Opportunities for Accountants in servicing the needs of SMEs Nik Mohd Hasyudeen Yusoff President Malaysian Institute of Ac...
Agenda <ul><li>The Motivation </li></ul><ul><li>Research Background </li></ul><ul><li>Profile of Respondents </li></ul><ul...
The Motivation <ul><li>Understand the needs of SMEs in areas where accountants could provide solutions </li></ul><ul><li>P...
The Motivation <ul><li>Why SME sector? </li></ul><ul><ul><li>97% of enterprises in manufacturing sector and 99% of enterpr...
Research Background <ul><li>This presentation is based on the research initiated by MIA, conducted by Universiti Malaya an...
Research Background <ul><li>Research objectives: </li></ul><ul><ul><li>To understand the needs of SMEs for business suppor...
Research Background Type of services Detailed definition Accounting Bookkeeping, Financial statement compliance, Budgeting...
Profile of Respondents <ul><li>We received 145 usable responses from 1,200  questionnaires  (8.3%) [Collection of data is ...
Profile of Respondents
Profile of Respondents
Key Findings and Observation Around 14% of SMEs which maintain their own accounts out-sourced the preparation of financial...
Key Findings and Observation <ul><li>SME mostly procure compliance related services from external service providers </li><...
Key Findings and Observation Where SMEs procure the out-sourced business services?
Key Findings and Observation Reasons cited by SMEs in procuring the out-sourced business services
Key Findings and Observation Reasons cited by SMEs in procuring the out-sourced business services
Key Findings and Observation How SMEs select the out-sourced business services providers?
Key Findings and Observation How SMEs select the out-sourced business services providers?
Key Findings and Observation <ul><li>Demand for additional bookkeeping and financial statement compliance services is rath...
Key Findings and Observation <ul><li>SMEs have been out-sourcing tax compliance services although not many intend to purch...
Key Findings and Observation <ul><li>Assurance services is the most purchased services although further purchase plan is n...
Key Findings and Observation <ul><li>Company secretarial  services is the most purchased services although further purchas...
Key Findings and Observation <ul><li>SMEs have been procuring external services for fund raising and financial management ...
Key Findings and Observation <ul><li>SMEs have been procuring business consulting services especially relating to human re...
Key Findings and Observation <ul><li>The trend is quite consistent with findings on why SMEs select their service provider...
Key Findings and Observation
Key Findings and Observation <ul><li>The SMEs are somehow concern about the security of their business information althoug...
Moving Forward Thoughts <ul><li>As in any business, SMEs face different challenges in different aspects depending on the g...
Moving Forward Thoughts <ul><li>Accountants serving the SMEs should not limit their scope of services to the traditional c...
Moving Forward Thoughts <ul><li>While accountants are required to uphold professional values including the duty of confide...
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Opportunities For Accountants In Servicing The Needs Of SMEs

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Research findings of the needs of SMEs on business services and their purchasing patterns of these services

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Opportunities For Accountants In Servicing The Needs Of SMEs

  1. 1. Opportunities for Accountants in servicing the needs of SMEs Nik Mohd Hasyudeen Yusoff President Malaysian Institute of Accountants
  2. 2. Agenda <ul><li>The Motivation </li></ul><ul><li>Research Background </li></ul><ul><li>Profile of Respondents </li></ul><ul><li>Key Findings and Observation </li></ul><ul><li>Moving Forward Thoughts </li></ul>
  3. 3. The Motivation <ul><li>Understand the needs of SMEs in areas where accountants could provide solutions </li></ul><ul><li>Provide market information to accountants in public practice and those working for the SMEs, institutions of higher learning, developmental agencies as well as financial institutions </li></ul><ul><li>Input into MIA’s strategy in developing the SMP and PAIB in support of nation building </li></ul><ul><li>Development of education and training programmes as well as guidance and tools to accountants </li></ul>
