Thai Customs Business Conference 7 July 2016

Thai Customs Business Conference

On Thursday 7 July 2016 I had the privilege of attending the first ever Thai Customs – Business Conference, which was held at the S31 Sukhumvit Hotel in Bangkok.

This conference, which was attended by around 100 conference participants from a broad range of interested stakeholders including many Chambers of Commerce, represented a refreshing outreach by the Thai Customs Department to the Thailand business community.

The recently appointed Director General of Thai Customs, K. Kulit Sumbatsiri, stated very clearly and concisely that Thai Customs needs to adjust and change from being a Tax Collector to become a Trade Facilitator, and no longer be an obstacle to trade and investment.

He also indicated in his opening remarks that Thailand can no longer count on customs tax collection as a significant source of revenue, because tariffs are being restructured to increase Thai trade competitiveness.

The Thai Customs Department is currently executing its new five year plan, titled “Future Customs 2020.” This plan will see the transformation of the Thai Customs Department to become a trade facilitator for Thailand business activities.

New initiatives that the Thai Customs Department is diligently pursuing include:

National Single Window: This has been discussed for more than ten years, but is now being diligently pursued. The National Single Window will effectively create a “One Stop Shop” for importers, where the Customs Department will be electronically linked to 36 related government agencies in a database, to allow importers to pursue import licenses from relevant agencies such as the Agricultural Department, Ministry of Industry, and even the Ministry of Public Health. The goal is to facilitate prompt and convenient import license approvals. A pilot program involving the five most frequently imported goods will soon be launched.

Pre-Arrival System: This is a system to expedite customs arrival formalities. Manifests from air and ocean shipments will be transmitted to Thai Customs six hours in advance of arrival. Thai Customs will analyze the manifests during a 4 hour period prior to shipment arrival, and pre-approve shipments for the Green Line or Red Line channels. The Pre-Arrival Process of Suvarnabhumi Airport is being used as a model. The goal is to expand this system to other airports and seaports based on the success of the Suvarnabhumi model.

Authorized Economic Operator Program (AEO): The AEO program is a successor to the previous 1999 Gold Card Scheme and the 2009 Licensed Customs Broker program. AEO was launched in 2013 upon the cancellation of the Licensed Custom Broker program. Today Thailand has 297 AEO Operators, including 147 Customs Brokers and 150 Importers / Exporters.

The advantages of AEO include exemption from physical examination except for related laws otherwise stated or in the case of suspicions. Also, AEO members will receive priority for conducting physical examinations when they are required.

Thailand is in the process of negotiating reciprocal “Mutual Recognition Arrangements (MRA)” with Hong Kong, Singapore, Malaysia, and S. Korea. Hong Kong and Thailand have already executed an MRA agreement, and a pilot operation will begin later this year.

Advanced Tariff Ruling (ATR): This is a service for importers to seek an advance ruling on tariff classification of goods prior to import into Thailand, upon a written request. This will provide certainty with regard to the correct tariff classification for imported goods. An ATR ruling is effective for two years from the date of the ruling, and will be issued within 60 official working days after application.

Digital Customs and Customs Mobile Application: The Thai Customs Department is working on a mobile application that will greatly facilitate the importation and customs clearance process.

During the conference, the Thai Customs Department officials also provided an update on recent and pending revisions to Thai Customs Laws, some of which are nearly 100 years old. Most noteworthy are incremental changes to the Rewards and Bribes laws, which will limit the size of rewards paid to Customs officials.

I very much appreciated the information and vision that was shared by the Thai Customs Department. I am cautiously optimistic that the Thai Customs Department can effectively transform itself into a modern, professional, world-class trade facilitator.

Frank T.

DigiMarketing: Wertime and Fenwick 2008

Digimarketing Fenwick

I have again visited my dusty bookshelf to review an outstanding book on Digital Marketing: “DigiMarketing – The Essential Guide to New Media & Digital Marketing” by Kent Wertime and Ian Fenwick.

