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Setting the Scene: Global and Regional Trends
This document summarizes the key topics discussed at the 2013 IFAC SMP Forum in Kampala, Uganda. It outlines global and regional economic trends, challenges facing SMPs, opportunities for SMEs, and IFAC's activities to support SMPs. Economic uncertainty remains for many regions, though growth continues in Africa. SMPs are expanding services like advisory work. IFAC works to represent SMP interests through the SMP Committee and developing guidance to address issues around standards, skills, and competition.
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Setting the Scene: Global and Regional Trends
- 1. 1 Setting the Scene:Global and Regional Trends Giancarlo Attolini Chair, IFAC SMP Committee IFAC Small and Medium Practices Forum Kampala, Uganda June 5, 2013
- 2. 2 Outline • Annual IFACSMP Forum • Economic trends – Global and regional SMP Poll results • Summary of challenges and risks • Accountancy trends – Global and regional SMP Poll results • Opportunities for SMEs; Implications for SMPs • IFAC’s activities to address these challenges – About the committee – Guidance and support – Knowledge sharing
- 3. 3 Annual IFAC SMPForum • Previous Forums – Hong Kong SAR (2006), Malta (2007), Nigeria (2008), China (2009), Turkey (2011), and Singapore (2012) • Last yr. apx. 200 delegates, 36+ countries, and 40+ member bodies • Objectives – Unite global SMP community – Foster discussion, debate, and sharing of best practices and ideas – Home in on the opportunities and challenges facing SMPs and their SME clients – Identify opportunities for future collaboration • Assists in the SMP Committee’s strategy development
- 4. 4 Economic Trends—Global • Financialcrisis – SMEs, in particular, face ongoing challenges • Lending to SMEs slowed more than to other businesses – SMPs face similar problems as SMEs themselves – Increased fee pressure and changing demand for SMPs’ service • SMP Quick Poll (year-end 2012)—Business Outlook – 33% expect business growth in 2013, up slightly from 2011 – Economic uncertainty remains one of top two concerns for SMPs’ SME clients
- 5. 5 Economic Trends—Regional • Whatabout Africa? – Continued growth; In Uganda, 6-7% growth annually over past 15 years – Increased interest in business and investment in Africa due to • Communications infrastructure boom • Economic turmoil in other parts of the world • Investment in regulatory change • SMP Quick Poll (year-end 2012 )—Africa/Middle East – Business outlook • 44% expect business growth in 2013 • Economic uncertainty (18%) and difficulties accessing finance (18%) among top three concerns for SMPs’ SME clients
- 6. 6 Challenges and Risks—Global •Lingering effects of financial crisis – Certain regions of world • SMPs may not have the skills they need to keep up with changing demand/internationalization • Standards/regulation need to be proportionate, stable, and relevant • Competition from unqualified & non-accountants
- 7. 7 Accountancy Trends • Expandingrole of SMP practitioners – Appetite for one-stop shop for professional services – Develop and market new services (e.g., sustainability) – SMP Quick Poll: Advisory/consulting services • Globally 20% cited as fastest growing source of revenue • In Africa, significantly higher (27%) cited this area as fastest growing • SMPs’ Comparative Advantage – Reputation for competency, trust – Valued for geographic proximity and responsiveness – Entrepreneurial, innovative spirit
- 8. 8 Opportunities for SMEs& SMPs • SMEs are a critical portion of economies globally • Increasing internationalization of SMEs • Increasing demand for non-traditional accounting services • IT developments, such as cloud computing • Stable employment
- 9. 9 IFAC’s Activities toAddress Challenges • SMP Committee formed in January 2006 to represent interests of SMPs • Vision: “The SMP Committee is a valued contributor to helping IFAC member bodies develop their small- and medium-sized practices.” • Composition – 18 members including 3 from Africa (Malawi, Kenya, and Nigeria) – Members are nominated by member bodies but are independent – Assurance providers and business advisors
- 10. 10 Mission and KeyActivities • Standards and Guidance • Adoption and Implementation • Development and Quality • Speaking Out
- 11.
Editor's Notes
- #3 Intro: Thank the co-hosts ICPAU and PAFA Thank the sponsors—esp ACCA (gold sponsor); silver sponsors are CECCAR, HKICPA, and ICAEW Observations upon arrival in Kampala (FYI Fayez will cover: The importance of accounting development in Africa, the role of SMPs and SMEs in Africa and IFAC’s overall strategy for supporting these constituencies.)
