IFRS 16 was issued by the International Accounting Standards Board in January 2016 and will be effective from January 1^st, 2019. IFRS 16 will replace the previous leases Standard, IAS 17 Leases.  The new standard largely impacts the lessees and won’t have much influence on the lessors.

Many positive outcomes are expected out of the introduction of the new lease and the major ones are an increase in leased assets and financial liabilities on the balance sheet of the lessee.

IFRS 16 doesn’t make a distinction between finance leases and operating leases, as in all (material) leases will be treated as finance leases. Short-term and low value leases are exceptions. Under this new standard, you will have to recognize most leases on balance sheets, let your industry be any.

The new accounting treatment will lead to an increase in net debt, a higher EBITDA and a higher invested capital for the lessee. Moreover, it leads to increased visibility of all leases , which will help investors to make better informed investment decisions. Enhanced economic growth is also made possible by IFRS 16, as it improves capital allocation.

IFRS 16 replaces IAS 17, IFRS 4, SIC 15 and SIC 27 leases. If you look into the complete perspective of IAS 17, IAS 17  was introduced with the substance over form and present value concept which was not followed till that time and now it is unchanged almost 27 years.

IFRS 16 requires companies to bring lease commitments on to their balance sheets, which was not mandatory earlier. For instance, take a look at the listed companies that use IFRS or US GAAP, that have around $3.3trillion of lease commitments.  Over 85 percent of these lease agreement do not appear on their balance sheet. The reason is, till date, the  leases were categorized as either ‘finance leases’ or ‘operating leases.

That means the reader is not getting a real picture of how the company is operating, what their financial assets and liabilities are, apart from the leases.

When lease assets and liabilities are not accounted in the financial statements, purchasing of assets becomes difficult. An estimation of lease liabilities is always a difficult task. If you take a proportion of the actual debt related to the lease liabilities, it comes upto 6-10 percent of the liability, only in the balance sheet

With IFRS 16, this problem can be tackled to a greater extend.

So, we have discussed about the pros of IFRS 16, how it is going to bring more transparency to business. But, how difficult will it be for companies to comply with the new standard? It might be quite challenging.

If your company has well-organised lease administration and accounting functions, then this won’t be a difficult process. All you have to do is, evaluate whether adjustments are required in the existing systems to accommodate the changes. Understanding the impact IFRS 16 will have on your organization at an early stage will enable you to sort out issues and reduce implementation costs and compliance risk.

Businesses of today are witnessing massive digital transformation at dizzying speed, and you are left with two options- either embrace the innovations and thrive or remain dormant. If you decide upon the latter, there are chances of your business succumbing to the external market pressure.

There is a large proportion of businesses that are stragglers when it comes to adopting latest technologies. But if you aspire to survive and stay ahead of the game, then adoption is the only option!

Robotic Process Automation(RPA) is a revolutionary technology trend that has been gaining serious traction in the last few years.  RPA uses artificial intelligence and software robots to streamline workflows and it is expected to evolve and soar within no time.

Automating complex processes or routine tasks is of significant importance and as such RPA is the need of the hour. There are diverse industries that benefit from RPA and one such sector that reaps maximum benefit from the technology is HR and payroll.

HR department in any organization is responsible for a plethora of mundane tasks and their plates are always full. With the adoption of RPA, most of these tasks can be automated with greater degree of accuracy and efficiency.

RPA adds new functionalities to HR processes and does not replace HR software suite or employees. The technology rather makes the lives of employees easier and allow them to focus on the growth of their organization.

The robotic software carries out varied functions that range from collecting and copying data, running reports, processing and submitting e-mails to feeding data in HR or payroll systems and pre-populating forms. They are designed with self-learning artificial intelligence (AI) capabilities that ensures response to changes and performs tasks far beyond basic processing.

RPA facilitates the shortlisting of suitable candidates and compresses the onboarding process by taking over many of the tedious tasks that happens at the onset of the tenure of any employee. It acts on your behalf and saves you from the herculean task of manually updating everything. It also enables customization of training based on individual characteristics. Managers need not have to physically monitor productivity as it can be based on actual performance metrics.

Unlike in the past where you had to transfer all the employee data from your HRIS to a document template upon request for a document from an employee, RPA can automatically generate the documents. Smart robots pave way for automatic tracking of pay checks, benefits administration, rewards and reimbursements.

