singapore accountancy convention 2013download.icpas.org.sg/event/sac2013.pdf · singapore...

Singapore Accountancy Convention 2013 The Singapore Chartered Accountant: A Beacon of the Asian Economy

2nd July 2013

9.00am


Segment 1 The impact of global trends and directions on the demand for accountancy

services, and consequently the role of the accounting profession

by

President

International Federation of Accountants

Global trends and directions affecting the accountancy

profession – What it means and holds for Asia

Warren Allen

Agenda

• Global Leadership Survey (GLS)

• IFAC Priorities

• Integrated Reporting

• Recruiting the Best & Brightest

• Supporting Growth in Asia and Beyond

4

Global Leadership Survey

• Sixth annual survey of the global accountancy profession

• Completed in late 2012

• Respondents’ Top Concerns/Priorities:

– Reputation and credibility of the profession;

– Public sector financial management and sovereign debt issues;

– The difficult global financial climate; and

– Needs of SMPs and SMEs

5

GLS Respondents By Region

6

IFAC Priorities

• Supporting the independent standard-setting boards

• Advancing public sector financial management

– IPSAS Adoption/Implementation

• Building capacity

• Regulatory and public policy issues

7

Supporting the Independent Standard-setting Boards

• International Auditing and Assurance Standards Board (IAASB)

• International Ethics Standards Board for Accountants (IESBA)

• International Public Sector Accounting Standards Board (IPSASB)

• International Accounting Education Standards Board (IAESB)

8

Advancing Public Sector Financial Management

9

• IFAC continues its efforts to:

– Increase the confidence in international standards;

– Advocate the adoption of international standards;

– Support the implementation of international standards

• IFAC is working with Members Bodies and other stakeholders to:

– Advance proper public sector financial management, including IPSASs

Building Capacity

10

• Good governance, accountability, good financial management, and transparency are vital to economic growth

• A sound financial infrastructure includes high-quality recognized standards in auditing and assurance, ethics, education, and public sector accounting

• Nations such as Australia, India, New Zealand, Republic of Korea, and Singapore have a high level of development

– Any discussion of economic growth must include the development of the regional accountancy profession

• Building capacity ensures there are enough qualified accounting professionals to meet the demands of the marketplace and sustain and increase growth

Public Policy and Regulation

11

• Regulatory and public policy issues were also concerns addressed in the 2012 Global Leadership Survey

• IFAC is fully committed to enhancing the focus on regulation and public policy

• It is uniquely positioned to research and present the views of the profession and its stakeholders on a global level

• IFAC will continue to speak out on issues

Integrated Reporting

12

• IFAC sees a continuing trend toward integrated reporting <IR>

• <IR> facilitates transparency and accountability and enhances investor/stakeholder confidence

• It also contributes to the development of sustainable economies and financial stability

• IFAC has led the way in its development, working with the International Integrated Reporting Council (IIRC)

• These efforts have earned IFAC a “seat at the table” for the accounting profession

Recruiting the Best & Brightest

13

• If trends continue, the accountancy profession may be unable to properly meet the demands of our global communities

• The global financial crisis has made banking/finance less attractive to new professionals

• A collective approach is needed to recruit the best and brightest from our educational institutions

• Implementation of international standards facilitates global mobility for the professional accountant

Supporting Growth in Asia

14

“Data is mixed, but Asia continues steady economic growth…

…Economic growth in developing member countries in the Pacific is projected to average 4.2% in 2013.”

- Asian Development Bank report

Supporting Growth in Asia

15

• ASEAN capital markets are showing strong growth

• The accountancy profession serves as the foundation of high-

quality financial information, which underpins the effective functioning of capital markets

• Analysts predict ASEAN’s combined GDP of $2.2 trillion will increase 28% from 2012 to 2015

• The increase in Asia’s per capita GDP and subsequent spending

will fuel growth in affluent and emerging affluent consumers • IFAC will work with its regional organizations, professional

accountancy organizations, and other stakeholders to establish and strengthen the profession and actively promote global accountancy development


Segment 2A Shaping the accounting profession to meet the demands of

tomorrow's challenges

by

Chairman

International Valuation Standards Council

Former Chairman

International Accounting Standards Board

Accounting standard setters and the global economy – Taking the driver's seat or merely playing catch-up?

Sir David Tweedie

by

Immediate Past President

Institute of Chartered Accountants in England and Wales

Leading the development of the global accountancy profession to meet the challenges of tomorrow

Mark Spofforth

Introduction

• My background.

