icpas-cpa australia roundtable - isca · icpas-cpa australia roundtable at the roundtable mr yee...

JUNE 2013

Leveraging on Advisory Services for Business Growth

ICPAS-CPA AUSTRALIAROUNDTABLE

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CONTENTS

3 ATTHEROUNDTABLE

4 INTRODUCTION

6 EXECUTIVESUMMARY

7 EXPECTATIONGAP

9 TAKINGTHELONGVIEW

11 CLOSINGTHEGAP

13 ICPAS-CPAAUSTRALIASURVEYONADVISORYSERVICESFORSINGAPOREBUSINESSES

15 BIOGRAPHIES

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ICPAS-CPA AUSTRALIA ROUNDTABLE

AT THE ROUNDTABLE

MRYEECHEOKHONGExecutiveDirector(Policy&StrategicPlanning/IndustryDevelopment)Institute of Certified Public Accountants of Singapore

MRFRANKIECHIAManagingPartnerBDO LLP

MRCHOWKAMWINGExecutiveDirectorandChiefFinancialOfficerMicro-Mechanics (Holdings) Ltd

MRALBERTHODirectorCentrum Capital Pte Ltd

MRJERRYLEEKIANENGManagingPartnerNg, Lee & Associates - DFK

MSDIANAPANGBusinessDevelopmentDirectorSunny Metal & Engineering Pte Ltd

MSLYNNPHANGLAYKOONPartnerandCo-FounderArdent

MRTANWEEKODirectorChallenger Technologies Ltd (Challenger)

MRTANGSHIUHHUEIManagingPartnerManaging Partner, S H Tang & Associates LLP

MRMELVINYONGSingaporeGeneralManagerCPA Australia

CHAIRPERSONS:

PANELLISTS:

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INTEGRATEDREPORTING–RESPONDINGTOBUSINESSANDINVESTORNEEDS1

1 An executive summary of the survey findings can be found on page 13 to 14.

INTRODUCTION

Small and medium-sized accounting practices (SMPs),astrustedbusinessadvisorstosmallandmedium-sizedenterprises (SMEs), can be a significant and valuablesource of support to help SMEs achieve their businessgoals.AccordingtoarecentsurveyjointlyconductedbyICPAS and CPA Australia, SMPs can better support thegrowthofSMEsbydiversifyingfromauditandassuranceservices to provide advisory services to support SMEs’internationalisationefforts.1

TobetterunderstandhowSMEsandSMPscan leverageon advisory services for sustainable business growth,ICPAS and CPA Australia jointly organised an SME-SMPRoundtable in April 2013. The roundtable discussion,attendedbyeightexperiencedbusinessleadersfromtheSMEandSMPcommunity,wasco-chairedbyMrYeeCheokHong, Executive Director (Policy & Strategic Planning /Industry Development) of Institute of Certified PublicAccountantsofSingaporeandMrMelvinYong,SingaporeGeneralManager,CPAAustralia.

Inhiswelcomeaddress,MrYeehighlightedtheimperativeneed forSMEsandSMPstoworktogether toovercomechallenges in the current economic environment. AsSingapore continues its restructuring efforts to achievequalitygrowthbyincreasingproductivityandinnovation,there are opportunities for SMPs to support SMEs intheirgrowthefforts.Withtheproposedincreaseinauditexemptions, it is also increasingly necessary for SMPstoconsidermovingup thevaluechainandexpand intoadvisory services. Hence, it becomes more compellingfor SMEs and SMPs to work closer together and takeadvantageof theabundantopportunities toexpandandsustaintheirbusinesses.

Looking forward, Mr Yong is hopeful that the surveyand roundtable will help members of both ICPAS andCPAAustralia toachieve theirbusinessandprofessionalgoals. He also encouraged more collaboration betweenindustrybodies,aswellastheSMEandSMPcommunitytowork together on similar platforms to support futuregrowtheffortsofSMEsandSMPsinSingapore.

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IfSMPsarefacingobstacles,thisiswhereaccountancybodieslikeICPASandCPAAustraliacanfacilitatetheireffortstoovercomethem,soSMPscanhaveanopportunitytotestwhetherthesearepossiblecorecompetencyareastobuild.

-YeeCheokHong ExecutiveDirector

(Policy&StrategicPlanning/IndustryDevelopment),ICPAS

“”

AstrustedbusinessadvisorstoSMEs,SMPsplayanintegralroleinsupportingthem.SMPsshouldseizetheopportunitytoprogressupthevaluechainbyofferingadvisoryservicessuchastax,financialandriskmanagement,tobettersupporttheirSMEclientsinlinewiththeirchangingneeds.ICPAS,asthenationalaccountancybody,willcontinuetosupportandworkwithSMPsintheireffortstogrowtheircapabilitiesandmoveupthevaluechain

“

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Fromtheperspectiveofprovidingnicheservices,professionalbodiessuchasCPAAustraliawillalwaysfindareaswherewewillgivemorevaluetoourmembersandtheprofessionatlarge.Regardlessofwhereyouraffiliationsare,thisissomethingwewillcontinuetodo.Attheendoftheday,itisaboutaddingvaluetoeachareathataccountantsandfinanceprofessionalsneedfordevelopment.

“

”Thesurveybringsoutoneveryclearmessage–SMEshavegoodappetitetoincreasetheirengagementsofsmalland

mediumpracticesbecausetheycouldbemorepersonable,targetedandpossiblyofferservicesatmorecompetitiverates.WithSMEsmakingup99%ofallenterprisesinSingapore,thisopportunityisalowhangingfruitifonlySMPswouldchoosetobite.

