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Setting the Scene: The SME and SMP Landscape in Singapore
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Setting the Scene: The SME and SMP Landscape in Singapore

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Presentation by Dr. Ernest Kan, President of the Institute of Certified Public Accountants of Singapore, at the IFAC SMP Forum, March 2012

Presentation by Dr. Ernest Kan, President of the Institute of Certified Public Accountants of Singapore, at the IFAC SMP Forum, March 2012

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Setting the Scene: The SME and SMP Landscape in Singapore Setting the Scene: The SME and SMP Landscape in Singapore Presentation Transcript

  • Setting the Scene: The SME and SMP Landscape in Singapore Dr Ernest Kan, President of ICPAS 19th March 2012 1
  • THE JOURNEY1. Landscape of Singapore2. Understanding our SMEs and SMPs3. ICPAS: Creating Value for SMPs4. Conclusion: The Road Ahead
  • 1. LANDSCAPE OF SINGAPORE
  • SINGAPORE: GATEWAY TO ASIA’S ECONOMIC GROWTHAsia: New Centre of Economic Gravity• According to IMF, global growth forecast is 3.3% in 2012;• Continued rapid growth in Developing Asia is 7.3% in 2012Singapore: Gateway to Asia• MTI forecasted 2012 GDP growth: 1-3%• Ranked No.1 on the Ease of Doing Business Index (6th consecutive year) by World Bank• Lowest unemployment rate of 2% in 14- years (supported by strong job creation)
  • TRANSFORMING SINGAPORE INTO A LEADING GLOBAL ACCOUNTANCY HUB FOR ASIA-PACIFIC THRUST #1 THRUST #2 THRUST #3 Leading Global Centre for Leading Centre for High Strong Accountancy Accountancy Talent, Education, Value-adding Sector’s Infrastructure andThough Leadership & Professional Professional Institutions Development Accountancy Services 5
  • CHALLENGES & OPPORTUNITIES : STATUS QUO NOT AN OPTIONChallenges ImplicationsIncreased emphasis by regulator on audit • SMPs face increased regulatoryquality burdenProposed increase in audit exemption • Fewer businesses required to performthreshold statutory audit • Possible local audit market saturation for SMPsBudget 2012: Tightening of Foreign Labour • SMPs hire significant portion of foreigners • Increased labour costs for SMEs and SMPs
  • CHALLENGES & OPPORTUNITIES : STATUS QUO NOT AN OPTIONOpportunities ImplicationsVision to develop Singapore as leading • Opportunities for SMPs to grow andglobal accountancy hub for Asia-Pacific move up value chain, for example, in taxation, valuation and advisory servicesSMEs encouraged by Government to • Opportunities to provide advisoryinternationalise their businesses services and partner SMEs in their internationalisation effortsAccountancy sector included in National •More value-adding services to move upProductivity Drive the value-chain • More government support to put resources into this sector
  • 2. UNDERSTANDING OUR SMEs AND SMPs
  • UNDERSTANDING OUR SMEsDefinition of SMEs in Singapore• Operating receipts ≤$100mil or• Employment ≤ 200 workers for all sectorsImportance of SMEs in Singapore• 154,100 SMEs (99.3% of total enterprises)• 50% GDP Contribution• 6 out of 10 persons employed by SMEs• Expected to create more than 15,000 jobs and generate S$4.4 billion in value-add for the economy
  • UNDERSTANDING OUR SMPsNumber of Accounting Entities: 590 Number of Public Accountants: 974Big (4), Medium (11), Small (575) Big (208); Medium (91); Small (675) Big Medium 1% 2% Medium, Big,22% 9% Small Small, 69 97% %
  • SMPs LESS OPTIMISTIC THAN SMEs IN THE LONG TERMSMEs: Most positive about their long term SMPs: Least positive in the long(i.e., ≥ 5 years) business prospects term (≥ 5 years) business prospects