  4. 4. The Motivation <ul><li>Why SME sector? </li></ul><ul><ul><li>97% of enterprises in manufacturing sector and 99% of enterprises in the services sector are SMEs </li></ul></ul><ul><ul><li>Being targeted as the high potential growth sector in the Third Industrial Master Plan </li></ul></ul>Profile of accounting firms
  5. 5. Research Background <ul><li>This presentation is based on the research initiated by MIA, conducted by Universiti Malaya and funded by MAREF </li></ul><ul><li>Key areas for discovery: </li></ul><ul><ul><li>Services that will assist SMEs in defining and building competitive advantage </li></ul></ul><ul><ul><li>Types of services presently purchased from accountants and areas that are presently underserved </li></ul></ul><ul><ul><li>Factors that influence the SMEs in purchasing business and management services from external accountants </li></ul></ul>
  6. 6. Research Background <ul><li>Research objectives: </li></ul><ul><ul><li>To understand the needs of SMEs for business support services  </li></ul></ul><ul><ul><li>To identify support services that will assist SMEs in defining and building competitive advantage   </li></ul></ul><ul><ul><li>To broadly assess the extent of demand for such services  </li></ul></ul><ul><ul><li>To identify the types of services and the extent that SMEs currently buy from external accountants  </li></ul></ul><ul><ul><li>To gauge the level of satisfaction among SMEs regarding the current types and scope of services provided by public accountants   </li></ul></ul><ul><ul><li>To identify the opportunities that could be tapped by public accountants based on the gap analysis of demand for services and the current level of services provided by public accountants </li></ul></ul>
  7. 7. Research Background Type of services Detailed definition Accounting Bookkeeping, Financial statement compliance, Budgeting/Forecasting, Product/Services costing, Customer profitability analysis, Financial planning Taxation Compliance, Planning, Dispute resolution, Incentives application Assurance Financial audit, Internal audit, Internal control review, Financial due diligence Corporate services Company secretarial services, Mergers & Acquisitions Corporate finance Fund raising, Financial management services Business consulting Strategy & planning, Performance management, IT consulting, Business restructuring, Insolvency & receivership, Human resource consulting
  8. 8. Profile of Respondents <ul><li>We received 145 usable responses from 1,200 questionnaires (8.3%) [Collection of data is ongoing] </li></ul><ul><li>Definition of SME used in the research: </li></ul><ul><ul><li>Manufacturing: </li></ul></ul><ul><ul><ul><li>Less than 150 full time employees and turnover less that RM 25 million (USD 7 million) </li></ul></ul></ul><ul><ul><ul><li>37,886 establishments: Textiles and apparel (23.2%), Food and beverages (15.0%), Metal and metal products (12.4%), Paper, printing and publishing (9.2%), Furniture (6%) </li></ul></ul></ul><ul><ul><li>Distributive trade: </li></ul></ul><ul><ul><ul><li>Less than 50 full time employees and turnover less than RM 5 million (USD 1.4 million) </li></ul></ul></ul><ul><ul><ul><li>284,171 establishments: Wholesale (46.2%), Retail (28.8%), Motor vehicles (19.6%), Restaurants (5.3%) </li></ul></ul></ul>
  9. 9. Profile of Respondents
  10. 10. Profile of Respondents
  11. 11. Key Findings and Observation Around 14% of SMEs which maintain their own accounts out-sourced the preparation of financial statements
  12. 12. Key Findings and Observation <ul><li>SME mostly procure compliance related services from external service providers </li></ul><ul><li>Strategic services such as market research, consulting and corporate finance are also procured by SMEs </li></ul>Business services procured by the SMEs
  13. 13. Key Findings and Observation Where SMEs procure the out-sourced business services?
  14. 14. Key Findings and Observation Reasons cited by SMEs in procuring the out-sourced business services
  15. 15. Key Findings and Observation Reasons cited by SMEs in procuring the out-sourced business services
  16. 16. Key Findings and Observation How SMEs select the out-sourced business services providers?
  17. 17. Key Findings and Observation How SMEs select the out-sourced business services providers?
