Page 1 | Confidential and Proprietary Information
Performing Audits Efficiently
and Expanding Service Offerings:
Global an...
Page 2 | Confidential and Proprietary Information
Agenda—Sustainability of SMPs
• Global Insights
• Other Insights & Surve...
Page 3 | Confidential and Proprietary Information
Global Insights—IFAC Research I
Page 4 | Confidential and Proprietary Information
Global Insights—IFAC Research II
• SME demand for business advice
– Grow...
Page 5 | Confidential and Proprietary Information
Global Insights—IFAC Research III
• Reasons for choosing an SMP
– Recogn...
Page 6 | Confidential and Proprietary Information
Global Insights—IFAC Research IV
• Changing environment and challenges t...
Page 7 | Confidential and Proprietary Information
Global Insights—IFAC SMP Quick Poll (Recap)
• Keeping up with standards ...
Page 8 | Confidential and Proprietary Information
Other Insights & Surveys I
• ACCA/IMA Report on Top 10 technologies that...
Page 9 | Confidential and Proprietary Information
Other Insights & Surveys II
• CPA Australia Asia-Pacific Small Business ...
Page 10 | Confidential and Proprietary Information
Other Insights & Surveys III
• CPA Australia Asia-Pacific Small Busines...
Page 11 | Confidential and Proprietary Information
General Implications for SMPs
• Consider
– New service offerings to SME...
Page 12 | Confidential and Proprietary Information
New Service Offerings—Types
• Non-audit assurance (e.g., review engagem...
Page 13 | Confidential and Proprietary Information
New Service Offerings—International Development
• Edinburgh Group resea...
Page 14 | Confidential and Proprietary Information
New Service Offerings—Country Examples I
• Ireland
– “If we do not prov...
Page 15 | Confidential and Proprietary Information
New Service Offerings—Country Examples II
• Sweden
– “We offer a “busin...
Page 16 | Confidential and Proprietary Information
New Service Offerings—Country Examples III
• Australia
– Wealth managem...
Page 17 | Confidential and Proprietary Information
New Service Offerings—Country Examples IV
• Singapore
– Compilation of ...
Page 18 | Confidential and Proprietary Information
New Service Offerings—Country Examples V
• Hong Kong
– Consulting and b...
Page 19 | Confidential and Proprietary Information
New Service Offerings—Country Examples VI
• USA
– HR outsourcing (payro...
Page 20 | Confidential and Proprietary Information
Trusted Business Advisor—What it Means
• Understanding and listening to...
Page 21 | Confidential and Proprietary Information
Trusted Business Advisor – Process (AICPA’s 2.0)
• Identify clients
• C...
Page 22 | Confidential and Proprietary Information
Practice Management—General
• Marketing and pricing
• Staff
• IT
• Clie...
Page 23 | Confidential and Proprietary Information
Practice Management—Marketing and Pricing
• Marketing
– Build expertise...
Page 24 | Confidential and Proprietary Information
Practice Management—Staff
• Staff are most valuable asset of profession...
Page 25 | Confidential and Proprietary Information
Practice Management—IT (Geoffrey Moore) I
• Digitization (cloud computi...
Page 26 | Confidential and Proprietary Information
Practice Management—IT II
• Some great (mainly free!) apps
– Wi-Fi Find...
Page 27 | Confidential and Proprietary Information
Practice Management—Clients
• Educate
– Shift their perception of accou...
Page 28 | Confidential and Proprietary Information
Practice Management—Structure
• Specialization / niche
– Type of client...
Page 29 | Confidential and Proprietary Information
Practice Management—New Metrics
• Important to proactively measure and ...
Page 30 | Confidential and Proprietary Information
Next Steps
• Lead through commitment and culture
• Change mindsets (you...
Page 31 | Confidential and Proprietary Information
References—General
• IFAC SMP Committee website: www.ifac.org/smp
• IFA...
Page 32 | Confidential and Proprietary Information
References—Business Advisory
• The Role of Small and Medium Practices i...
Page 33 | Confidential and Proprietary Information
References—Practice Management
• Guide to Practice Management for Small...
Page 34 | Confidential and Proprietary Information
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Performing Audits Efficiently and Expanding Service Offerings: Global and Local Insights (Part II)

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This presentation expands on Part I providing in depth coverage on global insights, general implications for SMPs, new service offerings and practice management. Presented by Christina Foo, IFAC SMP Committee Member and Paul Thompson Deputy Director, SME & SMP Affairs at the MIA Seminar in Kuala Lumpur, Malaysia on December 6, 2013.