-MelvinYong SingaporeGeneralManager,CPAAustralia

“”

INTRODUCTION

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EXECUTIVESUMMARY

As the economic and regulatory environment changes,thebusinessneedsofSMEscontinuetoevolve.Toseekgrowthandmanagetheirbusinessrisksintheuncertaineconomicenvironment,SMEsmayfinditusefultoengagetheservicesofSMPs tosupport them inachieving theirbusinessgoals.

The roundtable revealed that most SME panellistsviewedSMPsfavourablyinvariousways.TheroundtablehighlightedthegeneralviewthatSMPscanindeedbecometrustedadvisersandpartnerstosupportSMEsinareasoftheirbusinessneeds.TheSMEsindicatedtheirpreferencetoworkwithSMPswiththefollowingcorecapabilities.

1. SMPswith the ability to deliver on time. SMEspanellistscited thisas theirprimaryconcern in theirselectionofSMPs.LargerSMEs,especiallylistedones,needtoreportonatimelybasistoshareholdersandregulators.Hence, it is important theyengageSMPswith the right skill sets and the ability to completeengagementsontime.

2. SMPs with the ability to provide a breadth ofservicestomeetSMEs’businessneeds.MostSMEpanellistsexpressedpreferencetoworkwithasingleSMPthatisabletosupportalltheirdifferentadvisoryneeds.Assignificanttimeandattentionmaybeneededto source and engage different service providers fordifferentservices,itwouldgreatlybenefitSMEsiftheyareable tofindasingleserviceprovider tomeetalltheirbusinessneeds.

3. SMPswiththeabilitytosupportSMEsinmultiplegeographies beyond Singapore. SMEs valueworking with SMPs possessing good networks inmarketswhichtheSMEsaimtoexpandinto.Further,SMPsshouldpossessknowledgeandexpertiseintheregulations and business practices in jurisdictions

beyondSingaporetosupportSMEseffectivelyincross-bordertransactions.

TheroundtablediscussionalsohighlightedtheneedforSMPstoevolve.WithmoreSMEsexpectingtoexpandoverseasandbecomelistedcompaniesinthefuture,itmaybenecessaryforSMPstoconsiderexpandingtheiradvisoryservicesofferingstobettersupportSMEs intheirgrowthefforts.

AsuccessfulexpansionintoadvisoryservicesrequiresSMPstoaddressorovercomesomeperceivedgapstomeetSMEs’changingbusinessneeds.

4. SMPsneedtoconsiderexpandingintoadvisoryservicestomeet theneedsofSMEs.SMPsmustadapt to the changing business environment, clientdemands and business trends to expand beyondtraditionalservicestooffermorerelevantandvalue-addingadvisoryservices.

5. SMPsneedto invest intrainingtoenhancethecompetencyofstafftoprovideadvisoryservices,aswellasinestablishinginternationalcoverageto support the business needs of SMEs. Theroundtable was concerned with the limited scopeof services offered bymost SMPs.WithmanySMEsrequiring many advisory services beyond audit intheir growthefforts, particularly forSMEsexpandingoverseas,someSMEswerescepticalabouttheabilityofSMPstosupporttheirnon-auditneeds.

6. SMPs need to overcome shortcomings in theirmarketing approach. The panellists felt thatwhilethere was little difference between the quality ofservices provided by the larger professional firmsandSMPs,theyagreedthatSMPslackedtheskillstomarketandselltheirserviceseffectively.

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EXPECTATIONSGAP

Despite the current economicuncertainty and changing businesslandscape,mostSMEpanellistswereupbeat about the growing demandfromSMEs touseadvisoryservices.While some of them acknowledgedthe need for listed SMEs to useaudit services provided by largerprofessional firms such as the Big4, they also indicated a willingnessto engage the services of SMPs foradvisory services such as tax andrisk management. The listed SMEssaid factors affecting their decisionto engage the SMPs, include theirability to build long-term businessrelationshipswithSMEs.However,thegeneralviewwasthatthereremainedan expectation gap between whatSMEswantandwhatSMPscanoffer.

SMP panellists felt that additionalcosts appeared to be a primaryconcern for SMEs in engaging SMPsforadvisoryservices.They indicatedthat, besides traditional services,mostSMEswereoftennotwillingtopayforsuchadditionalservices.

Some SME panellists had differingviews, saying that costs were asecondary issue. In the selection ofSMPs for professional services, theabilitytodelivertheneededserviceson timewas their top consideration.Given the tight regulatory regime inSingapore, it is extremely importantforlargerSMEs,especiallylistedones,to fulfil reporting requirements on atimely basis. Hence, SMEs need toengageSMPswiththerightskillssetsandtheabilitytorendertheirservicesontime.

With the business climate becomingincreasinglychallengingandcomplex,someSMEpanellistsalsocitedaneed

Costissecondary;itisqualitythatiskey.

-ChowKamWing ExecutiveDirectorand

ChiefFinancialOfficer,Micro-Mechanics(Holdings)Ltd

“ ”

WiththeSMPs,youactuallyhavethatverypersonaltouchwiththeclients.Andeveniftheygrowsobig,althoughtheirworkmaybedelegatedtoothersubordinates,they(theclients)willstillwanttocomeandseeyoupersonallybecauseofthatpersonaltouchwiththem.

-JerryLeeKianEng ManagingPartner,Ng,Lee&Associates-DFK

“”

Iagreepersonalrelationshipisveryimportant,butIthinkontopofpersonalrelationship,youonlyfeelthereispersonalrelationshipprovidedthepersoncandeliver.Ifthepersoncannotdeliverormissthetimeline,thenIthinkthepersonalrelationshipisgoingtobetough.Ithinkpersonalrelationshipisveryimportant,andthereforetheSMPpartnersandthemanagementneedtoinvestinbuildingtherelationship.