In the interest of full disclosure, I studied under Dr. Ian Fenwick at the Sasin Graduate Institute, and remain to this day a big fan of Professor Ian. He is a gifted teacher, researcher, and public speaker.

Digital Marketing is a fast moving field and industry. The rate of change and pace of innovation continues to be phenomenal. I therefore found it quite interesting to review this “ancient” eight year old book. My goals were to refresh my knowledge on digital marketing, and also to gauge the changes that have occurred during the past 1-1/2 lustrum (yes, I’m a Rooster Cogburn fan).

Wertime and Fenwick pack a lot of information and wisdom into 392 pages. They organized their book into three sections: “New Media and Marketing in the 21st Century”, “Digital Channels”, and “A DigiMarketing Planning Framework”.

The Internet is a truly global phenomenon, and the core principles of Digital Marketing therefore enjoy a global relevance. One of the great challenges of engaging with a global market is to effectively use a global tool to successfully engage with prospective customers in multiple geographic and cultural markets, with different languages, different product expectations, significantly different economic opportunities and disposal incomes, etc. The digital channels are also constantly changing and evolving, and a channel which is very popular and enjoys significant penetration in one geographic market may be virtually unknown in a different market.

One of the great revelations of “DigiMarketing” is in reviewing the hot Digital Marketing channels and players in 2008 compared with 2016. Google was the king of search, and remains the dominant search engine today. However, Facebook has completely eclipsed MySpace. From 2005 until April 2008 Myspace was the largest and dominant social networking site in the world, and in June 2006 MySpace actually surpassed Google as the most visited global website. Today MySpace is little more than a footnote in the history of social media, having recently been purchased by Time, Inc.

DigiMarketing isn’t a dry, boring, academic overview of the Digital Marketing landscape. Wertime and Fenwick have succeeded in creating an engaging, lively, and frequently entertaining guide to the exciting world of Digital Marketing. Examples of light-hearted and lively topics include “Cookies You Can’t Eat”, “Long-Tail Wags the Dog!”, and “Lies, Damned Lies, and Statistics”.

DigiMarketing remains a fantastic Digital Marketing reference book for anyone who is involved in the Digital space, or wishes to better understand the brave new world of Digital.

Frank T.

 

Lean Manufacturing that Works: Bill Carreira 2005

Lean Mfg that Works

Some books are worth reading a second time.

I was recently inspired to pull this book off my office bookshelf, dust it off, and read it again. This book contains a great deal of wisdom for managing a manufacturing operation. I’m quite happy I took the time to revisit this book, and refreshed my competency in Lean Manufacturing Principles.

Bill introduces the key principles of Lean Manufacturing. One of the most important principles is Customer Value. Regardless of the activity, whether a manufacturing step, logistics, inventory, administrative step, etc., the key concept of customer value is whether the activity adds value for the customer. “Does this activity directly contribute to my customer’s product’s becoming more complete, and is the customer paying for this activity to occur?” If either question generates a NO answer, why are you doing it?

The next concept is the Value Stream, which is defined as “the total cycle of activity, from initial customer contact through receiving payment for a product that has been delivered.” Careful evaluation of the value stream allows the manager to identify and prioritize opportunities for genuine cost reduction without compromising product quality, reliability, or other desirable product attributes.

The principles of “flow” and “pull” denote the behavior of activity in the workplace. Flow implies “a seamless sequence of activity throughout the process, with no stalls, no disruptions, and no disconnects or backtrack loops.” The principle of pull is activities “are done when they are required to be done, not before.” Lean Manufacturing activities are therefore consumption – driven or customer demand – driven, as compared with a forecast – driven system.

The essential principle of Lean Manufacturing is the continuous and ongoing elimination of waste. However, Lean Manufacturing redefines waste to include any wasteful activity. The goal is to eliminate any wasteful activity to ensure that all time and resources are devoted to additional value – added activity.

