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Keynote Speech By Mr Tharman Shanmugaratnam, Deputy Prime Minister And Minister For Finance, At The Singapore Accountancy Convention

02 Jul 2013

Dr Ernest Kan, President of the Institute of Singapore Chartered Accountants (ISCA),

Distinguished guests,

Ladies and gentlemen:

1. It is a privilege and delight to join all of you at the Singapore Accountancy Convention 2013, and most especially because we are commemorating ISCA’s 50th anniversary.

2. It has been an impressive history, with the Institute continuously adapting and reinventing itself so as to stay relevant amidst Singapore’s changing business landscape. Today, you are the largest professional body in Singapore with over 26,000 members. More importantly, the Institute is poised to play an active part in the next phase of the transformation of our economy.
3. This year, in conjunction with the launch of the Singapore Qualification Programme (QP) and the introduction of the Chartered Accountant of Singapore designation, the Institute is taking on new roles, and appropriately changing its name to the Institute of Singapore Chartered Accountants. I commend the Institute for its bold moves to reshape the profession for the future. 

The Accountancy Sector’s Role in Singapore’s Economic Development

4. Singapore is at an inflexion point in its economic development. Our economy is vastly different compared to where we were 20 years ago - with much higher levels of productivity and real incomes. But we all know productivity growth has slowed in recent years, although median incomes have moved up. We must make the next leap in productivity in this decade, so as to provide quality jobs and sustain income growth for our people. 

5. In this restructuring effort, the accountancy sector plays a key role as an enabler for businesses across the economy. It also promises rewarding careers in its own right. 

6. To play to its full potential, the accountancy profession will have to address three challenges: first, to seize growth opportunities by meeting emerging business needs; second, to leverage on technology and raise productivity; and third and related to this, we must widen the routes by which talent enters the profession, and focus on developing deeper expertise in various specialisations within the industry.

Seizing Growth Opportunities 

7. Singapore is strategically located at the heart of the fast-growing Asia-Pacific accountancy services market. This is a major advantage for both the global accountancy firms that are based here and our Small and Medium Practices (SMPs). It is also a clear plus for Singaporean talent.

8. Multinational corporations (MNCs) are setting up and growing regional headquarter operations to service fast-growing Asian economies They will anchor their finance functions in Singapore if they have access to high-quality accountancy and related professional services.

9. Accountancy firms can gain from this trend as well as strengthen Singapore’s position as a financial and business hub of choice, by expanding the services they offer - for example into areas like risk management and business valuation which are in high demand. .

10. There are also gaps, and hence considerable potential in servicing the SME sector, which forms the backbone of Singapore’s economy. A joint survey by ISCA and CPA Australia this year found a mismatch in the services offered by SMPs vis-à-vis the services required by their SME clients [1] . SMEs had indicated that they were willing to pay a premium for advisory services in tax, risk management and financial management. There is opportunity here for SMPs to move beyond providing audit and assurance services. 

11. We are also seeing an increasing number of SMEs seeking to penetrate overseas markets . These are often complex markets. SMPs providing focused, SME-friendly services can play the role of effective business partners for our SMEs and support their expansion abroad.

12. As the accountancy sector expands into new growth areas, however, we must continue to deepen our primary strengths in accounting and auditing services. We can never lose sight of the need for a robust financial reporting ecosystem, and especially as business models transcend borders and grow in complexity. All players in the reporting value chain must play their part in producing trusted financial information as well as high quality audits.

Improving Productivity through Technology and Scale

13. Let me now move on to the second challenge: raising productivity. The recent ISCA-SAP Productivity Benchmarking exercise and ISCA Pilot Productivity Studies have found significant room for productivity improvement - in our SMPs as well as in the finance functions of businesses in Singapore. We cannot duck this challenge if our accountancy and business sectors are to remain vibrant and competitive.

14. There is significant scope to use technologies to raise productivity. Our SMPs can acquire technology and software that meet their needs at a low cost, by taking full advantage of Government schemes such as the Productivity and Innovation Credit (PIC) and the Infocomm Development Authority’s iSPRINT scheme.

