Speech by Mrs Josephine Teo, Senior Minister of State for Finance and Transport, at the ACCA Singapore Annual Conference12 May 2014
Datin Alexandra Chin, Vice-President of the ACCA Council,
Mr Wilson Woo, President of the ACCA Singapore Branch,
ACCA Council and local executive committee members,
Thank you for inviting me to today’s event.
2. As I was browsing through the conference programme, I was pleasantly surprised to see that in this morning’s session, there will be a presentation by a futurologist and trend-spotter, and there will also be a presentation on “Digital Darwinism”. I was surprised as it did not look like the usual programme for a gathering of accountants and accounting professionals. For a moment, I wondered if I was looking at the wrong conference programme, until I saw what was going to happen in the afternoon.
3. I am very glad that the organisers decided to look beyond accountancy, and there are very good reasons why such a programme makes sense. This is because the accountancy profession serves the world of business - and the world of business is increasingly complex. The world of business is also impacted by regulatory change, the pace and scale of which can feel threatening at times.
A new future is rapidly unfolding
4. Given the future-orientation of this conference, a relevant question to ask is “What is the future of the accountancy profession?” I did what most people would do these days - I did a search on Google, and a number of useful articles came up.
5. One was a report commissioned by ACCA’s Accountancy Futures Academy on the “100 Drivers of Change”. It is quite a good read if you have not gone through it, I encourage you to. What I particularly liked was that it is conscious of today’s reality in the working world. It contained very useful and sound advice which is distilled into five imperatives for the accountancy profession.
- The first imperative is to embrace an enlarged strategic and commercial role. Within the organisation, the accounting professionals have a more strategic role to play in decision-making.
- The second imperative is about establishing trust and ethical leadership. In the public domain, there is an expectation and a role for the accounting professionals to uphold integrity in business dealings.
- The third imperative is to focus on a holistic view of complexity, risk and performance. I understand that the afternoon session deals with integrated reporting, and this will be discussed in greater detail.
- The fourth imperative is to develop a global orientation.
- The fifth and final imperative is to reinvent the talent pool. Essentially, it is no longer possible to be narrowly-focused among accounting professionals. You will not be able to get your job done very easily.
This is very sound advice.
6. Another interesting article I found is written by David Devlin, which was first published in Ireland and re-published by Global Accounting Alliance. Its question is, “Where will the accountancy profession be in 25 years?” The report focuses more on the impact of regulatory and policy changes. It essentially identified two things that accounting professionals would be required to do.
7. First, to offer more qualitative insights - for example, looking into enterprise risk and the potential for fraud. Second, it expected that there will be more auditor commentary on the information produced by management, not just in annual reports, but also through earnings releases and websites. Basically, people are looking to the accountancy profession to make sense of information that is becoming more widely available. It also identified a greater role for accounting professionals, in helping clients adapt (MNCs and SMEs alike), and also in safeguarding public interest and helping to preserve trust in institutions.
8. The third study I came across was a comprehensive study by the US-based accounting software and consulting firm Intuit, which was behind the “Quicken” and a number of other financial and accounting software. Intuit released a “Future of Accounting Report” in 2013, which attempted to project the next decade of accounting. They projected a number of findings in the next decade of accounting and I am going to quote selectively from the report, picking up things that I think would be relevant and interesting to today’s audience.
- Many of the traditional services provided by accounting professionals – especially low value-added or easily automated services – will become less profitable and even disappear due to automation and competition. However, for those who can structure and automate these basic service offerings effectively, there will be profitable opportunities to serve the growing number of businesses looking to outsource all or part of their book-keeping and finance functions. From my experience speaking to a large number of SMEs in Singapore, I can relate to that need.
- There is also growing business complexity, knowledge requirements, regulatory and legal change. Client expectations will favour accounting specialists over generalists.
- Specialisation will lead to increased collaboration and partnering among accounting firms and other financial professionals, both domestically and internationally.
- One other area of development that seizes the imagination of the profession - that is not just in the accountancy arena but across other businesses - is the advent of Big Data. What it means for businesses is that analytical tools and software will greatly increase the opportunities to provide clients with analysis, performance management and decision-support services. This was also identified in the first two reports, which is helping your clients to make sense of the large amount of information and data that are available.
- Technology consulting opportunities for accounting professionals will increase. This is rather interesting, which also seems unthinkable not so many years ago. Earlier on, I had heard talk about how it is not so much about having Chief Financial Officers, but rather Chief Financial Technology Officers. Increasingly, both terms are becoming intertwined. Data management, compliance, security and privacy consulting opportunities will be particularly strong.
- Outsourcing opportunities will be available to accounting firms able to develop and deploy efficient systems for managing book-keeping and financial operations for business clients. Successful accounting professionals will take on new roles as consultants and advisors, providing performance management, decision support, IT advice and similar services. It also makes you wonder, to what degree that the content of the training and professional development programmes that you have attended in the past will be sufficient and relevant in the next decade.
9. Some of the changes are no doubt daunting. For example, how do you pursue specialisation while yet avoid becoming too narrowly-focused? Automation and competition could mean loss of jobs. But, it is useful to point out that the accounting profession is not the only one affected.
10. For example, in medical profession, the use of “cognitive computing” technology like IBM’s Watson and wearable sensors has enabled computers to provide accurate initial medical diagnosis and treatment plans. In the legal profession, the use of advanced analytics has enabled the outsourcing of drafting and proof-reading of legal documents to computers, transforming a previously time-consuming and laborious task into a process that takes mere minutes. What this means is that while this has been a great productivity boost, it has also rendered a segment of paralegal services and manpower obsolete.