  18. 18. Key Findings and Observation <ul><li>Demand for additional bookkeeping and financial statement compliance services is rather soft </li></ul><ul><li>Significant demand for value-add services especially financial planning and customer profitability analysis </li></ul><ul><li>SMEs willing to out-source budgeting and costing functions </li></ul>Current and future purchase plan – Accounting services
  19. 19. Key Findings and Observation <ul><li>SMEs have been out-sourcing tax compliance services although not many intend to purchase further in the future </li></ul><ul><li>Tax planning has the highest room for further purchase </li></ul><ul><li>There is demand for tax dispute resolution and application for tax incentive services </li></ul>Current and future purchase plan – Taxation services
  20. 20. Key Findings and Observation <ul><li>Assurance services is the most purchased services although further purchase plan is not there </li></ul><ul><li>Demand for internal auditing, internal control review and financial due diligence is rather strong indicating the desire of SMEs to have assurance on their business </li></ul>Current and future purchase plan – Assurance services
  21. 21. Key Findings and Observation <ul><li>Company secretarial services is the most purchased services although further purchase plan is not there </li></ul><ul><li>Demand for services relating to merger and acquisition is rather strong indicating the desire of SMEs to further grow their businesses </li></ul>Current and future purchase plan – Corporate services
  22. 22. Key Findings and Observation <ul><li>SMEs have been procuring external services for fund raising and financial management services </li></ul><ul><li>Demand for services relating to business restructuring is rather strong indicating the need of SMEs to align capital structure with business activities </li></ul>Current and future purchase plan – Corporate Finance services
  23. 23. Key Findings and Observation <ul><li>SMEs have been procuring business consulting services especially relating to human resource and internal control </li></ul><ul><li>Demand for services relating to strategy, risk management and performance management is rather strong </li></ul><ul><li>Significant jump in demand for insolvency & receivership services is observed </li></ul>Current and future purchase plan – Business Consulting services
  24. 24. Key Findings and Observation <ul><li>The trend is quite consistent with findings on why SMEs select their service providers </li></ul><ul><li>Trustworthiness is not the highest criteria </li></ul><ul><li>SMEs are not loyal to existing providers as indicated to the lack of appreciation on established relationship </li></ul>
  25. 25. Key Findings and Observation
  26. 26. Key Findings and Observation <ul><li>The SMEs are somehow concern about the security of their business information although trustworthiness is not the highest criteria in selecting service providers </li></ul><ul><li>Need to understand more behind the “lack of trust” when confidentiality is one of professional values to be upheld by accountants </li></ul>
  27. 27. Moving Forward Thoughts <ul><li>As in any business, SMEs face different challenges in different aspects depending on the general economic climate, industry sector and stage of growth </li></ul><ul><li>Entrepreneurs are interested in ensuring the sustainability of their businesses, hence would be seeking assistance from experts in areas where they believe their businesses could be further strengthened </li></ul><ul><li>SMEs want assurance on their business , not just assurance on their financial statements </li></ul>
  28. 28. Moving Forward Thoughts <ul><li>Accountants serving the SMEs should not limit their scope of services to the traditional compliance services but also venture into areas which further enhance the competitiveness of the business of SMEs as indicated by the future purchase plan of the SME </li></ul><ul><li>The relative strength of accountants in accounting, taxation, assurance and corporate services should be capitalised to offer other services in business advisory areas which are also needed by the SMEs </li></ul><ul><li>While technical knowledge appears to be the key driver to attract SMEs, they are also cost sensitive while also demand more understanding about their business and certain service levels from the accountants </li></ul>
  29. 29. Moving Forward Thoughts <ul><li>While accountants are required to uphold professional values including the duty of confidentiality, SMEs do not see trustworthiness as the main aspects in making their purchase decision and are even concern about information security when dealing with accountants </li></ul><ul><li>Investment in staff professional development and service quality would enhance the attractiveness of a firm in servicing the SMEs </li></ul><ul><li>Further strengthening of relation between accountants and SMEs appears to be desired to ensure more sustainable business relationship, subject to the continuing affordability of services offered to the SMEs </li></ul>
  30. 30. Thank you

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