment card information breach that ever happened due to compromised point of sale (POS) systems. Other big names such as Home Depot², Hyatt Hotels³, and Mandarin Oriental Hotel Group⁴ also sufferred from similar breaches involving their customers’ payment card information. Motivated by profit, fraudsters are now turning into compromised POS devices as a primary source for unencrypted payment card data. And no, it does not only affect big corporations, but also those small shops in your neighbourhood that accept payments using credit card. Hence, it is getting more obvious that compliance with PCI-DSS has never been this critical before.

History of PCI-DSS

Since the start of the internet era in the 1990s, an increasing number of merchants rolled out e-commerce websites and connected their payment processing systems to the internet to acquire new customers and to boost revenue by offering

the convenience of online purchasing. At the same time, fraudsters began compromising poorly protected systems to steal payment data, making payment card frauds faster and easier than ever before.

Between 1988 and 1998, Visa and MasterCard reported credit card fraud losses totaling US$750 million. In order to prevent future frauds, in October 1999, Visa developed Cardholder Information Security Program (CISP), a security standard for merchants conducting online transactions, which was then followed by other payment brands. However, the enforcement was rather unsuccessful largely due to the lack of a single, unified standard among the payment brands.

Only on 15 December 2004, the first unified security stand-ard was released and supported by all five major payment card brands: American Express, JCB, Discover, MasterCard and Visa. The standard was known as Payment Card Industry Data Security Standard (PCI-DSS), and compliance is manda-tory for all entities involved in payment card processing, including merchants, processors, acquirers, issuers and agents, as well as all other entities that store, process or transmit cardholder data. On 6 September 2006, the five major payment card brands announced the creation of the PCI Security Standard Council (PCI SSC), an independent group that will manage the standard going forward.

¹ http://www.nbcnews.com/tech/security/target-reaches-settlement-visa-over-2013-data-breach-n412071

² http://www.forbes.com/sites/maggiemcgrath/2014/09/08/home-depot-confirms-data-breach-investigating-transactions-from-april-onward/#74e3b4b77c7b

³ http://www.channelnewsasia.com/news/technology/hyatt-hotels-attacked-wit/2373974.html

⁴ http://www.cnbc.com/2015/03/04/report-of-credit-card-breach-at-mandarin-oriental.html

11Payment Card Industry: Data Security Standards (PCI-DSS): Does your business have to comply?

What are the requirements?PCI-DSS was developed to enhance the security of cardholder data and to ensure consistent data security throughout payment card processing lifecycle. PCI-DSS consists of a basic set of technical and operational require-ments for protecting cardholder data that mirror best security practices. The following will provide an overview of the 12 key requirements of PCI-DSS:

Build and maintain a secure network

1. Install and maintain a firewall configuration to protect cardholder data2. Do not use vendor-supplied defaults for system passwords and other security parameters

Protect cardholder data

3. Protect stored data4. Encrypt transmission of cardholder data across open, public networks

Maintain a vulnerability management program

5. Use and regularly update anti-virus software6. Develop and maintain secure systems and applications

Implement strong access control measures

7. Restrict access to cardholder data by business need-to-know8. Assign a unique ID to each person with computer access9. Restrict physical access to cardholder data

Regularly monitor and test networks

10. Track and monitor all access to network resources and cardholder data11. Regularly test security systems and processes

Maintain an information security policy

12. Maintain a policy that addresses information security

How to comply with PCI-DSSWhile the PCI SSC is responsible for setting the data security standards, each payment card brand maintains its own separate compliance enforcement programs. Each payment card brand has defined specific requirements for validation of compliance and reporting, such as provisions for self assessment versus using a Qualified Security Assessor (QSA).Your business’s risk level will be measured by the transaction volume using a particular payment card brand, and it will determine the specific validation requirements that must be met. The processes for validating compliance and reporting to acquiring financial institutions typically comes in the following sequence⁵:

• PCI-DSS ScopingDetermine what system components are governedby PCI-DSS

• SamplingExamine the compliance of a subset of system components in scope

• Compensating ControlsQSA validates alternative control technologies/processes

• ReportingMerchant/organisation submits required documentation

• ClarificationsMerchant/organisation clarifies/updates report statements (if applicable) upon bank request

⁵ Extracted from PCI SSC Quick Reference Guide in https://www.pcisecuritystandards.org/

12Payment Card Industry: Data Security Standards (PCI-DSS): Does your business have to comply?