-TanWeeKo ChiefFinancialOfficer,

ChallengerTechnologiesLtd(Challenger)

“

”

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EXPECTATIONSGAP

forSMPswhoareabletoinformandeducateSMEsonregulatorychangesand measures introduced by thegovernment. This was exemplifiedbytheneedtounderstandregulatorychangesinrecenttimes,suchastheCode of Corporate Governance andSGXlistingrules.AsmostSMEshavelimitedresourcesanddonothavein-houseexpertstolookintoandstudythese changes, someSMEpanellistsrecognisedtheneedforthemtoseekprofessionaladviceinsuchareas.

SME panellists also stressed theimportanceofhavingadvisoryserviceproviders that are willing to investtime and attention to understandtheir businesses. An SMP that isfamiliarwiththeSMEclient’sbusinessenvironment and their operationscould provide more useful andeffectiveadvisorysolutions.AsSMEsgrowandexpandwithinandbeyondSingapore, SMEs also valueworkingwith SMPs that are willing to givethemmorespecialisedattentionwithafocusonhelpingthemgrow.Hence,thepanellistsagreedthatSMPshaveanedgeoverlargerprofessionalfirmsin terms of providing that personaltouch to become trusted businessadvisersandpartners.

To sustain growth, it is alsoincreasingly important for SMEs toconsiderventuringoverseas.

However, many SMEs struggled tounderstand the tax and businessregulations in other jurisdictions.Hence,SMEpanellists indicated thatSMPs could provide useful advice tohelpSMEsintheirinternationalisationefforts. In this respect,SMEsvaluedSMPs who have a good network aswell as the necessary knowledge ofregulationsandbusinesspracticesinsuchjurisdictionstosupportthemincross-bordertransactions.

SomeSMEpanellists also expressedapreferencetoselectSMPsthatcanprovideabreadthofservicestomeettheirbusinessneeds.They indicatedthat significant time and attentionwouldbeexpendedwhen theyhavetosourceandengagedifferentserviceproviders for a variety of services.Hence,itwouldgreatlybenefitSMEsifasingleserviceprovider isabletosupporttheirdifferentadvisoryneeds.

IbelievethereareareaswhereSMPshaveanedgeoverthelargerauditfirms.SMPsmayhavebetterknowledgeoftheirclients’businessespeciallywhentheyhaveseenthecompanygrowovertheyearsandhavedevelopedstrongrelationshipswiththebusinessowners.IthinkSMPscouldleverageonthebusinessknowledgeandrelationshipswiththeirclients,andseehowbesttheycanfulfilltheevolvingneedsoftheirclientssuchasinriskmanagement,businessstrategy,businessprocessimprovementandothersastheygrow.

-AlbertHo Director,CentrumCapitalPteLtd

“

”

Ithinkit’stheeducation;theSMPshavetoeducateSMEswhatvalue-addedservicesthatcanhelpSMEsgrow.“ ”

Idon’tseeanydifferenceincompetencybetweentheBig4firmsandSMPs.MycompanyusesSMPsinvariousareassuchasinternalaudit,riskmanagement,votescrutineeringatAGM,businesscontinuitymanagement,andbusinessproductivity.TheonlyissueisthatIhavetousefivedifferentSMPs.ItwouldbemostidealifthereisasingleSMPthatcanhandlealltheseareas.

-ChowKamWing ExecutiveDirectorandChiefFinancialOfficer,

Micro-Mechanics(Holdings)Ltd

“”

IthinkSMPsfirstly,needtobefocused.Secondly,youneedtobepreparedtoinvestinproducts,thepeopleandaswellastheopportunitycostingettingyourbasicrevenue.FromaSMEpointofview,IamwillingtoworkwithSMPprovidedtheycandeliver.



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TAKINGTHELONGVIEW

Beyond meeting their complianceneeds, more SMEs are increasinglylooking to SMPs for professionaladvice to grow their businesses. Tofunctioneffectivelyasakeybusinessadviser,SMPsneedtounderstandindetailtheSMEclients’businessesandtheissuestheyface.Hence,panellistsreiteratedtheimportanceforSMPstoinvestinbuildingupcapabilities.

Inorder toexpandsuccessfully intoadvisoryservices,SMPsneedtoadopta long-term view of their businessmodel. As SMEs continue to adapttochangingeconomicconditionsandregulations,theirbusinessneedsalsochangeaccordingly.Intandem,SMPsmustadapttothechangingbusinessenvironment, business trends, andclient demands. SMPs may needto put more focus on the strategicaspects of their business in orderto shape their long-term plans andsustaintheirpractices.Hence,SMPsmust consider expanding beyondtraditionalservices,suchasauditandassurance,tooffermorerelevantandvalue-addingadvisoryservices.

It is also important for SMPs toidentify their core strengths andcompetencies. This enables SMPsto plan and invest in the necessaryareas to enhance their capabilitiesin advisory services. As trustedbusinessadvisersandpartners, it iscrucialthatSMPsputinthenecessaryinvestments and efforts to build uptheir firm and staff competency.This will enable SMPs to providethe essential advisory services thatclientsmayneed.

Thelackofstaffcompetencyamongsome SMPs was raised by SMEpanellists as a concern. With most

AsSMPs,eachofushastoidentifywhatwedobest,andtailorourbusinessstrategyaccordinglybyplayingtoourstrengths.Startbylookingatyourself,yourpractice;findoutwhatyourexpertiseis,wheretheopportunitiesare,anddevelopyourpracticearoundyourstrengths.Weneednotbeanall-roundedpractitioner,solongaswedeliverwithexcellenceinourchosenfields.

