Keynote Address By Ms Indranee Rajah, Minister In The Prime Minister’s Office and Second Minister For Law, Finance And Education, at the ISCA Practitioners Conference on 1 June 201801 Jun 2018
Transforming to Value-Add in the Digital World
Mr Kon Yin Tong, President of ISCA
Ladies and gentlemen
1. It is a great pleasure to be here. Thank you very much for having me. I always enjoy my interactions with professionals. In my Ministry of Finance role, I get to meet a lot of accountants. So it is very good to be here with you today.
2. Accountants used to say: a trial balance that doesn’t balance is called a late night.
a. In future, hopefully, such late nights will increasingly be outsourced to computers and artificial intelligence. You might be able to get more sleep.
b. With the help of technology, balancing trial balances will increasingly be less of a trial for accountants and practitioners. New technologies are going to reshape how we live, work and play.
3. Against the backdrop of technology disruption, I would like to speak about the need for transformation and how it can help your clients’ and you in the upcoming Industry 4.0 world.
Accountancy sector in Industry 4.0
4. What is the value of the accounting practitioner’s services?
a. In 2013, researchers from the University of Quebec and the North Dakota State Universities tried to answer that question.
b. According to their research, accounting practitioners provide two types of value-added services. The first type relates to your role as an independent check on management’s financial statements. The second type of value-add relates to the insights that you provide to your clients, which allows them to make more informed business decisions.
c. These value-adds have provided practitioners with a competitive edge.
5. However, Singapore’s economic landscape is being reshaped by new technologies.
a. These new technologies will move Singapore into the Industry 4.0 age. In Industry 4.0, Technologies will change the way we live and work. Technologies will also change the business models of many companies. Technologies will further result in companies gravitating towards intangible assets rather than physical assets.
6. So let me highlight three ways, in which these changes will impact yourself as accounting practitioners.
a. First, practitioners will increasingly have to take into consideration cyber security risks as you carry out your audits. As your clients increasingly incorporate technologies into their operations, cybersecurity will become a key risk area to focus on.
i. The risk of cyber security attacks is real. According to a recent study by Microsoft, the economic damage arising from cyber-attacks on Singapore companies alone last year amount to 17.7 billion U.S. dollars.
ii. While practitioners may not be cyber security experts, practitioners should consider such risks as part of your standard risk assessments. ISCA’s report on Cybersecurity Risk Considerations in a Financial Statements Audit also emphasised the importance for practitioners to keep abreast of considerations that are relevant during such risk assessments.
iii. By taking into account cyber security risks, practitioners can then provide better assurance and value-add to your clients. You need a competitive edge, and this is one of the areas that you can provide.
b. Second, practitioners will increasingly need new and different skills. Change is uncomfortable, but you will have to acquire these new skills.
i. Beyond accounting and functional expertise, practitioners will need to understand new technologies. Understanding new technologies will help you to conduct more effective risk assessments, as business models change with the emergence of new technologies. Understanding the new technologies will also help you understand the impact these technologies have on the financial statements of your clients.
ii. Practitioners will also need to have teams with multi-disciplinary skills, and the ability to interpret and explain the output from the new technologies to your clients.
iii. Such skills will allow practitioners to continue providing your clients with insightful business insights in the era of Industry 4.0.
c. Third, practitioners will also need to innovate in the delivery of services.
i. Such changes can range from the complex, like how risk assessments and audit tests are conducted, to the mundane, such as how your clients are billed. The Singapore Accountancy Commission (SAC) has been working with the Infocomm Media Development Authority (IMDA) to implement the e-invoicing framework in the accounting services sector. The framework will allow practitioners to bill your clients electronically rather than physically, thus cutting down the mundane but important work of billing.
ii. Such changes will allow practitioners to deliver your services faster, more efficiently and more competitively.
7. To continue to value-add in Industry 4.0, accounting practitioners will therefore need to transform to keep up with the changing external landscape.
