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

1. Setting the Scene: The SME and SMP Landscape in
Singapore
Dr Ernest Kan,
President of ICPAS
19th March 2012
1

2. THE JOURNEY
1. Landscape of Singapore
2. Understanding our SMEs
and SMPs
3. ICPAS: Creating Value for
SMPs
4. Conclusion: The Road
Ahead

3. 1. LANDSCAPE OF SINGAPORE

4. SINGAPORE: GATEWAY TO ASIA’S
ECONOMIC GROWTH
Asia: 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 2012
Singapore: 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)

5. 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 and
Though Leadership & Professional Professional
Institutions
Development Accountancy Services 5

6. CHALLENGES & OPPORTUNITIES :
STATUS QUO NOT AN OPTION
Challenges Implications
Increased emphasis by regulator on audit • SMPs face increased regulatory
quality burden
Proposed increase in audit exemption • Fewer businesses required to perform
threshold statutory audit
• Possible local audit market saturation
for SMPs
Budget 2012: Tightening of Foreign Labour • SMPs hire significant portion of
foreigners
• Increased labour costs for SMEs and
SMPs

7. CHALLENGES & OPPORTUNITIES :
STATUS QUO NOT AN OPTION
Opportunities Implications
Vision to develop Singapore as leading • Opportunities for SMPs to grow and
global accountancy hub for Asia-Pacific move up value chain, for example, in
taxation, valuation and advisory
services
SMEs encouraged by Government to • Opportunities to provide advisory
internationalise their businesses services and partner SMEs in their
internationalisation efforts
Accountancy sector included in National •More value-adding services to move up
Productivity Drive the value-chain
• More government support to put
resources into this sector

8. 2. UNDERSTANDING OUR SMEs AND SMPs

9. UNDERSTANDING OUR SMEs
Definition of SMEs in Singapore
• Operating receipts ≤$100mil or
• Employment ≤ 200 workers for all sectors
Importance 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

10. UNDERSTANDING OUR SMPs
Number of Accounting Entities: 590 Number of Public Accountants: 974
Big (4), Medium (11), Small (575) Big (208); Medium (91); Small (675)
Big Medium
1% 2%
Medium,
Big,22% 9%
Small Small, 69
97% %

11. SMPs LESS OPTIMISTIC THAN SMEs
IN THE LONG TERM
SMEs: Most positive about their long term SMPs: Least positive in the long
(i.e., ≥ 5 years) business prospects term (≥ 5 years) business prospects

12. SMPs CORE BUSINESS: STATUTORY AUDIT
Majority (67.8%) of SMPs responded that statutory audit constituted at
least 51% of the firms’ revenues (i.e. core business).
67.8%

13. 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 ratings
for the same measure, perhaps as more professional judgment is required

14. TALENT CRUNCH FOR SMPs
MORE PERTINENT THAN SMEs
Key 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 hire
foreigners
• SMPs have to battle with high turnover and recent changes in
tightening of foreign labour (e.g. through the S-Pass) raises the hiring
costs of audit professionals

15. SERVICES : SMEs and SMPs PERSPECTIVE
SMEs Perspective SMPs Perspective
No. Most important Premium Services Keen to provide these
services required Required services to SMEs
1 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%)

16. 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

17. SMPs SERVICES CAN BE ENHANCED
Overall, satisfactory service. However, the proportion of disapproval ratings
across the services was also considerable (i.e. more than 10% for each service).
.

18. 3. ICPAS: CREATING VALUE FOR
SMPs

19. 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 in
Framework to Promote Singapore
• Enhancing more initiatives for SMPs through this framework
SMPs’ Audit Quality
Members Development • Continual updating of core functional competencies
• Advance development in new areas of expertise
Fund (MDF) to Upskill
• Encourage members to fulfil mandatory CPE hours
our Members through • Incentivise members to increase enrolment in ICPAS’ CPE
Training programmes

20. 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)

21. 4. CONCLUSION: THE ROAD AHEAD

22. CONCLUSION: THE ROAD AHEAD
Areas to help SMPs ICPAS’ SMP Initiatives
• Strategic relook at business
lines due to saturation of Moving Up the Value Chain
statutory audit market
• Better understanding of
client’s needs Outreach/ Networking events
• Quality of Talent
Training
• cost, productivity
•Free up more resources for Technology
strategic and value-adding
areas

23. Thank You