Bill has organized “Lean Manufacturing That Works” into two sections. The first part is titled “The What” and it carefully and thoroughly explains the ideas and logic of Lean Manufacturing to best define “what we are trying to accomplish.” The second part is titled “The How” and it defines and describes the tools, techniques, and best practices to most effectively implement and maintain a Lean Manufacturing process.

Bill explains that Lean Manufacturing is not a thing, an initiative, or some other discrete activity. To be effective, Lean Manufacturing must become integrated into the company culture. It is “a way of thinking, an overall philosophy of running a business.”

Bill has packed this 288 page book with dozens of charts, graphs, pictures, flowcharts, sample analyses, and real world examples to bring the Lean Manufacturing principles to life.

Naturally, the contents of this book are most relevant to industrial manufacturing companies. However, any manager or business person can greatly benefit from the Lean Manufacturing philosophy, whether you are assembling cars, bicycles, providing warehouse or logistics services, running an accounting office, or providing medical services. I highly recommend this book to any serious business manager.

Frank T.

Testosterone Inc: C.M. Byron 2005

Testosterone Inc Cover

“Testosterone Inc.” was published a decade ago, but it remains very relevant today. This book tells the very interesting and frequently sordid tales of four famous CEO’s: Jack Welsh CEO of GE, Ron Perelman CEO of Revlon, “Chainsaw” Al Dunlop CEO of Sunbeam, and Dennis Kozlowski CEO of Tyco.

Christopher Byron conducted diligent research for this book, and carefully documented his sources. Though this book does indeed reveal the many egregious moral and social failures of the four CEO subjects, it also provides considerable insight into the dark side of success and the role of unbridled ego in undermining principled leadership.

As I was reading this book, I found myself reflecting on the US Republican Primary campaigns. I would not be surprised if Byron or a future researcher / author chooses Donald Trump as a subject for a future “Testosterone Inc.” edition.

Throughout my professional career, I feel that I often learned as much or more about leadership and success from the mistakes and failures of my supervisors and managers as I did from their wisdom and successes.

Testosterone Inc. is a fascinating, exciting, and often thrilling “page turner” of a book. Having read several of Jack Welsh’s books many years ago, this book provided a completely new perspective on this “Rock Star CEO”.

I strongly recommend this book for any managers who are genuinely interested in leadership and governance.

Frank T.

Masters in Business Podcast (Bloomberg Radio): Barry Ritholtz

Masters in Business

I have long been a believe in the old adage that “Leaders are Readers”. In order to be an effective leader, it is necessary to continuously upgrade and update your knowledge in the most broad sense. Readers are not necessarily leaders; the mere act of reading does not transform a bookworm into a charismatic champion executive anymore than diligently studying J.K. Rowling can turn a muggle into a gifted wizard.

However, it can be difficult for a busy executive or manager, or an aspiring leader, to budget adequate time to read the books, newspapers, professional magazines, and trusted online resources to gain access to the incredible wealth and diversity of information available in our modern and fast paced age.

I typically spend at least 6 hours each week driving. I used to listen to music during my long drives. However, early last year I decided to turn off the music and invest the hours I spend behind the wheel listening to podcasts.

For those individuals who are struggling to keep up with the diverse array of modern digital media choices, a podcast is basically an audio recording that is available for download to your smartphone, PC, music player, or other form of digital media player. Since I am primarily invested into the Apple ecosystem, my preferred source for podcast is Apple iTunes.

One podcast which I have greatly enjoyed and highly recommend to anyone with even a casual interest in investing or financial management is “Masters in Business” featuring Barry Ritholtz and published by Bloomberg Radio.

Each week Barry interviews a successful and influential business person, and explores the unique technical, professional, and personal views and attributes that have contributed to the success of the interviewee and his / her business.

Most of Barry’s interviews are conducted with Wall Street icons and financial leaders, such as Bill Gross of Janis Capital, Richard Thaler of the University of Chicago Booth School, and Nobel Laureate of Economics Professor Paul Krugman. However, he also interviews successful business people including Dallas Mavericks owner Mark Cuban and Restauranteur / Iron Chef Mario Batali.

