Panel proposes financial incentives to spur consolidation of small and medium practices; firms voice concern over two-year timeframe
By ANNA TEO 09 February 2010
(SINGAPORE) The accountancy sector is set for a shake-up, if plans to consolidate the 500 small and medium practices here over a two-year period materialise.
The Committee to Develop the Accountancy Sector (CDAS) has proposed financial incentives to spur the process: Grants for firms to cover post-merger integration costs and for them to join regional and international network alliances.
Formed by the Ministry of Finance at end-2008 to review the sector, CDAS has put up 10 proposals towards the vision of Singapore as a leading global accountancy hub over the next 10 years.
The 14-member committee - which sought public views after unveiling its proposals in mid-November - sees Singapore becoming a leading centre for high-value professional accountancy services, and for accountancy talent, education, thought leadership and professional development.
But the sector’s infrastructure and institutions must be strengthened. Hence the plan to consolidate the small and medium practices (SMPs), among other proposals. The idea has, unsurprisingly, stirred perhaps the biggest interest and concern among the firms.
According to the Institute of Certified Public Accountants of Singapore - which had a forum in December to gather views on the CDAS proposals - while SMPs recognise the advantages of consolidation, they find it challenging to find suitable partners for merging.
Many SMPs see their niche in providing ‘more personalised’ one-stop services to small and medium enterprises (SMEs) and some, in fact, prefer to stay small.
In any case, the SMPs feel the two-year target time-frame for them to get hitched could be ‘too short to yield any meaningful results’.
ICPAS has suggested that CDAS consider a longer period, and that incentive grants be given, too, to smaller SMPs that provide niche specialised services.
Explaining the rationale behind the proposal, CDAS chairman Bobby Chin told BT that consolidation will enable SMPs to build up capacity and capability, reap the benefits from economies of scale and move up the value chain.
CDAS sees the SMP segment playing a crucial role in meeting the business needs of Singapore’s SME sector, said Mr. Chin, who is chairman of the Singapore Totalisator Board and formerly managing partner of KPMG Singapore.
Many of Singapore’s SMEs have regional operations and the SMPs can position themselves as effective business partners. But the SMPs typically face systemic challenges in talent attraction and retention, and in getting technical support and financial resources.
‘While consolidation is the obvious way to go for the SMPs, the CDAS appreciates that it is not an easy process and there are practical challenges involved for the SMPs,’ said Mr. Chin. CDAS therefore sees the need to ‘inject a sense of purpose and urgency’ to spur the process - via the proposed two-year incentive programme and an Accountancy Sector Development Fund, another proposal of the panel.
‘Can consolidation be achieved in two years? It will not be easy, but I believe it can be done,’ he said. ‘We need to work together with the profession and stay focused on the objective, which is to enable the sector to seize the huge potential that will open up to the Singapore profession.’
China and the Asean economies - potentially key markets for the Singapore accountancy sector’s regional aspirations - present significant growth opportunities for the profession, Mr. Chin pointed out.
‘Based on direct feedback from the SMPs and through the professional bodies, I think the SMP segment appreciates the need to move in the direction,’ he said. ‘The key for many of them is how to get there, as the process is not easy. CDAS has thus set two years as a time-frame for incentivising consolidation. Whether many will take up this offer is an unknown at the moment. What is apparent right now is that the SMPs need scale and scalability in a highly competitive and resource intensive industry.’
Beyond the Big Four firms, a good number of the bigger local accounting firms have long been members of an international network. These include Foo Kon Tan Grant Thornton; MGI MA & YIT PAC, and LTC, which is a member firm of BKR International.
Another CDAS proposal with potential direct impact on the SMPs is the call to review the current $5 million audit exemption threshold - which would mean reducing the pool of audit clients.
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Accountancy sector poised for a shake-up
Panel proposes financial incentives to spur consolidation of small and medium practices; firms voice concern over two-year timeframe
By ANNA TEO
09 February 2010
(SINGAPORE) The accountancy sector is set for a shake-up, if plans to consolidate the 500 small and medium practices here over a two-year period materialise.
The Committee to Develop the Accountancy Sector (CDAS) has proposed financial incentives to spur the process: Grants for firms to cover post-merger integration costs and for them to join regional and international network alliances.
Formed by the Ministry of Finance at end-2008 to review the sector, CDAS has put up 10 proposals towards the vision of Singapore as a leading global accountancy hub over the next 10 years.
The 14-member committee - which sought public views after unveiling its proposals in mid-November - sees Singapore becoming a leading centre for high-value professional accountancy services, and for accountancy talent, education, thought leadership and professional development.
But the sector’s infrastructure and institutions must be strengthened. Hence the plan to consolidate the small and medium practices (SMPs), among other proposals. The idea has, unsurprisingly, stirred perhaps the biggest interest and concern among the firms.
According to the Institute of Certified Public Accountants of Singapore - which had a forum in December to gather views on the CDAS proposals - while SMPs recognise the advantages of consolidation, they find it challenging to find suitable partners for merging.
Many SMPs see their niche in providing ‘more personalised’ one-stop services to small and medium enterprises (SMEs) and some, in fact, prefer to stay small.
In any case, the SMPs feel the two-year target time-frame for them to get hitched could be ‘too short to yield any meaningful results’.
ICPAS has suggested that CDAS consider a longer period, and that incentive grants be given, too, to smaller SMPs that provide niche specialised services.
Explaining the rationale behind the proposal, CDAS chairman Bobby Chin told BT that consolidation will enable SMPs to build up capacity and capability, reap the benefits from economies of scale and move up the value chain.
CDAS sees the SMP segment playing a crucial role in meeting the business needs of Singapore’s SME sector, said Mr. Chin, who is chairman of the Singapore Totalisator Board and formerly managing partner of KPMG Singapore.
Many of Singapore’s SMEs have regional operations and the SMPs can position themselves as effective business partners. But the SMPs typically face systemic challenges in talent attraction and retention, and in getting technical support and financial resources.
‘While consolidation is the obvious way to go for the SMPs, the CDAS appreciates that it is not an easy process and there are practical challenges involved for the SMPs,’ said Mr. Chin. CDAS therefore sees the need to ‘inject a sense of purpose and urgency’ to spur the process - via the proposed two-year incentive programme and an Accountancy Sector Development Fund, another proposal of the panel.
‘Can consolidation be achieved in two years? It will not be easy, but I believe it can be done,’ he said. ‘We need to work together with the profession and stay focused on the objective, which is to enable the sector to seize the huge potential that will open up to the Singapore profession.’
China and the Asean economies - potentially key markets for the Singapore accountancy sector’s regional aspirations - present significant growth opportunities for the profession, Mr. Chin pointed out.
‘Based on direct feedback from the SMPs and through the professional bodies, I think the SMP segment appreciates the need to move in the direction,’ he said. ‘The key for many of them is how to get there, as the process is not easy. CDAS has thus set two years as a time-frame for incentivising consolidation. Whether many will take up this offer is an unknown at the moment. What is apparent right now is that the SMPs need scale and scalability in a highly competitive and resource intensive industry.’
Beyond the Big Four firms, a good number of the bigger local accounting firms have long been members of an international network. These include Foo Kon Tan Grant Thornton; MGI MA & YIT PAC, and LTC, which is a member firm of BKR International.
Another CDAS proposal with potential direct impact on the SMPs is the call to review the current $5 million audit exemption threshold - which would mean reducing the pool of audit clients.
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