Only the acquiring financial institution can assign a validation level to merchants. Please refer to the following URLs for each payment card brand’s compliance programs:

• American Express www.americanexpress.com/datasecurity• Discover Financial Services www.discovernetwork.com/resources/data/data_security.html• JCB International www.jcb-global.com/english/pci/index.html• MasterCard Worldwide www.mastercard.com/sdp• Visa Inc www.visa.com/cisp

How Nexia TS can helpNexia TS has a team of data security experts who understand the specific PCI-DSS compliance requirements for business of all sizes. Our unique proposition, which combines years of experience in IT security and computer forensic investiga-tion, allows us to perceive data security from many angles, assisting your business to effectively prevent, detect, respond and investigate data breaches in a timely manner.Our full suite of PCI-DSS Compliance Services includes:

• Pre-compliance Gap AnalysisOnsite review and gap analysis to establish a baseline level of compliance and to address areas of non-compliance. This essential service forms the basis of a successful compliance program.

• Network Vulnerability ScansIdentify network vulnerabilities to ensure ongoing protection from cyber threats and to meet annual PCI-DSS compliance requirements.

• Penetration TestingProvide a comprehensive and thorough analysis of networks and applications security, while ensuring cardholder data protection against potential exploitation by internal or external hackers.

• Remediation ServicesEnsure that all deviations from PCI-DSS requirements are properly remediated and/or compensating controls are designed to mitigate the risk.

CONTACTSFor more information, please contact:

Mr Tan Kah LeongDirectorTechnology [email protected]

The second and final phase of legislative changes to the Companies Act was effected on 3 January 2016. Below are some of the key legislative changes:

• No maximum age limit for directors

• Directors’ disclosure requirements extended to include Chief Executive Officers (CEOs)

CEOs of companies are now required to make the same disclosures as Directors. This is consistent with the approach already adopted for listed companies.

A CEO of a company is defined as any one (or more) person(s), by whatever name described, who is in direct employment of, or acting for or by arrangement with, the company; and is principally responsible for the management and conduct of the business of the company, or part of the business of the company, as the case may be.

• Power of Registrar to debar directors and company secretaries

A director or company secretary who has failed to lodge any documents as required in the Companies Act for at least 3 months or more after the prescribed deadlines may face a debarment order from the Registrar. A debarred person will not be able to take on new appointments as director or company secretary of other companies but may continue with existing appointments. The Registrar will lift the debarment when the default has been rectified or on other prescribed grounds.

• Exemption of preparation of financial statements (“FS”) for dormant unlisted companies

A dormant non-listed company (other than a subsidiary of a listed company) is no longer required to prepare FS if (a) the company has been dormant from the time of formation or

since the end of the previous financial year (“FY”); and (b) the company fulfils a substantial assets test, i.e. the total assets of the company or the total assets of the group if it is a parent company at any time within the FY must not exceed S$500,000. The exemption is only applicable to FYs that ended on or after 3 January 2016.

• Memorandum and Articles of Association are now merged into a single document called the Constitution

• Removal of one-share-one-vote restriction for public companies

• ACRA will now maintain the electronic register of mem-bers for private companiesDate of filing of the information with ACRA will be consid-ered the effective date of entry/cessation as a member into the register.

• ACRA will also maintain the electronic registers of Directors, Secretaries, Auditors and CEOs

• Directors, CEOs and Secretaries are allowed to report an alternate address in place of their residential addressThe alternate address must be located in the same jurisdic-tion as the individual’s residential address and where the person can be contacted. The alternate address cannot be a P.O. Box address.

CONTACTSFor more information on Corporate Secretarial and Bookkeeping Services, please contact:

Ms Loh Mei LingAssociate DirectorCorporate [email protected]

For more information on the phased implementation of Companies (Amendment) Act 2014, please refer to the ACRA website here: https://www.acra.gov.sg/Legislation/Two-Phase_Implementation_of_Companies_(Amendment)_Act_2014/

Key Legislative Amendmentsto the Companies Act - Phase 2

OutsourcingThis article is authored by Esther Tan (Manager, Accounting Services, Nexia TS)

Why Outsource?

