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This article was first published in the February 2018 China edition of Accounting and Business magazine.

Amid all the high-tech kit on the desk of a man who advises accountants for a living stands an old-fashioned alarm clock.

The tick-tock of the battery-powered relic serves as a reminder that the way business used to be done (for example, the billable hour) could be a roadblock to firms’ growth today.

‘Firms need to be partners in business, rather than mere service providers,’ says Michael ‘MC’ Carter, co-founder of Practice Paradox, a digital marketing consultancy for accountants operating in multiple countries. ‘How can you build a relationship with a client who is reluctant to pick up the phone, because the meter is running?’

While the Big Four firms have branched out into new territory such as cybersecurity and analytics, industry research from Singapore suggests that smaller firms are lagging behind.

According to the AEcensus2016, the latest national census conducted by the Singapore Accountancy Commission (SAC) for accounting entities, the Big Four generated 66% (S$1367bn) of the record S$2bn in total revenue of Singapore’s accounting sector in 2015, with smaller firms losing market share. Compared to the previous year’s census, says Germin Ong, head of strategic planning at the SAC, ‘the productivity of the Big Four improved while that of the smaller firms was stagnant or dropped slightly’. Diversity of services is highlighted as the difference.

‘Overall, the Singapore accountancy sector achieved an estimated 2.5% improvement in productivity in 2015, better than many other sectors in Singapore,’ Ong says. ‘However, the productivity improvements were confined mainly to the Big Four which generated S$150,000 per employee.’

These were mainly achieved from their efforts to adopt advanced technologies and provide higher value accounting services, as well as their ability to recruit and develop accountancy talent, Ong continued. The smaller and medium-sized firms, he says, generated about S$80,000 per employee, almost half that achieved by the Big Four.

‘While we note that the smaller firms have begun to diversify into additional accounting services and achieve higher revenue growth, there is room for them to consider adopting more technology and strengthening their human resource practices to attract more talent to join them,’ he says.

Presenting the census findings at an ACCA seminar last year on the role of small and medium-sized practices in the future economy, Ong put forward three key thrusts which could help smaller firms to close the gap.

One is to expand into high-value accounting work through innovation and transformation. ‘Diversify beyond audit services,’ Ong urged them. ‘And adopt technology.’

The second is to foster collaborations and partnerships for regional growth: ‘Form partnerships, alliances and networks across borders and capabilities,’ he says.

Thirdly, firms should develop talent with international experience to accelerate growth: ‘This includes acquiring experience and knowledge of overseas markets and regulations.’

The growth of PwC’s Asian business shows that this is a region where accounting firms can thrive. Asia, led by India and China, was the fastest-growing region for PwC globally, expanding its revenues by 10% in the financial year ending 30 June 2016.

Bob Moritz, chairman of PwC International, explains that ‘whether it’s the tax and audit services of the future, transformational consulting, blockchain or augmented reality, we are implementing a strategy to meet the long-term needs of our stakeholders and the career aspirations of our people’.

Across Asia, accountants can leverage their respective strengths to add value for clients. For instance, in Hong Kong, a close connection with the mainland, and global exposure including IFRS Standards experience, equips its accountants to play a unique role in China’s ‘going-global’ agenda.

Mabel Chan, who is president of the Hong Kong Institute of Certified Public Accountants and deputy managing partner at Grant Thornton, cites opportunities under the Belt and Road initiative (BRI) – a plan that aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network using roads, ports, railways, pipelines, airports, transnational electric grids and fibre optic lines.

These mostly developing countries will need external funding to build the infrastructure, and accountants to help them present financial information to investors, Chan says.

‘Here in Hong Kong, we have adopted IFRS, international auditing standards and (the professional) code of ethics – that really helps us to participate in these projects.’

While the major firms might serve the larger investors and property developers, smaller firms are well-placed to advise suppliers on the myriad transactions required – procurement of materials, machinery, and so on, Chan continues. ‘The number of transactions will be numerous, but the size of each transaction relatively small,’ she says. ‘I believe this is an opportunity for smaller firms which can provide a more personalised service.’

Ayesha Lau, managing partner, Hong Kong, at KPMG China agrees that the prospects for Hong Kong professional services firms are positive. ‘They are well equipped to advise on project planning and development, M&A financial structuring and due diligence. The Belt and Road initiative will very likely lead to increased China outbound investments and China/foreign joint ventures, and professional firms in Hong Kong have the right resources and expertise to avail themselves of these new opportunities,’ Lau says.

According to Dato’ Mohammad Faiz Azmi, president of the Malaysian Institute of Accountants (MIA), current conditions put Malaysian accountants on the front foot to evolve and capitalise on opportunities both regionally and beyond. This path to growing their businesses, he says, has been paved during the preceding years through a programme of financial reforms, structural adjustments and professional upskilling to produce accounting talents on a par with global standards.

The diversification of Malaysia’s economy away from a petroleum-based taxation base to direct and indirect taxes offers a key area for progression, Dato’ Faiz says. ‘Our members have already upskilled themselves for the goods and services tax (implemented in Malaysia in 2015), so I can see demand for tax planning and compliance growing with increased taxation, along with the policies and processes to support tax compliance,’ he says.

In this changing business landscape, accountants should ensure companies pay ‘the right tax – not a dollar more, nor a dollar less’. Companies ‘need to be able to prove a case’ on taxation matters through their policies and processes, a role that trained accountants are equipped to play.

Dato’ Faiz also sees opportunity in the digital economy: ‘With fintech, blockchain concepts and so on coming in, there needs, for example, to be a trusted source providing encryption to ensure the security of the product,’ he says. ‘MIA’s mantra is for accountants to embrace technology and evolve their services to be relevant. While the mechanism of the business may change, the need for financial numbers will not.’

A key area of practice which is ripe for growth is provision of services around Islamic finance. According to the IMF, Malaysia is the world leader and standard-setter in Islamic finance, a sector with a global wealth of around US$1.9 trillion in 2016.

‘One of our competitive advantages [in this field] is that Malaysia has for decades been nurturing an alternative way of providing financial services to the populace,’ he says. ‘We’ve had Bank Islam since the 1980s, and in the 1960s, we created a provident fund for pilgrims based on Islamic principles. That evolution has built up a very impressive Sharia-compliant financial infrastructure which is more than just banks, it’s insurance, wealth management, asset management and related fields. We have been able to get all those pieces to operate in an environment where conventional finance also operates, and it all co-exists.’

What gives the Malaysian accounting profession an edge is the decision, made in 2012, to apply IFRS to Islamic transactions as well as conventional finance, Dato’ Faiz continues. ‘We have had five years of experience applying international standards (to Islamic finance), building on the knowledge we had before. Other countries coming up to the adoption of IFRS – such as Indonesia, Saudi Arabia and the Middle East – are looking to us to find out how we solved the issues that they’re going through now. So we are educating overseas countries as to how this can be done, and have the opportunity to export that expertise.’

Wealth creation consistent with sharia principles is a particularly lucrative field for Malaysian accountants to expand in.

The key to prosperity for accountants’ own businesses is to upskill themselves, and adapt their service offerings to meet new market opportunities, Dato’ Faiz believes. ‘As long as there is a need for judgment and trust, then our profession, l feel, will always be relevant,’ he says.

Peta Tomlinson, journalist