Barry is an engaging interviewer who has a gift for facilitating entertaining and informative dialogs and discussions. Whether the discussion is about high speed trading, portfolio weighting theories, or the most important attributes of restaurant design, Barry encourages his guests to share their most valuable insights underpinning their business success.

I highly recommend podcasts as a supplement to traditional hardcopy or digital books and periodicals to maximize the productive time available for continued learning and self-improvement.

Frank T.

Switch – How to Change Things When Change is Hard: Heath and Heath 2010

Switch Heath and Heath

Change is a vital process for any business or organization. The failure to adapt to a continuously evolving environment leads inevitably to failure and eventual extinction.

I’m always looking and listening for book recommendations. I had the privilege of attending the Thai IOD “Anti Corruption Conference” on 15 October. During the lunch break Professor Robert Klitgaard of Claremont Graduate University gave a very interesting presentation about countries that managed to change course, significantly reducing corruption, improving competitiveness, improving public engagement and confidence. During his presentation he referenced the book “Switch – How to Change Things When Change is Hard” by Chip and Dan Heath. I immediately added the book to my “Unread Books Collection.”

I have just completed reading “Switch”, and I can report that I found the book quite interesting and very useful. The authors did a great job of presenting an effective and practical template for achieving effective and lasting change.

“Switch” proposes that change is most effectively achieved by recognizing and responding to both rational and emotional elements, and then creating an process to enable, support, and sustain the desired change.

To most effectively and memorably introduce and explain their change template, they have created the metaphor of a Rider, an Elephant, and a Path.

The Rider is the rational human element. The Rider can be readily convinced of the needed change by presenting logical and analytical framework, but the Rider is also easily distracted and confused by excessive options or inadequate direction. The Authors recommend providing the Rider with clearly scripted critical moves and a precise vision of the destination or objective.

To most effectively determine the change which is required to achieve an objective, the authors discuss the concept of “Bright Spots.” Look for examples of success that can be replicated, such as an employee who is succeeding at a task where others are failing. Identify the key success factor and replicate it. Solutions for most problems typically already exist, but it often takes diligence and persistence to find the “Bright Spots” that illuminate the solution.

The Elephant is the emotional human element. The Elephant doesn’t readily respond to rational explanation; it must be motivated. Promote the change in a way which reaches the heart and feelings of the team. Massive change is inherently demotivating, so the authors recommend breaking down the change into smaller, more readily achievable milestones. This allows rapid and frequent successes along the path to the ultimate change destination.

Finally, the Authors recommend “Shaping the Path” to facilitate the change process. Behaviors change when the situation changes, so seek to change the situation or environment to most effectively and efficiently achieve the desired change in behavior. Seek “Action Triggers” to encourage behaviors to become habits. Rally the team or organization to adopt the change as a contagious behavior.

As I read “Switch”, I found myself frequently remembering occasions when I pursued or promoted change using either a rational, emotional, or process (path) based approach. However, I was rarely conscious of my choice of method to promote change, and I don’t believe I ever successfully combined and utilized all three change drivers simultaneously. Individual people are complicated, and teams and organizations are both complicated and diverse. It makes a great deal of sense to utilize all three change driving tools to best motivate and sustain the change process.

Frank T.

Thai IOD Chartered Director Class

Thai IOD CDC

The Thai Institute of Directors (Thai IOD) was founded in 1999 and has become the leading Thailand based organization promoting Director Professionalism and Corporate Governance.

www.thai-iod.com

I am a big fan of the Thai IOD, both for its significant contributions to leadership and Corporate Governance, and also for its strong commitment to anti-corruption and ethical behavior.

Last week I had the privilege of attending the Thai IOD’s “Chartered Director Class” (CDC). This is a two day course that is designed to “enhance directorship expertise by strengthening key knowledge and skills.” A prerequisite to attending the Chartered Director Class is the successful completion of the Thai IOD’s “Director Certification Program” (DCP), which is a 5 day intensive course covering the fundamentals of directorship and Corporate Governance.