Tapping on the accountancy transformation roadmap
8. As I said earlier, change is uncomfortable. Transformation goes with the pace which seems to be breath taking, and leaves you breathless. So it is important that you have help and support in this journey of transformation. Let me next share some of the plans to help businesses and yourselves.
a. Many of you would have heard about the Professional Services Industry Transformation Map (ITM). It was launched in January this year. The ITM charts the transformation roadmaps for five key sub-sectors, which includes the accounting services sector.
b. Through the transformation roadmap for the accountancy sector, these are the things we hope to do. First, grow your innovation capabilities in the high growth areas; Second, equip you with the skills necessary to be future ready; and Third, establish Singapore as a hub for the region to access the best accounting expertise in the region.
9. We want Singapore to be like a global exchange, where everybody else in ASEAN and Asia, when they think of accounting services, where is the first place that they must go - we want them to think of Singapore. We want them to look to Singapore as the place to procure high quality, high value-add accounting services.
10. SAC has been working with various agencies, including ISCA, on the implementation of various initiatives in the transformation roadmap. Today, I am very pleased to announce two initiatives to help your businesses and yourselves.
11. First, SAC, in collaboration with IMDA and Enterprise Singapore, will be launching the Digital Transformation for Accountancy programme in the third quarter of this year.
a. Smaller accounting entities have highlighted to SAC your challenges in adopting technology. The cost of buying such technological solutions is one challenge. Another challenge is that you do not have the resources to curate and choose the appropriate technology solution.
b. SAC has heard you and they’ve tailored the programme to meet your needs. Under this programme, smaller accounting entities can apply to SAC to fund technology solutions in the areas of practice management, tax or internal audit. What is unique about the programme is that IMDA will curate the technology solutions suitable for funding.
c. So I would encourage the smaller accounting entities to make use of this programme to integrate technology into your operations. Besides improving productivity, the programme will enable smaller accounting entities to allocate valuable resources to higher-value work, and thereby increase profitability.
12. The second initiative is the launch of the Professional Conversion Programme (PCP) for the Financial Forensic Professionals. This PCP was jointly developed by SAC, Workforce Singapore and ISCA.
a. For mid-career PMETs, this PCP offers you the opportunity to enter into a high growth area such as financial forensics, where manpower is in much higher demand, and it equips you with future-ready skills.
b. For accounting entities, this PCP offers you the opportunity to widen your talent pool by accepting PMETs from different sectors and backgrounds.
c. Many accounting entities, including Ernst & Young, KPMG, Helmi Talib and Nexia TS have pledged their support for this PCP.
13. The Digital Transformation for Accountancy programme and the PCP for the Financial Forensic Professionals are two of the initiatives developed under the accounting sector transformation roadmap. There are many others, which SAC will share with you later during the conference.
Moving beyond the roadmap – a culture of change and innovation
14. The accounting services sector transformation roadmap charts out the blueprint for practitioners to transform. However, in itself, the transformation roadmap will not be sufficient. Practitioners need to play a part by fostering a culture of change and innovation.
15. So I hope that the words change and innovation would not be mere words. I hope that the profession will internalise this, and make it a mindset. Make it an attitude. Make it a way of working. A way of your career and professional life. Because in Industry 4.0, we have no other choice. The world is changing. Businesses are changing. Professions are changing. The accounting sector must not be left behind. There are huge opportunities there, and we will only be able to harness it if we ourselves make sure we change our mindset, and we put ourselves in a position where we have the right skills, the right ability, capability and the knowledge to use the technology that is available.
16. So to spur innovation in the accounting sector, SAC will be holding a Hackathon, the Accounting Innovation Challenge. The Accounting Innovation Challenge is a first step towards inculcating a culture of change and innovation in the accounting services sector.
a. To keep pace with the rapid changes that will be forthcoming in Industry 4.0, practitioners cannot and should not be satisfied with traditional methods of solving problems. You have to explore new ways of solving problems. This Hackathon provides practitioners and participants the opportunity to do so.
17. I am also pleased to hear that ISCA has been helping your members keep up to date with the changing landscape through courses in emerging areas like data analytics, cybersecurity and blockchain.
18. Together with the accounting sector transformation map, a culture of change and innovation will help practitioners stay nimble and respond rapidly with Industry 4.0.
19. So in conclusion, let me say, the future will be an exciting new age for accounting practitioners. However, fortune favors the brave and the prepared.
20. So, I hope that our story be one of triumph over fear of technology. Let us push for more than relevance. I urge you to upskill, innovate and ride on the wave of change.
Thank you very much.