-FrankieChia ManagingPartner,BDOLLP

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Itisthebuildingoftherelationshipandunderstandinghowyou(SME)operatethebusiness.Tous(SMPs),it’sverymuchlikewhenourclientsgrow,wegrow.Weshouldtryandfindoutwaystocontinuebuildingontherelationshiptounderstandhowwecanhelpeachother.

-TangShiuhHuei ManagingPartner,

SHTang&AssociatesLLP

“”

It’sreallyaboutpositioningourselvesinthevaluechain.IncludingtheSMEs,we’realsotalkingaboutwhereyou’restandinginthevaluechain.FromaSMPstandpoint,beitbig,mediumorsmall,it’saboutwhat’syourcorecompetency,whatyouwanttodo,howyouwanttoprovideaservicethatyoucanprovidebest,ofwhichyoucanthendelivertotheSMEsintermsofdeliverables,timeline,etc.

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TAKINGTHELONGVIEW

SMPs focused on providing auditand assurance services, their staffmaynothave the right skill sets toprovide advisory-related services.Hence, some SME panellists raisedthe need for SMPs to channeleffort to developing their staff’scompetencies in order to expandtheir service offerings. While therecruitment of skilled professionalsis challenging amid the tight labourmarket,panellistsagreedthatitmaybe essential for SMPs to focus onbroadeningtheskillsetsoftheirstafftosuccessfullyprovidemoreadvisoryservices.

ThelackofinternationalcoverageofsomeSMPswasalsoraisedbytheSMEpanellists. With internationalisationbecoming an important aspect ofa typical SME’s growth strategy,SMEsvalueSMPsthatpossessgoodnetworksinmarketswhichtheyaimtoexpandinto.Further,SMPsshouldpossess knowledgeandexpertise intheregulationsandbusinesspracticesin jurisdictions beyond Singapore.ThiswillallowSMPstosupportcross-bordertransactionsmoreeffectively.SMPscanlooktojoinaninternationalnetwork or work with a foreignpartnerwiththenecessarynetworktoadviseandsupporttheirSMEclients.SomepanellistsalsosuggestedSMPscanconsiderpooling their resourcestogether, via strategic alliances, inorder to better support their SMEclientswhomayhavedifferingneeds.This may require a mindset shiftamong SMPs to consider lookingbeyond the traditional businessmodels and adopt new approachestoenhancetheirbusinesscapabilitiesandserviceofferings.

SMEsintransition,thosethatarenotlistedyet,donotusuallyhaveaccesstofinancialandhumanresourceslikepubliclistedcompaniesorlargeMNCs.TheneedsofsuchSMEsintransitioncanbeservedbyhavingSMPsgrowingwiththemandhelpingthemgrowtotheirdesiredlevel.IfSMPsareunabletoprovideawiderrangeofservicestotheirclients,perhapsSMPscouldestablishandpullintheallianceswithotherserviceprovidersasandwhentheopportunitycomes.

-AlbertHo Director,CentrumCapitalPteLtd

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SMPshavecomealongwayovertheyears.Today,thereareplentyofboutiqueSMPswhoaremorethancapableofdeliveringhighqualitytaxadvisoryservices.Theymaynotofferthewholerangeoftraditionalservicessuchasauditing,buttheseboutiquetaxadvisoryfirmscanofferexcellentexpertiseintheirspecialistfield.Indeed,someofthesepeopleareex-Big4accountants.

“”

Weneedtoevolveandchangeourmindset.Weneedtolookbeyondwhatwehaveachievedinthepast.Wehavethebenefitofthefindingsfromthedemandside,whatweneedtodonowistoidentifyournicheareas,ourstrengthsandtheninvestinthem,andtrainourstaffwell.Wereallyneedtotakeupthemantleandtransformourprofession.


“

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Oneofthewaysistogooutandfindpartnersinsomeofthesejurisdictionswhichyoufeelyourclientwillbegoingtoandyouknowthatthesearethepartnerswhowillbeabletoworkwithyou.Inordertobreakthroughthebarrier,itisreallyaboutgrowingthroughnetwork.Thatisreallythemainkey,notjustwithinSingapore,butglobally.

“”

EventhoughSMPsmightnothaveafullrangeofservicesor‘know-how’,theydohavenetworksandallianceswithotherfirmstorefertheirclientsto.

-TangShiuhHuei ManagingPartner,SHTang&AssociatesLLP

“ ”

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CLOSINGTHEGAP

Despite the gap in expectations ofwhatSMEswantandwhatSMPscanoffer,mostSMEpanellistscontinuedto have favourable perceptionsabout SMPs, such as their workquality. SMEs also praised theirSMPcounterparts for theirefforts inbuildinggoodrelationshipswiththemand developing a sound intimateunderstanding of their businesses.Hence,mostSMEpanellistsindicatedtheirwillingnesstocontinueengagingSMPs for most of their businessneeds.Nonetheless,SMPswoulddowelltoaddresstheexpectationsgapraisedbytheSMEs.