The CDC class was organized as four (4) half day modules covering Accountability, the Art of Directorship, the Strategic Board, and Ethical Decision Making.

I’ve attended many professional development classes and seminars. However, with very few exceptions, the Thai IOD courses have consistently been the most rigorous and professionally managed programs I’ve had the privilege of attending. The Thai IOD prides itself on starting its programs on time, and fully utilizing the time allocated for each program module. Thai IOD programs are definitely not long coffee breaks periodically interrupted by brief lectures; these are intensive lectures and engaging professional dialogs with only brief interruptions for coffee and lunch. No, you won’t be going home early … sorry, you won’t beat the traffic. However, you can always be sure to derive maximum value from your time and monetary investment in a Thai IOD program.

The CDC program was facilitated by Dr. Bandid Nijathaworn, Banchong Chittchang, Professor Dr. Kriengsak Chareonwongsak, and Dr. Warapatr Todhanakasem. These four gentlemen each have very impressive professional and academic credentials, and are also quite gifted lecturers and facilitators. The facilitators, course materials, and case studies were all very well developed, organized, and presented.

Equally important to a professional development program is the quality of the participants. The Thai IOD is very successful in not only attracting and retaining the best quality facilitators, but also the best quality and diversity of participants. Our CDC class had fifteen men and women, Thais and foreigners, coming from a variety of professional and academic backgrounds. I felt privileged to have the opportunity to share this CDC experience with such distinguished and experienced peers.

The benefits of Directorship and Corporate Governance training are not limited to the Boards of Directors of Public or Listed Companies. Any professional manager, director, or leader of a listed or limited company can benefit from the skills, leadership, ethics, and governance fundamentals taught by the Thai IOD. These courses are not “cheap”, but they provide great value for both the individual participants and also for the organizations and teams of participants.

Frank T.

BEPS: Base Erosion and Profit Shifting

BEPS

Last week I had the privilege of attending the Business and Economics Committee Meeting of the American Chamber of Commerce in Thailand. Jack Sheehan, Partner at DFDL, and Steven Carey, MD of Quantera Global, gave a very interesting and informative presentation about BEPS.

Until very recently, I have heard almost nothing about the OECD BEPS initiative. BEPS stands for “Base Erosion and Profit Shifting” and it is basically an action plan to address aggressive transfer pricing (or perhaps more accurately described as “Transfer Mis-Pricing”) by multinational organizations to minimize or avoid taxation.

When companies conduct business across multiple jurisdictions, they frequently supply products or services to related entities. This creates opportunities for both double taxation of profits and also opportunities to shift profits between the related entities. Ideally, each company would honestly value products and services based on classical “arms-length” transfer pricing standards. This would allow profits to be earned by each entity in the jurisdiction where the profits are actually generated, and pay taxes on those profits accordingly.

However, it is becoming increasingly common for companies to adjust the pricing of products and services to shift profit from entities or jurisdictions with a high tax burden to an entity or jurisdiction with a low or no tax burden. Several companies, including Starbucks, Amazon, and Google, have recently been accused of aggressively implementing transfer pricing based profit shifting activities to avoid taxation on massive global earnings.

Dual tax treaties have been negotiated between many countries to protect companies and individuals from being double taxed on income arising from various types of cross border transactions. However, companies are now aggressively pursuing various loopholes and strategies to achieve “double non-taxation” on income, leveraging rules intended to protect them from double taxation on such income.

In early October 2015, the Organization for Economic Co-operation and Development (OECD) published its detailed 15 step plan to reform the system of international taxation. This plan, which is expected to be implemented by members nations of the OECD and other national jurisdictions starting in 2016, is potentially the most significant revision to the international system of taxation since the 1920’s.

One of the primary reforms proposed by the BEPS ties revenue recognition and profit  more closely to real economic activity. This proposal is similar to the system of formulary apportionment, the kind of system used by the USA to tax corporations at the state level.

