This document summarizes a presentation given by Dawn McGeachy on partnerships between small and medium practices (SMPs) and small and medium enterprises (SMEs). It discusses insights from surveys that SMEs' biggest challenges are access to financing and economic uncertainty, while SMPs' challenges are attracting clients and adapting to regulations. It suggests that SMPs can grow by offering new advisory services to SMEs in areas like compliance, risk management, and sustainability. The document concludes that SMPs and SMEs need each other and can form a mutually beneficial partnership.

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A Win-Win Partnership: SMPs
and SMEs
Dawn McGeachy
Member, IFAC SMP Committee
International Federation of Accountants &
Institute of Chartered Accountants of Jamaica
Business Development Conference
Jamaica Conference Centre
March 18, 2014

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• SMEs and SMPs
• IFAC SMP Committee
• Insights from IFAC SMP Quick Poll and IFAC Research
• Implications for SMPs—new services
• Concluding Remarks
• References
Agenda

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• SMEs typically account for majority of private sector GDP,
employment, and growth, and are engines of innovation
• SMEs are a heterogeneous group—different size, age,
sector, location, and growth profiles
• SMEs typically look to accountants, especially SMPs, for
range of professional services (assurance to advice)
• Accountants often preferred source of advice for SMEs—
established relationship based on trust
SMEs and SMPs

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IFAC SMP Committee—Overview I
• To represent interests of SMPs
• Comprised of 18 members from 17 countries
• Regular input to policy, regulation, and international standards
• Develops tools and guidance
• Promotes the visibility and recognition of SMPs
• Global Knowledge Gateway

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IFAC SMP Committee—Overview II
• Global Knowledge Gateway
• www.ifac.org/Gateway
• Initially focuses on Ethics, Business Reporting, Finance
Leadership & Development, Performance & Financial
Management, Governance, Risk Management & Internal
Control and Sustainability
• Six key components—Viewpoints, Accountancy News,
Resources, Discussions, Topical News, Upcoming Events

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• Latest poll Nov-Dec 2013 attracted over 3,700 respondents, 180 from
Central and South America & Caribbean
• Report at www.ifac.org/publications-resources/ifac-smp-quick-poll-
2013-year-end-round
• Poll was conducted in 17 languages
• Responses are heavily skewed in favor of practitioners from Europe
and Asia working in smallest categories of practice
• Key findings—global (with emphasis where Caribbean/Central and
South America differs)
Insights from IFAC SMP Quick Poll I

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• What is the biggest challenge faced by your SME clients?
Insights from IFAC SMP Quick Poll II
13%
15%
14%
18%
15%
8%
5%
9% 3% Lack of demand for their products and services
Pressure to lower prices of their products and services
Rising costs
Economic uncertainty
Difficulties accessing finance
Competition
Attracting and retaining staff
Compliance with regulation
Other

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• What is the biggest challenge your practice is facing right
now?
Insights from IFAC SMP Quick Poll III
24%
4%
21%
6%
2%
7%
7%
7%
2%
15%
5%
Attracting and retaining clients
Ability to adapt to changing client needs
Pressure to lower fees
Rising costs
Succession planning
Work-life balance
Attracting and retaining staff
Competition
Keeping up with new technology
Keeping up with new regulations and standards
Other

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• What is the fastest growing source of revenue for your
practice?
Insights from IFAC SMP Quick Poll IV
33%
18%21%
23%
6%
Accounting, Compilation, and Other Non-assurance/
Related Services
Tax
Advisory/Consulting Services
Audit and Assurance
Other

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• What is the main driver of your practice’s profitability?
Insights from IFAC SMP Quick Poll V
34%
33%
11%
9%
9%
2% 2% Acquisition of new clients
Better retention of existing clients
Increased productivity
Reduced overheads
Increased average fee size
Other
Better utilization of working capital and other assets

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• How does your practice expect business to be in 2014
compared to 2013?
• Next Quick Poll November 2014
Insights from IFAC SMP Quick Poll VI
31%
47%
22%
Better than this year
About the same
Worse than this year

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Insights from IFAC Research I

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• SME demand for business advice
– Owner-managers can be reluctant to readily seek advice
– SMEs lack of in-house expertise
– Change in enterprise or external environment
– Regulatory demands extending outside financial compliance
– Growing information needs of SMEs
• Accountants as external advisers
– Most studies worldwide indicate accountants are preferred and first source
of advice for SMEs
Insights from IFAC Research II

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Gallup’s 2013 Business Banking Industry Study

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• Reasons for choosing an accounting firm, especially SMP
– Recognition—SMPs face similar compliance burden as SMEs
– Technical competency
– Trust
– Proximity and responsiveness
– SMEs wanting a one-stop shop
Insights from IFAC Research III

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What do clients REALLY want from their Accountant?
What Else Can We Learn from the Gallup Research?
• Help to be Successful
• Knowledge of Their Business &
Their Industry
• Creative Ideas
• Quick Service (responsive)
• Effort
*Source: Gallup Survey
• Value for Money (not to be
confused with a low fee)
• Concern for Their Well Being
• Someone to Talk to
• Reliability
• Wider Range of Services

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• 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
Insights from IFAC Research IV

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• SMPs will vary in their provision of ―non-traditional‖ advice
for a variety of reasons:
– A combination of the regulatory regime in the country
– Education tradition of accountancy profession in the jurisdiction
– The demand from the market
– The strategic intent of the accountant
Insights from IFAC Research V

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• Non-audit assurance (e.g., review engagements)
• Trusted business advisor
– 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 (finance, FOREX, and regulation)
Implications for SMPs—New Service Offerings I

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SMP Committee—Knowledge Sharing

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• Develop new and improved services to serve SMEs
– New forms of assurance and related services
– Advisory (e.g., regulation, sustainability, internationalization)
• Build capacity to offer new and improved services
– Networking
– Marketing
– IT (e.g., cloud computing)
Strategic Imperatives for SMPs

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• SMPs are SMEs operating in the accountancy sector
• SMPs are similar to SMEs—similar strengths and
weaknesses and face similar opportunities and threats
• SMPs and SMEs need each other
• SMPs and SMEs can make a winning partnership
Concluding Remarks

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• IFAC SMP Committee: www.ifac.org/SMP
• Follow us on Twitter: IFAC_SMP
• IFAC SMP Quick Poll www.ifac.org/smp
• Join us on LinkedIn: IFAC SMP Community
• Global Knowledge Gateway www.ifac.org/Gateway
IFAC Resources

24. www.ifac.org/SMP