• Accountancy as a language, not a science.

• The development of professional firms and the shape of today's profession.

• Audit skills have helped grow global business leaders.

• My professional body ICAEW– set up in 1880 to act in the public interest

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A Definition of a Profession

• In 1992 Lord Benson set out nine obligations that a profession should have to the public – useful even though things have moved on:

1. A controlling professional body, which mandates members to

subordinate their selfish interest in favour of the governing body. 2. The governing body sets standards of education as a condition of

entry, and thereafter ensures students attain an acceptable level of competence. Learning must continue throughout the member’s professional life.

3. The governing body must set the ethical rules and professional standards that are to be observed by members.

4. The rules and standards enforced by the governing body should be designed for the benefit of the public and not the private advantage of the members

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Benson’s definition

5. The governing body must take disciplinary action, if necessary, expulsion from membership should the rules not be observed. 6. Work is often reserved to a profession by statute for the protection of the public; it should be carried out by persons with the necessary competence. 7. The governing body must satisfy itself that there is fair and open competition, so that the public are not at risk of being exploited. It follows that members in practice must give full information to the public about their competence, experience, capacity to do the work, and the fees payable. 8. Members must be independent in thought and outlook. 9. In its specific field of learning, a profession must give leadership to the public it serves.

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Regulation

• Regulatory structures: – Self regulation – Government regulation – Self regulation with oversight

• Development of collaborative organisations – IFAC, GAA.

• IFAC does standard setting in:-

– Ethics

– Education

– Accounting

– Auditing

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Quandary 1

• Standards are set by practitioners with technical knowledge but inherent self-interest. How does society ensure that these standards are in the interests of the public more generally?

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Quandary 2

• Standard setting tends to be dominated by large firm technical staff, with few “front-line” or smaller practitioners able to give the necessary time and input – does this lead to over complex, theoretical, frameworks rather than practical language in standards and the resulting accounts?

24

Quandary 3

• Standards are set in great detail so that greater consistency and reliability results. Are Practitioners reluctant to exercise judgement to over-ride the written guidance, even where it is not mandatory?

25

Quandary 4

• Clients employ advisers to minimise their tax bill; does the adviser need to advise on the broader implications of a tax strategy – eg risk to reputation.

26

Quandary 5

• Competition in the accounting market has been reduced by consolidation in a relatively few major global firms, with no obvious solution to their resulting market dominance.

• Can competition be increased without reducing consumer choice?

27

Future Challenges:

• Looking forward, not back – the Sharman report.

• “Mark to market” – educating the users of accounts.

• The value of audit – less volatility in market prices, not certainty of business success.

• The responsibility of corporates – is it more than profit maximisation? What should Companies be responsible For?

• Complexity of accounts – the Integrated Reporting model.

• Accounting for natural capital (TEEB, based in Singapore)

28


Segment 2B Establishing a robust infrastructure for Singapore's ascension to

a global accountancy hub

by

Chairman

Singapore Accountancy Commission

CDAS recommendations:

An update from 2010 and what more can be done by the relevant

stakeholders to advance the accountancy profession

Michael Lim


Segment 3 The Singapore Chartered Accountant:

Poised to seize opportunities in Singapore, Asia and beyond

by

Chief Executive Officer

Deloitte Asia Pacific and

Deloitte Southeast Asia

How Singapore Chartered Accountants can lead the

region through the changing accountancy services landscape

Chaly Mah

Key Themes

• Importance of Accountancy Profession in the Region

• Changing Landscape

• Future of the Profession

• How Can Singapore Chartered Accountants Lead?

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Importance of Accountancy Profession in the Region

Profession in Asia-Pacific

• Asia-Pacific region is the fastest-growing region for international accountancy networks

• Asia-Pacific accountancy market forecasted to reach US$38.3 billion by the end of this year

• Current size of accounting profession in Singapore is US$862.4 million, or 0.47% of Singapore’s GDP

• At the heart of Asia-Pacific, Singapore is well-positioned to benefit from the growth of the region

• The high growth potential and rise of new investment opportunities will fuel demand for Singapore’s professional accountancy services and talent

• Singapore provides a compelling proposition for companies looking for regional HQs to spearhead their business expansion into Asia-Pacific region

35

Singapore’s Vision

• Singapore’s vision is to transform into a leading global accountancy hub for Asia-Pacific by 2020

– Raise the sector’s existing share of GDP from 0.47% to about 1%

– Double the exports contribution of professional accountancy services by the sector to the region to 50%