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  • Practices in Asia and Africa/Middle East were most likely to be offering sustainability services
  • Digital Darwinism: Thriving in the Face of Technology Change from ACCA’s Accountancy Futures Academy and IMAWhere are you and your practice on each of these?
  • CPA Australia Asia-Pacific Small Business Survey 2013 demonstrates that in the Asian economies surveyed, the current global economic volatility has impacted small business confidence. Small business confidence for the economyin 2014 is down significantly in Hong Kong and Malaysia compared to 2013, with Singaporean and Indonesian small businesses also less confident in their economy in 2014 than in 2013. Both Australian and New Zealand small business confidence in their respective economies is stronger than in previous years. This survey focuses on the business environment small businesses are experiencing and how they are responding, or propose to respond to, that environment.
  • CPA Australia Asia-Pacific Small Business Survey 2013 demonstrates that in the Asian economies surveyed, the current global economic volatility has impacted small business confidence. Small business confidence for the economy in 2014 is down significantly in Malaysia compared to 2013.
  • Importantthatfirmsmeasure key metricsfor clientacquisition and revenue.Needtomeasure the rate at whichtheirnewleadsconverttomeetings, and howmanyofthoseconverttoproposals and thento a closeExamplesOf New Metrics% offeesfromnewclients vs existingonesAverage fee per clientNumber of solutions each client buysTrackingthesemetricswill help youunderstandeffectivenessofyourefforts in these2waysofgrowingyour business organically - gettingnewbuisness and cross-selling
  • Performing Audits Efficiently and Expanding Service Offerings: Global and Local Insights (Part II)

    1. 1. Page 1 | Confidential and Proprietary Information Performing Audits Efficiently and Expanding Service Offerings: Global and Local Insights (Part II) Christina Foo IFAC SMP Committee Member Paul Thompson Deputy Director, SME & SMP Affairs MIA Seminar Kuala Lumpur, Malaysia December 6, 2013
    2. 2. Page 2 | Confidential and Proprietary Information Agenda—Sustainability of SMPs • Global Insights • Other Insights & Surveys • General Implications for SMPs • New Service Offerings • Trusted Business Advisor • Practice Management • Next Steps • References
    3. 3. Page 3 | Confidential and Proprietary Information Global Insights—IFAC Research I
    4. 4. Page 4 | Confidential and Proprietary Information Global Insights—IFAC Research II • SME demand for business advice – Growing information needs of SMEs – Regulatory demands extending outside financial compliance – Growing government regulation – SMEs lack of in-house expertise • Accountants as external advisers – Most studies worldwide indicate accountants are preferred and first source of advice for SMEs – Larger the SME the more often meet their accountant
    5. 5. Page 5 | Confidential and Proprietary Information Global Insights—IFAC Research III • Reasons for choosing an SMP – Recognition SMPs face similar compliance burden as SMEs – Technical competency – Trust – Proximity and responsiveness – SMEs wanting a one-stop shop
    6. 6. Page 6 | Confidential and Proprietary Information Global Insights—IFAC Research IV • Changing environment and challenges to traditional provision of services – Consolidation within the accountancy profession – Rise in the provision of services by larger practices – Shift in regulatory environment: fewer audits – Shift in the nature of the SME population – Reluctance of some SMPs to provide advice
    7. 7. Page 7 | Confidential and Proprietary Information Global Insights—IFAC SMP Quick Poll (Recap) • Keeping up with standards and regulation is biggest challenge facing SMEs & SMPs (Asia – price/fee pressure) • Accounting, compilation & other non-assurance/related services is fastest growing source of practice revenue (Asia – audit and assurance) • Acquisition of new clients is main driver of practice profitability • Nearly 50% of practices offer sustainability services (most common advisory) and another 25% plan to • Main barriers to business advisory are lack of marketing expertise and insufficient partner time
    8. 8. Page 8 | Confidential and Proprietary Information Other Insights & Surveys I • ACCA/IMA Report on Top 10 technologies that have the potential to considerably reshape the accountancy profession and business landscape – Mobile – Big data – Artificial intelligence and robotics – Cyber security – Educational – Cloud payment systems – Virtual and augmented reality – Digital – Service delivery – Social
    9. 9. Page 9 | Confidential and Proprietary Information Other Insights & Surveys II • CPA Australia Asia-Pacific Small Business Survey 2013 Key Findings: – The most challenging issues for all markets during 2013 were increasing cost pressures and competition – these issues are likely to continue to prove difficult for many small businesses in 2014. Businesses should therefore be focusing more on business management practices, such as cost control and improving working capital while also prioritizing customer retention and investing in innovation.