Thailand has also been closely monitoring Transfer Pricing issues, and in May 2015 issued a new Draft Transfer Pricing Act. This act will amend the Thai Revenue Code to implement measures to prevent tax evasion through the use of transfer pricing schemes. The Draft Transfer Pricing act has been approved by the Thai Cabinet and is expected to be enacted by late 2015 or during the first quarter of 2016.

Under the new Act, firms having related party transactions will be required to prepare and submit transfer pricing documentation. Such documentation must be submitted within 150 days of the end of an accounting period. Failure to submit transfer pricing documentation will be subject to a penalty of THB 400,000.

Transfer Pricing investigations are reportedly a top Thai government agenda, following the pace of other ASEAN countries. The Thai Revenue Department is also devoting more staff resources to Transfer Pricing investigations.

The Thai Government is reportedly closely monitoring and reviewing the BEPS recommendations. The Chinese government strongly backs the OECD BEPS proposals, but China is reportedly staking out its own proposals in a few specific areas in a bid to capture more taxes.

Many Thailand based companies, especially Thailand based subsidiaries of multinational companies, will fall under the jurisdiction of the new Transfer Pricing act, and will also likely be impacted when the BEPS rules are implemented and incorporated into existing Dual Tax Treaties. All Managers and Directors of such Thailand based companies should diligently review their exposure to Transfer Pricing related issues, and implement prudent measures to ensure compliance with Transfer Pricing rules.

It is a privilege to do business in Thailand, serve the Thailand community, and to earn profit from our Thailand based activities. Paying fair taxes in Thailand on profits derived from Thailand based activities is the honorable and just behavior of any responsible Thailand based entity, organization, or individual.

Frank T.

Thailand 6th National Conference on Collective Action against Corruption

Thai CAC ConferenceOn Thursday 15 October 2015 I had the privilege of attending “Thailand’s 6th National Conference on Collective Action against Corruption”. This conference was organized by the Thai CAC, formally known as “Thailand’s Private Sector Collective Action against Corruption”.

The Thai CAC was co-founded by eight of Thailand’s leading private sector organizations: the Thai Chamber of Commerce, the Joint Foreign Chambers of Commerce in Thailand, the Thai Listed Companies Association, the Federation of Thai Industries, the Federation of Thai Capital Market Organizations, the Thai Bankers’ Association, the Tourism Council of Thailand, and the Thai Institute of Directors (Thai IOD). The Thai IOD serves as the secretariat of the Thai CAC and takes a leading role in driving the program.

The CAC conference included three panel discussions which covered the topics of “Overcoming Anti-Corruption Challenges: International Experiences”, “Anti-Corruption Progress: How to Keep the Momentum Rolling”, and “Leveraging the Power of Collective Action”, and also included a powerful lunchtime presentation “Addressing Corruption Together – Strategy for Thailand.”

The CAC conference was concluded with a powerful and moving Closing Remarks presentation by His Excellency General Prem Tinsulanonda, President of the Privy Council. General Prem stated that corruption is the most severe problem plaguing Thailand, and a most shameful matter for the country. He also stated that taking part in corrupt schemes is equivalent to robbing the country. “Those involved are thieves.”

HE Gen Prem

Currently the Thai CAC has 521″Signatory Companies” which have signed a “Declaration of Intent”, and 122 Certified Companies who have implemented and audited anti-corruption programs.

I strongly encourage both Thai-owned and Foreign-owned companies operating in Thailand to join the Thai CAC and complete the certification process. Fighting corruption is a difficult task, and very few companies successfully escape the cruel sting of corrupt acts. Yes, your company may successfully avoid corrupt acts such as facilitation payments to government officials. However, your company is still subject to internal corruption, such as kickbacks to purchasing officers, kickbacks to maintenance personnel, fraudulent invoices, etc.

A well designed, communicated, and enforced anti-corruption program acts as a vaccination to inoculate a company against infection by corrupt influences. Sounds dramatic … but I firmly believe it.