The term “outsource” by Oxford definition, refers to “obtain (goods or a service) by contract from an outside supplier” while Investopedia defines “outsourcing” as to “practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally”.

So what is Outsourcing?

In simple terms, outsourcing is to engage external parties to assist in the company’s internal work.

Why should we consider Outsourcing?

Outsourcing is a cost-saving strategy where companies engage external parties to perform specific work require-ments based on their expertise, and the scope of work outsourced will determine the fees companies are required to pay. Employee-related expenses will be reduced as the company will not need to factor in additional employee benefits like bonus, commission, and CPF etc.

On top of that, companies who have outsourced their work are assured that the required work will be completed on time and on top of that, the information submitted to the respective government body corresponds with the docu-ments provided to the outsource company.

Outsourcing for financial institutions was a concern for the Monetary Authority of Singapore (MAS). As extracted from MAS, they first issued the “Guidelines on Outsourcing” in 2004 to promote sound risk management practices for outsourcing arrangements of financial institutions. Over the years, revisions have been made to the guidelines as outsourcing arrangements become more prevalent and

complex. It also provided further guidance on sound practices relating to the “Responsibility of the Board and Senior Management” and “Monitoring and Control of Outsourcing Arrangements”. These are part of MAS efforts to raise the standards of Institutions’ risk management practices.

When do we need Outsourcing?

Driven to further expand businesses, business owners prefer to have their resources on hand to focus on the company’s KPIs (Key Performance Indicators). However, with the perennial challenge of high staff turnover rate that is common in a lot of industry sectors, companies often find that the the amount of time invested in training new employees does not justify the benefits they have reaped because by the time the new employees are well-trained to deliver the required work, they choose to move on to another company. Inevitably, the resource-consuming and tedious routine of training new employees repeats itself again which often requires companies to reinvest significant amount of resources and time to retrain new hires.

In order to overcome this situation, business owners should consider engaging external parties to outsource these functions. The accounting and payroll functions require experienced personnel who are equipped with the necessary specialised knowledge. On top of that, an in-depth under-standing of the latest regulatory and reporting standards from the government and other relevant reporting sectors is required in order for the said functions to be performed well. Given the tangible outsourcing benefits, business owners should consider outsourcing these support functions to professional specialists if they want to step up their focus to pursue their company’s KPIs – this approach is particularly useful for companies with limited resources.

15Outsourcing

Who should we engage for Outsourcing?

Selecting the right external parties is an important step towards outsourcing. Outsourcing can be provided by individual freelancers or corporate service providers. It depends on the work requirements and the range of services the freelancers/service providers can provide before the company owners decide in their appointment. Engaging a freelancer may incur less cost than engaging a corporate service provider. However, as corporate service providers possess a higher level of resources and segregated expertise from different industry sectors, they are usually in a better position to assist companies, especially for more complex work requirements.

Where can we find these services?

Nexia TS offers outsourcing services which can be custom-ised to fit your specific company needs. We are a one-stop solution centre that offers professional outsourcing services that comply with the reporting requirements in Singapore.

CONTACTSFor more information on outsourcing, please contact:

Mr Chin Chee ChoonDirectorAssurance and [email protected]

Nexia TS is a rapidly growing mid-tier accounting firm based in Singapore. We are an independent member firm of Nexia International and are directly associated with Smith & Williamson of United Kingdom.

The business conditions are changing rapidly worldwide, with shrinking economic cycles and the emergence of a new economic world order. Whether one is doing business within the known boundaries or expanding globally, one cannot escape the challenges of this new state of affairs. Those who quickly adjust to and master these continually evolving conditions are also known to reap huge rewards from the abundant opportunities available today.

They say the world is getting smaller, and it really is. We help many talented entrepreneurs from across the globe with our sound strategic advice and highly-professional services. We go beyond the mandate typically enjoyed by accountants and become custodians of your business interests. In short, Team Nexia works with you to design game-changing business solutions.

