Keynote Address By Mrs Josephine Teo, Minister of State For Finance and Transport At The Singapore Accountancy Convention04 Nov 2011
Dr Ernest Kan
President, Institute of Certified Public Accountants of Singapore,
Ladies and Gentlemen
1. Good morning. I am delighted to be here today with all of you at the Singapore Accountancy Convention organised by ICPAS. Let me first congratulate ICPAS for successfully bringing together a distinguished line-up of speakers and panellists, whom I'm confident, will share useful insights on developments and issues that are relevant to the Singapore accountancy sector.
International Developments for the Accountancy Profession
2. The accountancy sector in Singapore serves a business community that is globally connected. As a result, it must keep pace with international developments and also respond to new trends. One important development is the heightened visibility of the value that professional accountants can bring. Events that triggered the 2008 global financial crisis and the current economic uncertainties have caused more investors to question the soundness of their businesses. Professional accountants have long ceased to be pure number crunchers but there are now even greater expectations for you to contribute to management and board-level discussions on wider business issues, including strategy, governance and risk-management. We can therefore expect increased demand for accounting professionals who can competently navigate the intricacies of financial reporting, address complexities in tax systems and enhance companies' risk management capabilities, all of which are higher order and in greater demand.
3. Despite the difficult economic conditions, the accountancy services industry has the opportunity to find new growth potential and opportunities. Accounting firms can develop new sources of revenue by tapping into new lines of high value-added services such as business valuation. However, to capture the promising prospects for the industry, many firms worldwide are being challenged to find better ways to attract and retain accounting and finance staff. The Global Financial Employment Monitor study, which is conducted annually by Robert Half, provides a rough sense of the size of the challenge that we face. This year, two in three employers reported at least some level of difficulty in recruiting skilled accounting and finance professionals. Retention concerns are also on the rise. Globally, 56 percent (more than half) of the employers said they were concerned about losing top performers to other job opportunities in the year ahead. This is an 11-point jump from the year before.
4. Part of the challenge can be attributed to the perceptions of the accountancy profession in general. Especially when the market of talent is tight, employers are forced to relook the pace of career progression, and even hygiene factors such as working hours, and flexibility in switching career tracks. Increasingly, it is also important to consider the branding of the firm as an employer of choice, and of the industry as a profession of choice. Career expectations of many accounting professionals, especially the young, are also changing. The Gen Y accountants, I am told, place high value on development opportunities and career progression, but not necessarily along traditional paths. They will not hesitate to seek alternative careers outside of mainstream accounting and finance roles.
Talent Crunch Situation in Singapore
5. The accounting profession in Singapore is not new to these challenges. In fact, the talent crunch in Singapore is probably more acute because of the shift of the economic centre of gravity to Asia and Singapore's growing position as a global-Asia hub for business.
6. Asia is expected to drive revenue growth for many multinational corporations, and Singapore is well-positioned as the trusted hub for basing their global and regional headquarters. This means that the demand for high-quality accounting services in Singapore will likely grow.
7. According to the Singapore Yearbook of Manpower Statistics released in June 2011, we produced more than 1,000 accountancy graduates from the three local universities last year. Although a large proportion of these graduates will join traditional accountancy and finance fields including external audit, many of them will eventually leave the profession after 3 to 5 years as seen from the trend in staff turnover in these fields. ACRA's survey with three professional accountancy bodies in Singapore also showed that close to one third of their members are no longer in the profession.
8. While these trends likely mean that accountancy trained professionals are versatile and sought-after, they also mean that we risk losing valuable skilled professional accountants to other industries. At the same time, Singapore faces tense global competition for accounting talent. Based on the International Talent Mobility Report developed jointly by ACCA and Robert Half in 2011, 73% of our finance and accounting professionals are interested to move overseas for a job. This is partly driven by the fact that their Singapore training often allows them to command a good wage premium abroad. It is also because of the very strong level of trust placed in Singapore professionals and the high level of integrity that we are able to command.
Are there Solutions for the Talent Crunch?
9. These challenges are also an opportunity and I will outline two approaches here. First, we have to cut the attrition rate by re-thinking staff retention and talent management strategies in order to retain good people. This is something employers have to focus on. Second, we need to increase the supply of accounting professionals by widening and deepening the pool of talent. This is something that professional accountancy bodies and the government can work towards.
Focus on Talent Management
10. Here, I would like to draw a parallel to financial statements. Most companies define their "assets" in terms of cash, receivables, and tangible goods like property and equipment. They do not pay enough attention to their one true asset - their staff. This is especially important for service industries. Employers must recognise their accounting professionals as "assets" and not just "overheads", and step up to strengthen their human-capital management strategies and value proposition. A well-conceived and implemented talent package that promotes professional development takes care of career progression and provides a healthy work-life balance will give employers a competitive edge in the race for limited talent.
Widening and Deepening the Talent Pool
11. Secondly, in order to build capacity and strengthen the capabilities of our accountancy sector, the Pro-Tem Singapore Accountancy Council (SAC) is working on initiatives that will help to widen and deepen the talent pool.
12. A major initiative of the Pro-Tem SAC is to develop a globally-recognised, Singapore-branded post-university professional accountancy qualification also known as the QP. The QP will not only train aspiring professional accountants in core technical skills through course work; it will also train them to apply their knowledge to solve real problems through practical training. Through such training opportunities, accountancy professionals can continue to sharpen their skills and distinguish themselves from th eir regional counterparts. The QP will also help Singapore to build a stronger brand for our accountancy sector and to enhance the standing of our accountancy professionals in the international arena.
13. As the same time, the QP will provide graduates from other disciplines a pathway to enter the accountancy profession, in other words, build a new pipeline of talents for the accountancy sector. With two pipelines instead of one, the industry can benefit from a more diverse range of expertise and experience such non-accounting graduates can bring. Aspiring professional accountants from the region, who possess good understanding of the different laws and tax systems, can also enrol in the QP, adding to the diversity and vibrancy of the sector.
Formation of the QP Development Panel
14. The Pro-Tem SAC has taken significant steps in the development of the QP in the past year. Today, I am pleased to announce that the Pro-Tem SAC has formed a QP Development Panel, which will drive the development of the QP. The Panel will be chaired by Mr Michael Lim, who is also the Chairman for the Pro-Tem SAC. The members include:
a) the Deans of the accountancy schools from our local universities;
b) Partners from both large and mid-tier public accounting firms;
c) CFOs of large local corporations; and
d) representatives from the professional accountancy bodies and national regulator of public accountants.
15. The work of the Panel will be supported by a consultancy services provider that the Pro-Tem SAC had earlier appointed. I would like to take this opportunity to encourage all stakeholders, from industry players, accounting professionals to academia, to actively contribute to the development of QP by providing your views to the Panel. I look forward to a robust and challenging QP that our accountancy graduates and potential accountants from other disciplines would be keen to take up.
16. I am personally excited by the potential of the QP initiative to make a difference to the long-term development of Singapore as a global accountancy hub. There is much to be done to address the demand-supply gap for talented professionals in the accountancy sector. But it is not only a short-term gap that we need to plug. There is a bigger opportunity that we can capture. For this, we will need the concerted effort and support of all stakeholders.
17. The good turn-out today is a reflection of the commitment to work towards a common goal, and I am certain that the discussions at today's convention will provide refreshing perspectives for companies and accountancy professionals alike.
18. With that, let me wish you a fruitful convention ahead and also wish you the best and brightest opportunities in your profession.