Human capital is critical in buildinga sustainable advisory servicesplatform. The roundtable felt thatSMPswillneedtoputingreatereffortin nurturing their staff and equipthemwiththerelevantcompetenciesand experience to effectively offeradvisory services. In addition tosendingstafffortrainingcoursesandseminars,SMPsmayneedtobemorestructuredintheirtrainingmethods,suchasestablishingproper learningand development or developing anHR framework to raise their staffcompetencies. To overcome theissue of scale, smaller SMPs canwork together topool resources, aswellastapongovernmentincentiveschemes. The lack of capacity orevena focuson leveragingon theircore strengths could explain whysome SMPs’ choose to specialise inonly one or two service offerings.ThismeansthatSMEswouldhavetoengage different SMPs for a varietyof advisory needs. As mentionedearlier,mostSMEswishtoworkwitha single SMP that can offer a widerange or a comprehensive suite of

Forbusinessesoranyorganisationtobesuccessful,itboilsdowntothepeople.ForSMPstogrowandSMEstomakeuseofSMPs’services,weneedtohavewell-trainedandcompetentpersonnelwithsufficientexperienceandexposure.“IbelievethatSMPscanevolveovertime,iftheyarefocusedandpreparedtoinvestintheirproductsandpeople,inconjunctionwithmanagingtherisksandopportunitycoststhatcouldormightarisewithsuchinvestments.



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WhenmycompanywasthinkingofexpandingtoVietnam,IcouldonlythinkofengagingaBig4.IdidnotchooseanSMPbecauseIfeltthattheylackthelocalknow-how,knowledgeandnetworkstoadequatelysupportmyplans.

-DianaPang BusinessDevelopmentDirector,Sunny

Metal&EngineeringPteLtd

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Wedon’thaveaninternationalaffiliationbutwedotaponotherinternationalnetworks.Wewouldworkwiththenetwork’soverseasofficesverycloselyandobtaintheiradviceonthejurisdictionwheretheyarelocatedastheyaredefinitelymoreknowledgeableontheregulationsoftheirjurisdiction.

-LynnPhangLayKoon Partner,Ardent

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CLOSINGTHEGAP

services.Tohelpaddressthis,someSMP panellists raised the possibilityof a number of SMPs collaboratingto provide a package of services tothose SMEs preferring to deal withanoverallserviceprovider.Ifmutualtrustcanbeestablished,thiscouldbeafeasibleoptiononanadhoc,case-by-casebasis.

The SMP panellists highlightedseveral strategies to increasetheir international coverage andenhancetheircapabilitiestosupporttheir clientele overseas. Beyondforming formal partnerships acrossjurisdictions,SMPscouldalsoconsiderjoining international networks totap on resources abroad. Informalalliances and partnerships couldalso be established to extend theirpresencebeyondSingapore.

Branding and marketing can alsoplayanimportantroletohelpSMPsmitigate possible misperceptionsabout their service quality. SMPpanellists indicated that SMPsfaced challenges in changing theperceptions that SMEs may haveabout them, forexample, theBig4firms are commonly perceived tohavemoreexpertiseandcapabilitiescomparedtoSMPs.Thishasresultedin instanceswhereSMEsarewillingto pay for the services provided byaBig4firm,butnot sowhensuchSMEs engage SMPs. However,mostpanellists felt thatsomeperceptionsabout a difference in work qualitybetween the Big 4 and SMPs firmsmaynotbetruebecausemostSMPspartners have significant prior workexperienceattheBig4firms.

As part of branding andmarketing,SMPsneedtodifferentiatethemselvesinthemarketplace.Inparticular,itisimportant that SMPs put in greatereffort to highlight and brand theiradvisorycapabilities.ThiswillenableSMEs to better identify and selecttherightSMPstomeettheirspecificadvisoryneeds.

TheSMEpanellistssharedthebeliefthatSingaporeSMPscansucceedinthe advisory space. Both SME andSMP panellists agreed that somekey ingredients to success includeaddressingtalentandbrandinggaps,expandinginternationalcoverageandplanninglongterminordertoprovideeffectiveadvisoryserviceofferings.

IamsuretherearealotofgoodSMPsoutthere,butIdonotknowwheretofindthem.MaybewecanhaveadirectoryofservicesofferedbySMPs.

-DianaPang BusinessDevelopmentDirector,

SunnyMetal&EngineeringPteLtd

“”

SMPsshouldalsolookintonicheservicesandbepreparedtotrainstaffinareasofadvisorywork,notjustonauditwork.ItisimportanttoreallyrevampyourpracticeoutlookasinchangingmindsetbetweenSMPsandSMEs.

-JerryLeeKianEng ManagingPartner,

Ng,Lee&Associates-DFK

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WeshouldnotpaintallSMPswiththesamebrushduetoonebadexperience.RegulatorybodiesandlistedcompaniesaretakinggreaterappreciationoftheutilityofSMPsnow.Perceptionsarechanging.


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SMPsshouldbemorevocalinsellingtheirskillstolettheSMEsknowthattheSMPsareactuallycapableofprovidingqualityservices.

-LynnPhangLayKoon Partner,Ardent

“ ”Otherthanauditserviceswhichlistedcompaniesarerequiredtoengage

anauditfirmofcertainsize,standingandreputation,andwhichitisnotevenmandatorytoengageaBig4firm,IamveryopentoengageSMPsforotherservices.Thus,Ithinkmaybeitisamythinthemarketthataslongasyouarelisted,allsortsofserviceshavetobeengagedwithaBig4firm.

-TanWeeKo ChiefFinancialOfficer,ChallengerTechnologiesLtd(Challenger)

“”

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Amid the changing businesslandscape and uncertain economicconditions, the challenges faced bysmallandmedium-sizedenterprises(SMEs) in Singapore continue toevolve. As they seek growth andmanage their business risks in aslowingeconomy,itisimportantthatsmallandmedium-sizedaccountingpractitioners (SMPs), as trustedbusiness advisers to SMEs, providerelevant and value-adding servicestosupportSMEs.