  • SMPs CORE BUSINESS: STATUTORY AUDITMajority (67.8%) of SMPs responded that statutory audit constituted atleast 51% of the firms’ revenues (i.e. core business). 67.8%
  • ENHANCING COST EFFECTIVENESS OF TECHNOLOGY FOR SMPs• Compilation engagements and other accounting services (45.1%) ranked high•Liquidation and receivership management received the highest disapproval ratingsfor the same measure, perhaps as more professional judgment is required
  • TALENT CRUNCH FOR SMPs MORE PERTINENT THAN SMEsKey Issues SMEs Key Challenges SMPs Key Challenges 1 Cost of Doing Business Staffing/ Human Resource issues 2 Generating Sales Cost of Doing Business 3 Staffing/ Human Resource Issues Generating Sales• Staffing/ human resource issues is a key challenge to SMPs growth• SMPs face difficulty in attracting local graduates and thus hireforeigners• SMPs have to battle with high turnover and recent changes intightening of foreign labour (e.g. through the S-Pass) raises the hiringcosts of audit professionals
  • SERVICES : SMEs and SMPs PERSPECTIVE SMEs Perspective SMPs PerspectiveNo. Most important Premium Services Keen to provide these services required Required services to SMEs1 Taxation (42.1%) Taxation (28.6%) Statutory Audit (69.6%)2 Statutory Audit (30.2%) Statutory Audit Compilation (18.3%) Engagements and other accounting services (49.6%)3 Corporate advisory, Corporate advisory, Taxation (33.6%) restructuring and restructuring and valuations (26.2%) valuations (15.9%)
  • TAXATION SERVICES IN DEMAND BY SMEs •Step up efforts in providing taxation services •SMEs likely to appreciate advice on how they can legally minimise tax expense / leverage on government incentive schemes
  • SMPs SERVICES CAN BE ENHANCEDOverall, satisfactory service. However, the proportion of disapproval ratingsacross the services was also considerable (i.e. more than 10% for each service)..
  • 3. ICPAS: CREATING VALUE FOR SMPs
  • ICPAS: CREATING VALUE FOR SMPs • Dedicated division set-up in August 2011 to promote the Industry Development development of accountancy sector and SMPs Division in ICPAS to • Working closely with businesses, regulators and relevant Focus on Developing government agencies to value-add for our SMPs • Continuously roll-out relevant initiatives for SMPs and SMEs (e.g.the Accountancy Sector SME-SMP survey, Inaugural ICPAS SME-SMP Forum 2012) Quality Assurance • To promote audit quality amongst small and medium practices inFramework to Promote Singapore • Enhancing more initiatives for SMPs through this framework SMPs’ Audit QualityMembers Development • Continual updating of core functional competencies • Advance development in new areas of expertiseFund (MDF) to Upskill • Encourage members to fulfil mandatory CPE hoursour Members through • Incentivise members to increase enrolment in ICPAS’ CPE Training programmes
  • ICPAS: CREATING VALUE FOR SMPs CPE Knowledge Structured Audit Core Online Knowledge Centres Training  ICPAS Research Professional Certificate in  Centre for Financial Reporting Audit Skills  Centre for Auditing and Public Practice Programme Assurance CPE Audit Practical Guidance  Country Desk (APG) Courses Special Projects  Ethics Centre Front Line Observations  Audit Manual Recruitment Platform  Audit Quality Publication Practice Monitoring Program  ICPAS Jobs Portal (PMP)
  • 4. CONCLUSION: THE ROAD AHEAD
  • CONCLUSION: THE ROAD AHEADAreas to help SMPs ICPAS’ SMP Initiatives• Strategic relook at businesslines due to saturation of Moving Up the Value Chainstatutory audit market• Better understanding ofclient’s needs Outreach/ Networking events• Quality of Talent Training• cost, productivity•Free up more resources for Technologystrategic and value-addingareas
  • Thank You