15. In this regard, I would like to commend ISCA for helping to facilitate the formation of the One SMP consortium, a technology adoption grouping comprising 28 SMPs. Participating SMPs reportedly achieved cost savings of up to four headcounts through the use of a shared practice management system. The One SMP consortium has also extended its service offerings to include joint marketing, recruitment and training. By sharing resources this way, participating SMPs have been able to overcome a lack of economies of scale, and move up the value chain to provide a wider range of high value-added accountancy services to clients.

16. Another initiative is the Singapore Accountancy Alliance, now a strong network of local SMPs. By sharing resources to enhance technical excellence, networking and human resource development, as well as through collective branding, member firms have been able to compete for larger, high value-adding jobs.

17. I hope that more accountancy firms, including the Big-Four firms, will leverage these existing initiatives, or embark on other initiatives to improve productivity and deepen expertise.

Widening Entry and Deepening the Talent Pool

18. The third and closely-related challenge is talent. The accounting profession provides a good career path, both in auditing and accounting services and for individuals who choose to move into other finance-related positions in MNCs or SMEs.

19. The profession at the same time faces a tight labour market, with many competing career choices for Singaporeans. We therefore cannot plan to expand the pipeline of young Singaporeans pursuing accountancy training in our tertiary institutions, or to boost the accountancy profession’s share of the local talent pool. Instead, we should focus on broadening the pathways into the profession, including allowing for less conventional routes of entry. And most importantly, we must make up for large numbe rs by instead developing higher levels of expertise and deeper specialist capabilities, through continual investment in skills over the course of a career. 

20. Most entrants in accountancy in Singapore have come through the route of a tertiary education in accountancy. There are strengths in this model, but it would be well-complemented by taking in those trained in other disciplines. The practice of taking non-accountancy graduates into the profession is common in the UK for example, and has begun in Australia.

21. There are already some moves in this direction in Singapore. For instance, under a bridging programme introduced last year, PricewaterhouseCoopers (PwC) Singapore recruited ten non-accountancy graduates to take on a three-month foundational course administered by CPA Australia. There is merit in this. Accountants with diverse educational backgrounds and work experiences can build innovative teams, and respond readily to new business opportunities.

22. The Singapore Qualification Programme (QP) was indeed introduced to enable both accountancy and non-accountancy graduates to gain entry to the profession, as well as to strengthen the skills and capabilities of all aspiring professional accountants. It develops core technical skills through coursework and training. The practical component of the QP is noteworthy as it seeks to train aspiring accountants to apply knowledge to solve real-world problems. I am pleased that since registration for the Singapore QP was officially opened less than a month ago (3 June), firms have committed over 300 aspiring professional accountants to take the Singapore QP. (About 30 applicants, or 10%, came from a non-accountancy background.)

23. Beyond the Singapore QP, we should explore every way to increase quality and mastery at all levels of the accountancy profession. Continuous professional education (CPE) and learning is more vital than ever. Through its CPE courses, ISCA can help its members keep their professional knowledge and skills up to date as technology, business needs and regulations change.

24. As the Designated Entity responsible for conferring the Chartered Accountant of Singapore designation, ISCA is a key strategic partner of the Government and the Singapore Accountancy Commission (SAC). It is a new institutional landscape, and I would be surprised if there was not some apprehension. But I am confident that ISCA and SAC will work closely together to ensure that Singapore is a centre for the highest standards of professional competence, expertise and ethics amongst accountancy professionals.

Celebrating Excellence

25. As we raise standards across the board in the profession, we are also celebrating excellence. I am pleased that ISCA will be launching the inaugural Singapore Accountancy Awards in 2013, to recognise the best in the accountancy profession - both firms and individuals.

26. Let me finally congratulate ISCA once again on your 50th anniversary, and thank you for your commitment in uplifting the accountancy profession.

27. There is much work ahead. It will require all stakeholders - accountancy firms, professional bodies, businesses and the Government - to work together to raise productivity and standards, seize growth opportunities in the dynamic Asia-Pacific region, and invest in talent and expertise. I am confident that ISCA will play a key role in the transformation of the accountancy sector and in Singapore’s continued success.

28. I wish you a fruitful convention. 

[1] ISCA-CPA Australia Survey on Advisory Services for Singapore Businesses (March 2013). The top three services which SMEs viewed as important, or were willing to pay a premium for, are advisory services in tax (32%), risk management (19%) and financial management (19%). However, the top three services provided by SMPs are in audit and assurance (94%), compilation engagements (88%), followed by tax and compliance (86%).