Tounderstandtherangeofaccountingand advisory services needed bySMEs and those currently providedby SMPs, ICPAS and CPA Australiaconducted a joint survey betweenSeptember and October 2012. Thesurveyreceived130responsesfromSMEsand108responsesfromSMPs.

THESERVICESECO-SYSTEM

Morethan80%ofSMPrespondentssaid they provide traditionalaccountingandcomplianceservicessuchasauditandassurance(94%),compilation and accounting (88%),andtaxandcompliance(86%).Auditandassurancealsostandoutasthemost important revenue source forSMPs. Some 68% of respondentsindicatedthatsuchservicescomprise51% or more of their firm’s totalrevenue.

On the other hand, relatively fewerSMPs provide advisory services, forexample, in the areas of tax (41%),financialmanagement (38%),or riskmanagement (33%). Of note, morethan half of the SMP respondentsprovide only one advisory service ornone at all (51%). Advisory servicespresentlydonotcontributesignificantlytotherevenueofmostSMPs.

GROWINGADVISORYSERVICESTOSUPPORTSMES

According to the survey, beyondtraditional services, a significantnumberofSMEsappearkeentoseekgreater use of advisory services,suchastaxadvisory(32%),financialmanagement (19%) and riskmanagement(19%).

SMEs also anticipate a future needfor more sophisticated advisoryservices as they expand theiroperations beyond Singapore intomultiplegeographies.Inthisregard,itisunsurprisingtoseethatthetopthree advisory services they wouldlike SMPs to provide or expand inthe future are risk management(53%),businessstrategy(48%)andbusinessprocess(46%).Thefindings

suggest thatSMEswould likeSMPsto build capabilities in these areas,whichrepresentasignificantgrowthopportunityforthesepractices.

BEYOND AUDIT: ADVISORYSERVICES

AsmoreSMEslooktoexpandbeyondSingapore to internationalmarkets,SME respondents indicated thereare insufficient advisory services intax and business strategy for theirexpansion needs (45% and 44%respectively). Some 40% of SMErespondentsfoundriskmanagementadvisory services lacking, while26%thoughtfinancialmanagementadvisoryservicescouldbeimproved.We note that these figurescorrespond with earlier data that

ICPAS-CPAAUSTRALIASURVEYONADVISORYSERVICESFORSINGAPOREBUSINESSES

FIGURE 1: SERVICES THAT SMPs OFFER

FIGURE 2: TYPES OF NEW ADVISORY SERVICES SMEs ANTICIPATE USING IN FUTURE

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1 “Government’s Response to Key Recommendations by the Steering Committee for the review of the Companies Act”, 3 October 2012, Ministry of Finance . It has been proposed that Private Companies which fulfil two of the following three criteria will be exempt from audit – (i) total annual revenue of not more than S$10 million; (ii) total gross assets of not more than S$10 million; or (iii) number of employees of not more than 50. Currently, only Exempt Private Companies with annual revenue not more than S$5 million can be exempt from audit.2 “Setting the Scene: The SME and SMP Landscape in Singapore”, p24, CPA Singapore, May 2012 issue

many SMPs do not provide or onlyprovide limited advisory services.Hence, the survey findings suggestthere are opportunities for SMPsto expand their advisory serviceofferings.

CHALLENGESTHATSMPsFACE

Withtheproposedincreaseinauditexemption threshold1, SMPs mayfacereduceddemandfortheirauditservices2.Businessturnovermaybenegatively affected. SMPs that relyheavilyonauditservicesmayneedto consider offering more advisoryservices to generate alternativerevenuestreams.

However, many SME respondentsindicated the lack of internationalcoverage by our SMPs as a keychallengewhenusingtheiradvisoryservices (35%). This is reflected

ICPAS-CPAAUSTRALIASURVEYONADVISORYSERVICESFORSINGAPOREBUSINESSES

in the data which show that only30% of SMPs have embarked oninternationalisation, such as joininganinternationalnetworkorworkingwith foreign partners. Hence,SMPs that are keen to grow theirbusinessesinadvisoryservicesmaywant to consider expanding theirscopeofservicesbeyondSingaporetobettermeettheneedsofSMEs.

A significant number of SMErespondents also perceived thatSMPs lack skilled staff to servetheirneeds.More thanone-thirdofSME respondents (37%) indicatedthat SMPs do not have sufficientskilledstaff,and28%of themalsohighlighted concerns about thetraining and competency of SMPstaff.

Hence,SMPscouldconsiderputtinginmoreeffortintrainingtheirexisting

staff to provide advisory services,or attract experienced practitionerswith thenecessaryskill-sets to jointheir firms. While these activitiesmay increase their business costssubstantially, SMPs may be ableto generate higher revenue fromadvisoryservicesinthelongrun.

THEFUTUREOFSMPs

The survey suggests significantopportunities for SMPs to supportSMEs in growing their businesses.Beyond traditional services suchas audit, SMPs should considerexpanding their scope of servicesto meet the growing demand foradvisory services, in particular taxadvisory and risk management. Todoso,theycouldconsiderexpandingtheir presence beyond Singaporeto support SMEs in their overseasmarkets, as well as continuingto deepen their professionalcompetencyandknowledge.

Toovercomechallengesandsustaingrowth efforts, SMPs can alsoconsiderengagingandworkingmoreclosely with professional industrybodiestobecomeeffectiveenablersofproductivityandgrowth for theirSMEclients.