    10. 10. Page 10 | Confidential and Proprietary Information Other Insights & Surveys III • CPA Australia Asia-Pacific Small Business Survey 2013 Key Findings for Malaysia: – Overall, the outlook for 2014 is mainly positive for Malaysian small businesses. With many Malaysian businesses focused on business fundamentals such as customer retention and cost control, if the economy performs better than expected, they are well placed to see much stronger growth than they expect.
    11. 11. Page 11 | Confidential and Proprietary Information General Implications for SMPs • Consider – New service offerings to SMEs – Making changes to management of your practice
    12. 12. Page 12 | Confidential and Proprietary Information New Service Offerings—Types • Non-audit assurance (e.g., review engagements) – New IFAC Guide (ETA Dec. 9, 2013) • Advisory – Compliance with regulations (e.g., HR, IT, Safety) – Risk management – Financial management (incl. access to finance) – Sustainability (advisory, accounting, assurance) – Start-ups / entrepreneurs (formation, finance, etc.) – International development (see over)
    13. 13. Page 13 | Confidential and Proprietary Information New Service Offerings—International Development • Edinburgh Group research, Growing the Global Economy through SMEs – SMEs increasingly international but need more support – SMPs can help with • Identifying markets • Navigating red tape • Facilitating finance • Dealing with FOREX
    14. 14. Page 14 | Confidential and Proprietary Information New Service Offerings—Country Examples I • Ireland – “If we do not provide bookkeeping services, we encourage the client to purchase an accounts software package, then install it and get it set up and then train the client on how to use it and to take back-ups. Each year we review how they are getting on and attend their premises to tidy up, before doing a year end procedure. The “cloud” is the obvious next move for this service though it is a little cost prohibitive for now. These are all value added services which the client pays a bit more for. They are more engaged with the financial side of the business. Equally, we are not burdened with quality control issues over low value bookkeeping services.”
    15. 15. Page 15 | Confidential and Proprietary Information New Service Offerings—Country Examples II • Sweden – “We offer a “business check” service formed as ISRS 4400 service in which we do a “miniature” quality control of a company’s accounting, annual report and certain administrative questions. It has a face value of 600-900 euros and what we hope is to also use this service an “ice-breaker” when attracting new customers. For a quite small amount, the client can use us as a check almost like the mandatory car inspection. What we hope for is beginning of a relationship motivating the client to demand more.”
    16. 16. Page 16 | Confidential and Proprietary Information New Service Offerings—Country Examples III • Australia – Wealth management / financial planning to business owners – Aged care advisory – Pre-insolvency or phoenix services – Business adviser / outsource CFO
    17. 17. Page 17 | Confidential and Proprietary Information New Service Offerings—Country Examples IV • Singapore – Compilation of accounts – Outsourcing bookkeeping – Valuation services – Advisory services – Corporate finance – Tax advisory / international tax – Insolvency services
    18. 18. Page 18 | Confidential and Proprietary Information New Service Offerings—Country Examples V • Hong Kong – Consulting and business advisory – Internal control reviews – Financial due diligence – M&A advisory – Business valuation – Funding advisory – Liquidations – Company secretarial services – Reporting on solicitors’ accounts
    19. 19. Page 19 | Confidential and Proprietary Information New Service Offerings—Country Examples VI • USA – HR outsourcing (payroll, benefits, record keeping etc.) – Bill management services (accounts payable) – Trusted business advisor
    20. 20. Page 20 | Confidential and Proprietary Information Trusted Business Advisor—What it Means • Understanding and listening to clients’ needs • Using our broad experience / expertise to help clients accomplish their goals • Creating an ongoing relationship with clients • Providing more than core accounting services
    21. 21. Page 21 | Confidential and Proprietary Information Trusted Business Advisor – Process (AICPA’s 2.0) • Identify clients • Conduct initial consultation – Build rapport and understand client needs • Create and deliver a proposal – Schedule / prepare for meeting and stress value added • Agree to engagement – Engagement letter with timing and pricing and get client to sign • Execute, obtain feedback and deliver • Conduct an engagement assessment meeting
    22. 22. Page 22 | Confidential and Proprietary Information Practice Management—General • Marketing and pricing • Staff • IT • Clients • Structure • New metrics