- #4 The importance of the Forum and it’s value to IFAC and the SMP Committee. Hopefully it will also prove valuable to all participants.
- #5 The “global” financial crisis was really focused on more mature economies: US, Europe, parts of Asia/Australia Challenges are ongoing Nov/Dec 2012 poll: Conducted in 17 languages with 3,800 respondents Data sent to member bodies: country data on request Thank you to those of you that participated/promoted Note limitations of poll—unbalanced geographically with a disproportionately large number from Europe Results generally consistent current economic climate Economic uncertainty cited by 22% of respondents as top concern for their SME clients (after burden of regulations and standards, 25%)
- #6 Financial crisis—Truly global? Africa largely unaffected It’s been five years since the IFAC SMP Forum was held in Africa, and a lot has changed since then. Possible anecdote: In the five years since the last SMP Forum was held in Africa, mobile phone usage has exploded. According to an International Accounting Bulletin research, there are now 650 million mobile phone subscribers in Africa. That’s more than in the US and EU. In 2008 there were approximate 400 million subscribers (See Smart Planet reference), which means growth over the past five years has been over 60%—and the implications are huge. Mobile phones and the Internet are changing the development landscape in Africa. (Can talk more about opportunities in Africa later.) References: IAB Report, Africa on the Move, April 2013, including Japheth’s interview on pg. 11 and Smart Planet (Dec, 2012) - http://www.smartplanet.com/blog/bulletin/africa-has-more-mobile-phone-users-than-the-us-or-eu/9053 Poll results for Africa Difficulties accessing finance was considerably higher in Africa/Middle East when compared with global results (18% vs 12% globally); this is another reason why the accountancy profession and the need for consistent high-quality financial reporting is so critical in Africa Note limitations: only 10% of respondents from Africa We would like to increase that percentage given the importance of the continent Please respond, and encourage others, to latest poll at www.ifac.org/smp
- #7 “Reputation and credibility” of profession was top concern globally and in Africa according to last poll
- #8 Numbers cited are according to latest SMP Quick poll; in Africa, audit and assurance is still the fastest growing source of revenue with advisory/consulting services coming in second Why aren’t more expanding into consulting? The May/June 2012 poll found main barriers to expanding advisory/consulting services was lack of marketing expertise and insufficient partner time
- #9 SMEs are a critical portion of economies globally As SME advisors, SMPs be part of solution to global financial crisis Xx% of GDP globally Increasing internationalization of SMEs Increasing demand for advice, especially tax IT developments like cloud computing Existing services at lower cost and new services (e.g., virtual CFO) Can benefit both SMEs and SMPs Employment While unemployment rates are still high in the US and Europe, the need for accountants worldwide remains high
- #11 Standards and Guidance: Mission: Contributing to the development of international standards and guidance that are stable, relevant, and can be applied in a manner proportionate to the size of an entity or practice Example: The SMP Committee’s original mandate was to input to international standard setting. A protocol has been in place that gives the committee privileged rights to input to the development of IAASB standards right from when a project is first started through to the exposure draft (ED). We are close to finalizing one with the IESBA. Adoption and Implementation: Mission: Facilitating the adoption and implementation of high-quality international standards and guidance by SMPs and SMEs Examples: ISA and QC Guides (currently xx translations) provide practical guidance and can be used both by practitioners and by trainers as a reference/basis for training and education materials; companion manual to help make best use of guides; other free resources and tools (articles, links in Delicious); Guide to Review Engagements due out in Q4 2013 or early 2014 Development and Quality: Mission: Building competence and relevance of SMPs through IFAC member bodies and other professional accountancy organizations and promoting the value of SMPs Examples: Videos interview series on developing business advisory capacity (Two of my SMP Committee colleagues are featured in the interviews – Stuart Black from Australia and Florin Toma from Romania. Good Practice Checklist for Small Business (Second Edition), Practice Management Guide, Other free resources and tools (articles, links in Delicious) Visibility and voice initiatives: Twitter, LinkedIn SMP Community, eNews, Quick Poll, and this Forum Speaking Out: Mission: Speaking out on public interest issues of relevance to SMPs and SMEs Objectives: Relevant, stable, and proportionate regulation for SMEs and SMPs (focus on impact of policy/regulation on SMEs [“Think Small First”]) Examples: SMP Committee Chair serves on PPR Advisory Group, IIRC’s Discussion Paper, Towards Integrated Reporting , EU Green Paper on Audit Policy, Policy Position Paper 6 (IFAC), Global Regulatory Convergence