FIGURE 3: TYPES OF ADVISORY SERVICES LACKING FROM SMPs

15


BIOGRAPHIES

As Executive Director, Policy and Strategic Planning / Industry Development at theInstituteofCertifiedPublicAccountantsofSingapore,CheokHongoverseesthePolicyandStrategicPlanningDivisionandtheIndustryDevelopmentDivision,andisresponsibleforpolicydevelopmentandstrategicplanning, research,governmentandregulatoryaffairs,internationalrelations,andindustrydevelopment.

PriortojoiningICPASin2011,CheokHongwasGroupDirector(PolicyandPlanning)intheMaritimeandPortAuthority(MPA).HeearlierservedintheRepublicofSingaporeAirForceasapilot,duringwhichheassumedseniorappointmentssuchasDeputyHeadAirPlans,HeadAir Intelligence,andHeadAirTraining; the last twobeingAssistantChiefofStaffappointments.

CheokHonggraduatedfromtheNationalUniversityofSingaporewithaBachelorofSocialSciences(FirstClassHonoursinEconomics)andtheEconomicSocietyGoldMedal.HealsoattendedtheIndonesianAirForceCommandandStaffCollegeandtheAustralianDefenceCollegewhere hewas awarded the “Sastra Jaya” and the “GeddesGavel” respectively.CheokHongwasawardedthePublicServiceMedal(Military)BronzeandthePublicServiceMedal(Military)Silver,thelastforhisvaluableserviceandoutstandingperformanceintheSAFTsunamiReliefOperationinAceh,Indonesia.

MelvinYongisGeneralManagerforSingaporeatCPAAustralia.Hehasmorethan17years’experience incorporateandfinancial journalism,publicrelations,newspresentationanddigital integration. Hemost recently served as Senior Vice President for the SingaporeCorporateandFinancialpracticeatglobalcommunicationsfirm,Fleishman-Hillard.

Asabusiness journalist for15yearsatMediaCorp,operatorof regional televisionnewsstationChannelNewsAsia,hehasinterviewedandbuiltstrongworkingrelationshipswithawidespectrumofbusiness,financialandaccountingprofessionals.HewasnamedBestNewsAnchorattheAsianTelevisionAwardsin2001andPresenteroftheYearattheMediaCorpNewsAwardsin2006.

MRYEECHEOKHONG

MRMELVINYONG

ExecutiveDirector(Policy&StrategicPlanning/IndustryDevelopment)Institute of Certified Public Accountants of Singapore

SingaporeGeneralManagerCPA Australia

16


BIOGRAPHIES

Frankie is theManagingPartnerofBDOLLP. Frankiehasover30yearsofprofessionalaccounting and management experience and is a practising member of ICPAS and aCharteredAccountant(FCA)oftheInstituteofCharteredAccountantsinEngland&Wales.FrankieisaCouncilMemberofICPASandservesasChairmanofthePublicAccountantsPractisingCommitteeofICPAS.HiscommitmentsoutsidethefirmincludeservingasapanelmemberoftheStrataTitleBoardandBoardmemberofBuildingandConstructionAuthority(BCA).

AlbertHoisadirectorofcorporateadvisoryandinvestmentfirm,CentrumCapital.CentrumCapital provides advisory services to both SMEs and corporates in various industries inSingapore,MalaysiaandHongKong.Alberthasover21yearsofexperienceintheareasofcorporatefinanceandinvestmentbanking,havingworkedatseveralinvestmentbankswherehehasadvisedlistedandnon-listedcompaniesintheEastAsiaRegionintheareasofmergersandacquisitions,divestments,corporaterestructuring,businessjointventuresandcapitalraisings.

KamWingistheExecutiveDirectorandChiefFinancialOfficerofMicro-Mechanics(Holdings)Ltd.HealsoholdstheappointmentofCompanySecretaryfortheGroup.

KamWingjoinedMicro-Mechanicsin1996andplayedthekeyrolefortheCompany’sIPOonSGXin2003.PriortojoiningMicro-Mechanics,KamWinghasmorethan15yearsofworkingexperienceinauditingandaccountinginHongKong.

InFebruary2008,KamWingwasrecognisedasCFOoftheyear(Sesdaq)attheSingaporeCorporateAwards.

KamWingiscurrentlyacommitteememberoftheCFOCommitteeoftheInstituteofCertifiedPublicAccountantsofSingaporeandamemberoftheSingaporeInstituteofDirectors.Heisanon-practicingCertifiedPublicAccountantregisteredinSingapore,AustraliaandHongKong.KamWingreceivedhisBA(Accounting)fromtheUniversityofSouthernQueensland,AustraliaandanMBAfromtheUniversityofWalesintheUnitedKingdom.

MRFRANKIECHIA

MRALBERTHO

MRCHOWKAMWING

ManagingPartnerBDO LLP

DirectorCentrum Capital Pte Ltd

ExecutiveDirectorandChiefFinancialOfficerMicro-Mechanics (Holdings) Ltd

17


BIOGRAPHIES

Jerry has been amember of the Institute of Certified Public Accountants of Singapore(ICPAS)since1966andiscurrentlyanapprovedcompanyauditorandliquidator.HeisalsoanAccreditedTaxAdvisor(IncomeTax&GST).

HeiscurrentlytheManagingPartnerofNg,Lee&Associates–DFK.

HeservedasamemberoftheInquiryCommitteeappointedbythePublicAccountantsBoard,SingaporeontheInquiryintotheAuditofBaringsFutures(Singapore)PteLtdandwasamemberoftheComplaintsandDisciplinaryPanelofACRA.Hewasadirector,memberoftheExecutiveCommitteeandVice-PresidentfortheAsia-PacificregionofDFKInternational,amajorworldwidegroupofindependentaccountingfirmsandbusinessadvisersandheheldthosepositionsformorethan15years.