Exciting opportunities for the profession and for Singapore
11. And yet, looking at these reports from the point of viewpoint of a non-accounting professional, and thinking about changes that the accountancy profession has to go through, I felt a sense of excitement for both the profession and Singapore.
12. Excitement for the profession because of an estimated 12,000 people employed by accountancy-related firms, and another estimated 38,000 accountancy-trained professionals, who serve in key roles such as Chief Financial Officers and finance executive within companies in other sectors. We know that these are jobs that pay well, which provide people with the means to grow their families, and to lead meaningful and fulfilling lives. But at the same time, we know that the stress level in the profession is quite high, especially during closing times. There is also a sense amongst some that as compared to other professionals, fees and income have not kept pace.
13. The developments outlined in the reports cited present opportunities for our professionals to level up and hence, the sense of excitement.
14. The excitement for Singapore is because we are in the heart of Asia where markets are emerging; there is still good growth momentum. In particular, the accountancy sector experienced strong growth between 2000 and 2010, and operating receipts grew at a compounded annual growth rate of about 6% while export of services increased twelve-fold.
15. The accountancy sector, which is an important contributor to Singapore’s vibrant business landscape, will grow in tandem with Singapore’s growth as an international capital and financial centre. This is underpinned by Singapore’s reputation as a trusted business hub with strong corporate governance practices and a robust regulatory environment.
16. Increasing numbers of multinationals are setting up and growing their regional and global headquarter operations in Singapore to service fast-growing economies and markets. For example, according to a study, about 44% of Fortune 500 companies have located their regional and/or global headquarters in Singapore.
17. This is important to the growth of a strong professional services eco-system, which includes management consultants, legal advisors and accountants, to support the business activities of these regional and global headquarters. Language and cultural diversity also enable Singapore-based teams to plug in more readily and be more effective across markets. And therefore, we are well-placed to grow accountancy sector and strengthen its regional positioning. Hence, the sense of excitement.
Singapore is poised to enjoy an uplift
18. The Ministry of Finance had set up the Committee to Develop the Accountancy Sector (CDAS) in 2008. Since the completion of the holistic review of Singapore’s accountancy sector in 2010 by the CDAS, there have been exciting developments in the accountancy sector here, which give us confidence to believe that the accountancy sector in Singapore is poised to enjoy another uplift.
- First and foremost, the Singapore Accountancy Commission (SAC) was set up in April 2013 to oversee the strategic direction for the growth and development of Singapore’s accountancy sector.
- Amongst its many priorities, the SAC has launched the Singapore Qualification Programme (SQP) last year in June, and to date, there are over 500 registered candidates. This is quite a good start for a professional qualification programme. The Singapore QP is now into its second semester for the first batch of candidates who will be taking their examinations in June 2014. SAC has also finalised the module inter-changeability of the Financial Reporting and Assurance modules with the equivalent modules in the ICAEW Associated Chartered Accountant (ACA) programme in March this year. This will increase awareness and recognition of our Singapore QP candidates, and enhance their international portability.
- SAC has also set up Centres of Excellence (CoExs) for various specialisation pathways, such as Business Valuation and Internal Audit. The Institute of Valuers and Appraisers of Singapore just organised its inaugural business valuation conference in March this year. This is one of the specialisation pathways that we see a lot of scope for growth, and we would like to make sure that our accountancy professionals gain a first-mover advantage.
- Additionally, the Singapore CFO Institute (SCFOI) has been active in organising several events, including the annual CFO Connect Symposium, CFO roundtables and special interest groups that discuss current developments and issues within the CFO community. Speaking to the regional business community about who their staffers of the finance functions are, I noted that quite often, Singaporeans are staffing those functions. There is hence, a value being attached to the skills and also the value they gained by being based in Singapore.
- Last but not least, the accountancy sector also saw the transformation of Singapore’s national accountancy body, the Institute of Singapore Chartered Accountants. (ISCA) in tandem with the use of the Chartered Accountant of Singapore designation. It is not just a name change, as ISCA is taking bold moves in its goal to become a globally-recognised professional accountancy body.
19. All these initiatives will contribute to achieving the vision that we have set for ourselves. The Government will continue to support the development of the accountancy sector to transform Singapore into a global accountancy hub. As members of this ecosystem, it is important that the accounting professionals work with other stakeholders such as SAC, ISCA and other professional bodies to shape the future of business and that of the profession here.
20. In closing, I thought I would share from another resource I came across. This was an older article (2008) focusing on the challenge of talent retention in the accounting profession. The author of this article has quoted from a book by Daniel Pink. The tile of the book is “A Whole New Mind: Why Right Brainers will Rule the Future”, and Daniel Pink says:
“Relatively few people become accountants out of a sense of intrinsic motivation. This weekend, there will be accountants doing watercolours in the garages. But I guarantee you that you won't find any sculptors who on weekends will be doing other people's taxes for fun.”
21. In other words, few auditors use their profession to express their true purpose and passion in life. They do this out of working hours. In the author’s mind, this is the challenge for employers because the work that entry-level graduate auditors do, is generally cumbersome and dull. And yet, thinking about all the changes that the accountancy profession needs to go through, passion and energy are precisely the qualities needed for firms to be able to rise to the challenges and opportunities brought about by change.
22. So I hope that in Singapore, work given to accountants at every level is going beyond the routine and mundane, so that it is also a profession in which their creative, innovative, energetic and passionate selves can also find expression. The opportunity to uplift the accountancy sector is equally an opportunity to uplift our people, not just in financial terms, but in terms of the meaning and fulfilment, which is ultimately what many of us seek in life.
23. On that note, I wish you a fruitful and enjoyable conference.