Our Service Portfolio

We believe that we must continually evolve and augment our skills to protect your business interests. We are continu-ally expanding our range of services in tune with your changing business needs. We serve you with:

• Tax Services

• Assurance & Business Services

• Governance, Risk Management & Internal Audit

• Valuation & Transaction Services

• M&A Advisory

• Financial Advisory, Insolvency & Restructuring

• Accounting & Corporate Services

• Forensic & Litigation Support Services

• Technology Advisory Services

• Business Advisory in China, Iskandar Malaysia & Myanmar

A Bouquet of ValuesBest of both worlds

We are a home grown company from Singapore yet are connected with our highly skilled counterparts from different economies. We can therefore put together seamless solutions when your business is partaking in cross-border opportunities. In doing so we leverage the knowledge and expertise offered by our associates across the globe.

People you can trust

Having worked with our clients through many different business conditions, the insights developed over these years have helped us quickly to find the solutions that serve your business interest in the best possible manner. Today we enjoy the implicit trust of our clients and often win business through referral.

Seamless advice from professional teams

We can draw up a team from our vast talent pool that undertands your needs and serves you efficiently, but we also give you a dedicated single point of contact, making it very easy to interact with us.

Competitive in every sense

With our comprehensive portfolio of assurance, tax, account-ing and advisory related services, we can offer service levels equivalent to our larger competitors but for more competi-tive fees, and ofter with a more personal service and greater levels of partner involvement.

Obsessed with quality, just like you

We share with you common values, such as professionalism, business ethics and trust. We give individual attention to every minute service detail, ensuring a high-quality experi-ence.

“We help many talented entrepreneurs from across

the globe with our sound strategic advice and

highly professional services.”

Our Approach and ExpertiseOur Leaders

Lam Fong Kiew

[email protected](65) 6597 7293

Edwin Leow


Chin Chee Choon


Gary Ng


Kristin Kim


Loh Ji Kin


Chin Chee Choon


Loh Hui Nee


Philip JC Tan


Christine Lee


Low See Lien


Meriana Ang


Chan Siew Ting


Assurance and Business Services

Tax Services

Governance, Risk Management & Internal Audit

Ross Y. Limjoco


Why Outsource?

The term “outsource” by Oxford definition, refers to “obtain (goods or a service) by contract from an outside supplier” while Investopedia defines “outsourcing” as to “practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally”.

So what is Outsourcing?

In simple terms, outsourcing is to engage external parties to assist in the company’s internal work.

Why should we consider Outsourcing?

Outsourcing is a cost-saving strategy where companies engage external parties to perform specific work require-ments based on their expertise, and the scope of work outsourced will determine the fees companies are required to pay. Employee-related expenses will be reduced as the company will not need to factor in additional employee benefits like bonus, commission, and CPF etc.

On top of that, companies who have outsourced their work are assured that the required work will be completed on time and on top of that, the information submitted to the respective government body corresponds with the docu-ments provided to the outsource company.

Outsourcing for financial institutions was a concern for the Monetary Authority of Singapore (MAS). As extracted from MAS, they first issued the “Guidelines on Outsourcing” in 2004 to promote sound risk management practices for outsourcing arrangements of financial institutions. Over the years, revisions have been made to the guidelines as outsourcing arrangements become more prevalent and

Our Approach and ExpertiseOur Leaders

Chan Yee Hong


Chin Chee Choon


Tan Swee Wan


Tan Kah Leong


Low See Lien


Tan Swee Wan


Tan Kah Leong


Accounting and Corporate Services Financial Advisory, Insolvency and Restructuring

Forensic and Litigation Support Services

Technology Advisory Services

Sitoh Yih Pin


Grace Lui


Valuation and Transaction Services

Disclaimer: Nexia TS is a member firm of the “Nexia International” network. Nexia International Limited does not deliver services in its own name or otherwise. Nexia International Limited and the member firms of the Nexia International network (including those members which trade under a name which includes the word NEXIA) are not part of a worldwide partnership. Member firms of the Nexia International network are independently owned and operated. Nexia International Limited does not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, any of its members. Nexia International Limited does not accept liability for any loss arising from any action taken, or omission, on the basis of the content in this publication or any documentation and external links provided. The trade marks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited and used under licence. References to Nexia or Nexia International are to Nexia International Limited or to the “Nexia International” network of firms, as the context may dictate. For more information, visit www.nexia.com

We have taken great care to ensure the accuracy of this publication. However, the publication is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Nexia TS Singapore 2016

www.nexiats.com.sg

Ross Y. Limjoco


M&A Advisory

In this issue - Nexia TS · 2018-02-27 · In this issue, we had picked an investment outlook...

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