HealsoactsasaTrusteeofChewHowTeckFoundation.

DianaistheBusinessDevelopmentDirectorofSunnyMetal&Engineering.Sheisresponsiblefor developing the overall business direction, overseeing the financial, accounting andtaxation matters of the company and implementing internal controls and corporategovernancepractices.Sheisalsotheco-founderofvariousstart-upssuchastheExhibitMedia(S)PteLtdandMesanLocksAsiaPteLtd.

Dianahasmorethan10yearsofexperience inaudit, taxandbusinessadvisory.She iscurrently amember of ICPAS andCPAAustralia. She also serves as amember inCPAAustralia’sYoungProfessionalNetwork/CSRcommittee.

Lynnhasmorethan16yearsofexperienceinaudit,taxcomplianceandbusinessadvisory.Inadditiontoauditandtaxassignments,LynnhasbeeninvolvedinvarioustransactionsandadvisoryservicesincludingIPOadvisory,financialduediligenceandvaluation.

PriortosettingupArdentinyear2008,LynnwasanAssociateDirector(BusinessAdvisory)inoneofthelargestaccountingandbusinessadvisorygroupinSingapore.

MRJERRYLEEKIANENG

MSDIANAPANG

MSLYNNPHANGLAYKOON

ManagingPartnerNg, Lee & Associates - DFK

BusinessDevelopmentDirectorSunny Metal & Engineering Pte Ltd

PartnerandCo-FounderArdent

18


TanWeeKo is theChiefFinancialOfficerofChallengerTechnologiesLtd (Challenger),acompanylistedonthemainboardofSingaporeExchange.

He also oversees human resources, business development and investors’ relationshipmatters. Prior to joining Challenger about eight years ago, he has worked in Big Fouraccountingfirm,multinationalcorporationsandsmall&mediumcompanies.

WeeKoisafellowmemberofCPAAustraliaandholdsaBachelorofAccountancydegreefromNanyangTechnologicalUniversityandaMasterofBusinessAdministrationfromTheUniversityofAdelaide.

ShiuhHueiisthemanagingpartnerofSHTang&AssociatesLLP,aCPAfirmregisteredinSingapore, providingprofessional services such as auditing, accounting, taxation andconsultancyservices.

ShiuhHuei iscurrentlyamemberofCPA,SingaporeandCPAAustralia.ShiuhHueihadgraduated with a Bachelor of Accountancy from Nanyang Business School, NanyangTechnologicalUniversity,SingaporeandaBachelorofLaws(Honours)fromLondonSchoolofEconomics,UniversityofLondon,UnitedKingdom.HeiscurrentlyamemberoftheInstituteof Internal Auditors andholds aGraduateDiploma (Technopreneurship and Innovation)(Honours)jointlyfromNanyangTechnologicalUniversityandUniversityofWashingtonandaMasterofScience(TechnopreneurshipandInnovation)fromNanyangTechnopreneurshipCentre,NanyangTechnologicalUniversity,Singapore.

MRTANWEEKO

MRTANGSHIUHHUEI

ChiefFinancialOfficerChallenger Technologies Ltd (Challenger)

ManagingPartnerS H Tang & Associates LLP

BIOGRAPHIES

Qualification/ProfessionalMembership

• PublicAccountantregisteredwithAccounting&CorporateRegulatoryAuthority• PracticingMember,InstituteofCertifiedPublicAccountantsofSingapore• Member,SingaporeInstituteofAccreditedTaxProfessionals• AssociationofCharteredCertifiedAccountants• AdvanceTaxProgramme,TaxAcademyofSingapore• MasterofTaxation,SIMUniversityofSingapore


Producedby:

The ICPAS Research team sincerely thanks Mr. Yee CheokHong,ExecutiveDirector(Policy&StrategicPlanning/IndustryDevelopment), for his invaluable feedback and guidance withregardtothisstudy.

We also thank Edward Choa and Elaine Low of the IndustryDevelopmentDepartmentfortheirinputs.

ACKNOWLEDGEMENTS

ICPASResearchTeam

MrChanSzeYee—Head,Research

MrGerminOng—Manager,Research

MsPerrineOh—Manager,Research

MrJamesShen—Executive,Research

MsKayZin—ExecutiveAssistant,Research

CPAAustralia

Mr.MelvinYong–GeneralManager,Singapore

Mr.MarkLoo–MemberServicesManager,Singapore

ThisdocumentcontainsgeneralinformationonlyandICPASandCPAAustraliaarenot,bymeansofthisdocument,renderinganyprofessionaladviceorservices.Thisdocumentisnotasubstituteforsuchprofessionaladviceorservices,norshoulditbeusedasabasisforanydecisionoractionthatmayaffectyourbusiness.Beforemakinganydecisionortakinganyactionthatmayaffectyourbusiness,youshouldconsultaprofessionaladvisor.Whilsteverycarehasbeentakenincompilingthisdocument,ICPASandCPAAustraliamakenorepresentationsorwarranty(expressedorimplied)abouttheaccuracy,suitability,reliabilityorcompletenessoftheinformationforanypurpose.ICPASandCPAAustralia,theiremployeesoragentsacceptnoliabilitytoanypartyforanyloss,damageorcostshowsoeverarising,whetherdirectlyorindirectlyfromanyactionordecisiontaken(ornottaken)asaresultofanypersonrelyingonorotherwiseusingthisdocumentorarisingfromanyomissionfromit.

Copyright©June2013byICPASandCPAAustralia.Allrightsreserved.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformbyanymeans,electronic,mechanical,photocopying,recordingorotherwise,withoutpriorwrittenpermissionfromICPASandCPAAustralia.

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