Software robots are far more productive than humans when it comes to monotonous tasks. With RPA, only minimal resources are required for the execution of hire-to-retire processes such as benefits, payroll and recruiting. Modifying or retraining the robot’s automated tasks is a cakewalk and the best part is that it is easier than re-training a staff.

Running payroll manually is not only monotonous but risk worthy; a small error is all it takes to  cause serious effects on the bottom line of a business. RPA replaces the process of checking data and looking for errors prior to running payroll with an automated validation check that can be executed in seconds.

Payroll activities that will benefit from RPA:

• Contractual changes: Designation, benefits, roles and responsibility
• Permanent changes like hike and contact details
• Temporary changes: Bonus and expense payments, overtime
• New hires / separations or departures
• Attendance records
• Validation checks
• Deductions that include pension, union, travel card and loans

Executives within leading HR global firms are of the opinion that RPA will deliver a 10-20% savings to their HR and overall business processes. Automating HR operations benefits the company as a whole and not just a single department.

While RPA has the potential to make business processes smarter and efficient, finding the right balance between automated tasks and employee responsibilities is what makes the difference. If you fail to achieve it, unlocking the potential of RPA might be quite challenging.

RPA is a huge sensation that has unmatched integration capabilities and the technology is something that you can’t do without in the future. You can trust the process blindly as it accomplishes work exactly as they are programmed to!

The pharmaceutical sector in Arabian Gulf is highly advanced and it continues to grow at an exponential pace. It is expected to reach $25.7bn in the next decade, which is almost double when compared to its revenue in 2018 ($13.9 billion).

The government of UAE has been taking diverse measures to boost the sector, by lowering the restrictions and attracting more pharmaceutical companies to UAE.

If you are planning to start a pharmaceutical company in UAE, Dubai mainland would be the best option when compared to free zones. The Department of Economic Development (DED) is the authority responsible for all types of businesses in Dubai mainland and company formation steps include;

• Identifying local sponsor
• Taking passport copies of partners including the local sponsor
• Naming the drugstore/pharmacy
• Submitting name approval application and getting initial approval from Department of Economic Development (DED)
• Submitting the application to Dubai Health Authority (DHA)

Initial Approval from Dubai Health Authority (DHA) 

1. Generate a username and password to commence the initial approval process
2. Upload the proposal letter to the online website
3. Appoint a medical director and pharmacist
4. Find a location for the pharmacy
5. Upload the engineering layout as per DHA rules

Once you get initial approval from DHA,

• The tenancy contract along with Ejari for the premises need to be obtained
• Draft the memorandum of Association and side agreement with the local sponsor
• Notarize the memorandum of Association from court
• Submit the necessary documents to DED and get the pharmacy license
• Following the issuance of pharmacy license from DED,the document need to be submitted for final DHA approval

Final Approval from Dubai Health Authority (DHA)

1. Interior fit-out construction according to the layout permitted by DHA in the initial approval
2. Professional approval for the medical director
3. Final fit out inspection from DHA

Documents Required

For Department of Economic Development

• Passport copies and Unique Identification Number (UID) of the owners
• Application form for the trade name and initial approval
• Initial Approval from Dubai Health Authority (DHA)
• Passport copy and Unique Identification Number (UID) number of the Manager
• Qualification and experience certificate of Manager
• NOC from sponsor, if the manager is holding valid visa in UAE
• Passport copy and attested qualification certificate of pharmacist and medical director
• Tenancy contract (During final submission to DED)
• Passport copy, Emirates ID and Gincia of Local sponsor (UAE national)

For Dubai Health Authority

          Initial Approval

• DED trade name reservation
• Dubai municipality affection plan of the plot/building
• Passport copies & UID number of partners
• Engineering layout as per DHA guidelines
• Proposal and Undertaking letter
• Passport copy and Qualification certificate of the medical director and pharmacist
• Offer letter for the Medical Director and Pharmacist

          Final Approval

• Interior fit-out construction according to the layout permitted by DHA in the initial approval
• Professional approval for the medical director
• Final inspection report and approval from DHA

The UAE plans to establish itself as a global hub for pharmaceutical companies. Hence setting up a pharma firm in UAE  will be highly profitable and easy.