    23. 23. Page 23 | Confidential and Proprietary Information Practice Management—Marketing and Pricing • Marketing – Build expertise – Utilize website, brochures etc. – Use social media (e.g., Twitter, Facebook, LinkedIn) • Pricing – Consider value over time-based
    24. 24. Page 24 | Confidential and Proprietary Information Practice Management—Staff • Staff are most valuable asset of professional services firm – Key to firm success where clients met face to face (professions) – Soft skills becoming more important than technical skills • Develop new skills and competencies – Soft skills (branding, marketing, presenting, negotiating etc.) – IT (cloud computing, apps etc.) – Advisory expertise (financial, HRM, strategic development etc.) • Make (train existing staff) or buy (recruit new staff)
    25. 25. Page 25 | Confidential and Proprietary Information Practice Management—IT (Geoffrey Moore) I • Digitization (cloud computing) – Paper to paperless to boost productivity • Virtualization (systems of engagement) – Physically present to virtually present to improve market reach • Transformation (business intelligence) – Compliance provider to trusted advisor to enhance value – On-demand reporting, business analytics, dashboard graphics, target market segment benchmarking and advisory services (discussing how best to respond to revealed issues)
    26. 26. Page 26 | Confidential and Proprietary Information Practice Management—IT II • Some great (mainly free!) apps – Wi-Fi Finder – Evernote – Feedly – Dropbox – Keeper – TripIt – AirServer
    27. 27. Page 27 | Confidential and Proprietary Information Practice Management—Clients • Educate – Shift their perception of accountants • Select – Ensure clients are right fit / match for your firm • Categorize – A, B, C list – Differentiate (like airlines!)
    28. 28. Page 28 | Confidential and Proprietary Information Practice Management—Structure • Specialization / niche – Type of client – Type of service • Merge with another practice • Participate in referral network
    29. 29. Page 29 | Confidential and Proprietary Information Practice Management—New Metrics • Important to proactively measure and spend time planning for growth and improved revenue • Examples: – % of fees from new vs. existing clients – Average fee per client – Number of solutions each client buys
    30. 30. Page 30 | Confidential and Proprietary Information Next Steps • Lead through commitment and culture • Change mindsets (your own, your staff and your clients) • Prepare for obstacles • Take time to develop, commit and execute a plan • List 3 actions you will take following this workshop
    31. 31. Page 31 | Confidential and Proprietary Information References—General • IFAC SMP Committee website: www.ifac.org/smp • IFAC SMP Twitter: www.twitter.com/IFAC_SMP • IFAC SMP Community: http://www.linkedin.com/groups?home=&gid=4542841&trk=anet_ug_hm • IFAC SMP Forum: www.ifac.org/2013SMPForum • IFAC SMP Quick Poll: 2012 Round-Up (Nov/Dec 2012): www.ifac.org/publications-resources/ifac-smp-quick-poll-2012-round • Resources and tools (all): www.ifac.org/about-ifac/small-and-medium-practices- committee/smp-resources-and-tools • IFAC Translations and Permissions: www.ifac.org/about-ifac/translations- permissions
    32. 32. Page 32 | Confidential and Proprietary Information References—Business Advisory • The Role of Small and Medium Practices in Providing Business Support to SMEs research paper: http://www.ifac.org/publications-resources/role-small-and- medium-practices-providing-business-support-small-and-medium-s • SMP Committee Business Advisory Interviews (Videos) http://www.youtube.com/playlist?list=PL38B5A23305EFBFB0&feature=view_all • Good Practice Checklist for Small Business (Second Edition): http://www.ifac.org/publications-resources/good-practice-checklist-small-business • How to Build Your Business Advisory Practice article: http://www.ifac.org/publications-resources/how-build-your-business-advisory- practice • Sustainability: Challenges and Opportunities for SMPs and SMEs article: https://www.ifac.org/news-events/2013-04/sustainability-challenges-and- opportunities-smps-and-smes
    33. 33. Page 33 | Confidential and Proprietary Information References—Practice Management • Guide to Practice Management for Small- and Medium-Sized Practices (Third Edition) (incl. companion manual): https://www.ifac.org/publications- resources/guide-practice-management-small-and-medium-sized-practices • 7 Tips for Accountants on Supporting the Globalization of Small Business article: http://www.ifac.org/news-events/2013-08/7-tips-accountants-supporting- globalization-small-business • Social Media Marketing May Be the Key to Practice Profitability article: http://www.ifac.org/news-events/2013-10/social-media-marketing-may-be-key- practice-profitability • Tomorrow’s Firm and the Role of Value Pricing: IFAC Interview with Ronald J. Baker article: https://www.ifac.org/news-events/2013-02/tomorrow-s-firm-and-role- value-pricing
    34. 34. Page 34 | Confidential and Proprietary Information

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