The managers of foreign-owned companies often tell me that they already have compliance programs in place for FCPA (the US Foreign Corrupt Practices Act) and UKBA (the UK Bribery Act). I don’t disagree that compliance with FCPA and UKBA is important. However, I also remind these companies that they are operating in Thailand, which has a very strong cultural identity. Thailand is proud to have never been colonized, and correctly believes that its culture is unique and valuable. Adopting and complying with a Thailand based anti-corruption initiative is a far more powerful motivating force than asserting compliance with a foreign initiative, which has the effect of imposing foreign laws upon Thai nationals and organizations.

Corruption is a difficult problem to solve. No single tool will be sufficient to fix this problem; a full toolbox of powerful tools, and the skill and experience to use them, will be required to eliminate corruption. Join the Thai CAC, become a signatory, and diligently work towards CAC certification. Your company, as well as our Thai community, will benefit greatly from this anti-corruption initiative.

Frank T.

Redflags of Financial Statement Frauds: M. Joshi 2013

Redflags of Fin Statement FraudsI was inspired to read this book as part of my continuing education in Corporate Governance and Directorship.

I was quite interested in learning more about about Financial Statement Fraud, but was worried that this topic would not be terribly exciting to read. I decided to first read “The Martian” by Andy Weir, with the personal commitment that I would explore Financial Statement Fraud as soon as I finished exploring Mars with Mark Watney. I found “The Martian” to be thoroughly enjoyable, exciting, and suspenseful; three adjectives which I doubted would apply to Mayur Joshi’s book.

“Redflags of Financial Statement Frauds” proved to be quite interesting and not too difficult to read. It certainly wasn’t as exciting as “The Martian”, but Joshi did a decent job of discussing different types of Financial Fraud and the signals that Auditors should watch for which might indicate fraudulent activities or intent.

Joshi actually wrote this book specifically for Indian Auditors. I was pleased to see a non-western perspective on Accounting and Auditing. I’m confident that Indian accountants and managers are no less creative than their western counterparts when it comes to “cooking the books”.

At times I did find the English grammar and composition to be a bit “unusual”. I think it would be unfair and perhaps inaccurate to accuse Joshi of poor grammar. However, Indian English is certainly a bit different than British, Australian, or American English.

“Redflags of Financial Statement Frauds” is only 80 pages long (based on my iBooks page formatting preferences). Thus, Joshi doesn’t waste any time or text on unnecessarily long explanations. This book is very direct, and each topic is introduced and explained as briefly and succinctly as possible. I found this approach to nicely satisfy my immediate expectations. It wasn’t my desire to become an expert on Financial Statement Fraud, but I did want to learn more about typical types of such fraud, and the warning signs of fraudulent activities and intent.

At times I did find myself wishing that Joshi had added a bit more detail or provided better examples of fraudulent entries. Clearly, it wasn’t Joshi’s intent for his book to be a handbook on best practices for committing Financial Statement fraud. However, I think he could have been a bit more generous with details, and I think this would have made the book both more interesting as well as informative.

In the chapter on “Improper Asset Valuations”, Joshi writes that “Profits can be inflated by increasing asset values.” I found this to be an interesting statement, and spent quite a bit of time trying to figure out how this could be possible. After some thought, I realized that profits can be increased by booking expenses as assets. These “expense assets” are then depreciated over several accounting periods instead of being immediately recognized, thereby increasing profit. This is one of many occasions when I would have preferred Joshi to have offered more detail to better explain the process of fraudulent accounting entries.

“Redflags of Financial Statement Frauds” is a short, inexpensive book which I would recommend to non-accounting professionals interested in Accounting Fraud. Though I do not recommend this book for accounting professionals, I must also advise that familiarity with basic accounting practices and terminology is a minimum requirement to appreciate this book.

I trust that the people who follow my posts are only interested in discovering and preventing fraud, as opposed to best practices for successfully committing fraud.

Frank T.