Challenge

• A company that was into large scale catering was finding it difficult to assess their employee adequacy
• The senior management believed that there was excess manpower – yet, managers and employees on the ground perceived a manpower shortage
• There were also consistently high overtime payouts

Work done and Impact

• Using primary and secondary sources, we obtained relevant industry data on Employee to Customer ratios across similar companies
• We analyzed the overtime costs and staff requests at department level, and found that major issues were in the Kitchen
• Our consultants carried out a Time and Motion study, covering all shifts of the kitchen for a period of 4 days and analyzed areas of high staff requirement
• We found that there were no major instances of slackness among employees
• However, on further analysis, we were able to pin-point certain specific items in the menus offered that were very high on cooking / preparation time
• We checked the criticality of these menu items to customer requirements with the concerned operating teams. With their feedback, we concluded that by changing some specific menu items, we could reduce the cooking time and hence staff workload and overtime significantly

Challenge

A client company who was into project sales across the region had approached us with the following concerns:

• They were unsure if they were overstaffed (i.e., was HR cost as % to sales was too high?)
• They were not clear how to downsize if business drops
• Were they paying the right salaries?

Work done and Impact

• We assessed manpower utilization, and determined optimal manpower based on current projects, planned handovers and the order pipeline
• We advised them to restructure their departments and realigned project cost calculations to get better cost estimates
• We built business case scenarios for different situations to estimate the optimal headcount in each situation, thus enabling the company to take the correctly plan manpower
• We benchmarked salaries across relevant competitors to correctly know in which positions where corrections were needed

Challenge

A manufacturing sector client with whom we were associated was facing regular issues of material non-availability despite the Purchase Head being a seasoned employee who had excellent knowledge of products and suppliers

All departments were clear that it was the Purchase team which was at fault for the issue, but there was no apparent solution

Work done and Impact

• On closer analysis of the internal processes, we found that the root cause was that there were too many tasks that the purchase head was doing by himself due to “confidentiality” issues although these were not of any strategic significance.
• The rest of the team was usually engaged in very trivial tasks of little value addition.
• The consultants proposed a new workflow and delegation of authority structure in the department, with proper controls. This ensured better work flows and accountability at all levels, and improved material availability resulting in greater order fulfillment rate, reduced emergency purchases etc.
• The company’s dependence on the Purchase Head was also reduced, thus benefiting business continuity

Challenge

• A locally owned family enterprise that was successfully running for over 30 years in the UAE had appointed a new CEO
• The company’s owners were unable to get the desired results from the CEO despite his excellent past track record and old acquaintance with the owners
• There were a few senior employees who were not performing, but the owners could not really determine the causes
• Employees at lower levels were lacking motivation

Work done and Impact

• We conducted detailed meetings with the Management and key employees across different levels to understand their expectations and concerns.
• We analyzed various internal processes and the authority delegation followed, and important business metrics.
• Based on the above, we were able to recommend an effective new structure that eliminated the need for a few employees who were actually a hindrance to the system
• The company obtained savings in costs, the owners found it easier to implement their plans and the employees down the line were more motivated and able to work more productively

Challenge

A family owned business in the UAE was aiming to implement a Performance Management System as part of an initiative to transform themselves. However, the management was unable to implement it despite having very well defined internal systems and processes in place

A Balanced Score Card initiative was launched with great expectation but did not take off

Employees were lacking motivation due to a perceived bias in their appraisal ratings

Work done and Impact

• The client in question was an existing internal audit client for us, and as a result we had an in-depth knowledge of their structure, systems and processes
• This enabled us to create tangible linkages between various BSC parameters and their actual deliverables (this link was missing earlier)
• Our in-depth involvement and understanding of their business and processes enabled us to define BSC parameters that were accepted by the team
• From a situation where performance pay was mostly done based on subjective criteria, it became about far more objective and related to actual performance delivery

Challenge

• The company‘s support function departments were unable to meet requirements of user departments, and was perceived to be too slow, despite a team of 50 employees at the HO and about 100 employees in their branches.
• The Board felt that these departments’ functioning would be a hindrance for the company’s growth plans

Work done and Impact

• We analyzed the department structures, workflows and processes – in line with the set growth objectives
• We recommended realignment of workflows, and decentralization of the concerned departments
• We helped to redefine the Authority Matrix and introduced review systems to ensure that the decentralized structure works effectively