• Complementary relationship between Singapore's growth as both Financial and Accountancy hubs

• The profession is primed to take part in the major transformation in Singapore economy that promises exciting growth prospects over the next 10 years

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Changing Landscape

Capital Markets Ecosystem:

38

Auditing

oversight body

Auditor

Audited

company

Institutional

investors

Financial institutions

regulator

Banks /

lending institution

Retail

investors

Securities

regulator

Credit rating

agencies

Investment banks

Standards

setting bodies

Investment

analysts

Audit

committee

Increasing connectivity and complexity of relationship with other stakeholders

CFO

Accountants

Preparers of

financial

statements

Post Lehman: The profession is being challenged

Role of auditor

Communications

Fee pressures

Mandatory firm rotation

Mandatory re-tendering

Joint audit

Further restriction on scope of

services

IFRS adoption

Concentration of audits

Review of tax structures

Areas of Concern

• Common areas of public discontentment

– Late and minimal loan impairment provisions

– Overly volatile fair values

– Auditors too late in communicating systemic risk to public

• Concerns from regulatory changes

– Disenfranchising shareholders by having the auditor appointed by a third party such as a regulator

– Mandatory audit firm rotation, mandatory tendering or the formation of a consortium to perform an audit

– Any further prohibition of non-audit services

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Positive Measures

• Relationship between auditors and regulators – Improve communications and cooperation between auditors and regulators

• Bank auditors to contribute to financial stability by working more closely with banking regulators to avoid systematic risks

• Company reporting on risks linked to its business model and the assumptions on which it bases its going concern status

• More robust auditor reporting on the audit process and methodologies used

• General enhancement of corporate governance practices

• Contingency planning between firms and regulators with a view to ensuring continuity of audit services

• Greater international cooperation among auditor oversight authorities

Future of Profession

Future of Audit

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• Audit Framework

• Detailed long-form report (MD&A) on financial health and risks linked to business models of companies

• Report on going concern assumptions

• Frequency of reporting

• Evolution of audit report (e.g. Vodafone)

Auditors of the Future

• A broader international outlook, both in terms of service provision and professional development

• Non-traditional career paths, with more diverse backgrounds

• Demanding more from their careers, including mobility, work-life balance, real-time learning

• Encouraging more entrepreneurial, creativity, and strategic thinking skills

44

CFO of the Future

45

Catalyst Drive Behavior Change

Strategist Provide Financial

Leadership

Operator Drive on Core

Operational Duties

Steward Protect and Preserve Critical Assets and Accurately Report on Financial Position

Future Roles:

Traditional Roles:

Public expectation of a more complete CFO/accountant – not just accounting knowledge, but also a good understanding of finance, risk management, strategy & operations

So how can Singapore Chartered Accountants lead in this changing landscape?

SQP and What It Means

47

From:

SCAs Can Lead by…

• Improving public image

• Establishing trust and ethical leadership

• Enlarging strategic and commercial role

• Adopting a holistic view

• Broadening a global mindset

• Focusing on sustainability and integrated reporting

48

Reinvent the Talent Pool

• Hold post-university accountancy qualification with global repute and standing (SQP)

• Improve work-life balance and provide diverse paths for career advancement

• Take advantage of on-demand accelerated learning

• Promote high-quality market-relevant research to position Singapore accountancy sector as a leading research centre through the Accountancy Services Research Centre

49

Collaborate in the Ecosystem

• Work closely with regulators to upgrade the quality of preparers of the financial statements

• Improve corporate governance standards

• Upgrade capability and expertise of SMPs

50

Disruption and Innovation

• Disrupt or be disrupted? … Which would you rather be?

51

Amazon or Borders?


Canon or Kodak?


• Disruption: Over next few years, 20-30% of professional services could be disrupted

• Stay nimble and adapt to fast-changing environment

• Harness Big Data

53

Big Data in the News

54 25 June 2013


• Disruption: Over next few years, 20-30% of professional services could be disrupted

• Stay nimble and adapt to fast-changing environment

• Harness Big Data

• Improve productivity

• Embed analytics

55

Concluding Themes

• Accountancy sector will continue to remain a key part of Singapore’s economy and capital markets ecosystem

• The landscape and expectations of auditors/accountants are changing

• Auditors and CFOs of the future must respond

• Innovation and disruption need to be anticipated and embraced

• Singapore Chartered Accountants can lead in the region

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Thank you for your participation

singapore accountancy convention 2013download.icpas.org.sg/event/sac2013.pdf · singapore...

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