Many businesses are grappling with significant survival issues with the pandemic still in sway. SMPs (Small and Medium Accounting Practices) in Singapore, in particular, are facing issues in meeting reporting deadlines due to a reduction in employee mobility and widespread lockdowns; posing difficulties in gathering audit evidence and finishing audit assignments. SMPs are also confronting technical issues, for example, audit and advisory risks relating to uncertainties in the valuation of inventories and receivables; assessing going concern assumptions; and relevant disclosures in the financial statements.
If there is a bright spot in all of this, we can reflect on the fact that while Covid-19 has generated many challenges, it is also spurring SMPs to relook their current business models and the services they provide. SMPs are being motivated to step out of their familiar environments to generate greater business value for themselves and their clients.
As an SMP, you may wonder how you will be able to do this while being burdened by the perennial lack of resources, talent, expertise and the uncertainties in moving ahead into a new service line when it is not clear to you whether there is a critical number of clients who will use your service.
However, there are two important questions that you will need to ask even before you embark on providing a new service:
Here are six crucial things you should do, gleaned from the recently launched ACCA (Association of Chartered Certified Accountants) - SAC (Singapore Accountancy Commission) report and quick guide before you start your transformation journey.
Tip #1: Digitalise your business then diversify for higher productivity.
Industry data shows that SMPs in Singapore that embark on diversification (before digitalisation) appear to suffer from lower productivity (see the Figure below). However, those that digitalise before they diversify, showcase higher productivity levels. Therefore, we would advise SMPs to avoid the natural urge to diversify; without first reflecting on your productivity levels to decide if digitalisation is necessary.
Tip #2: Diversify services beyond regulatory compliance to stay competitive.
According to the Market Demand for Professional Services report (2018) 3 out of the top 5 service lines demanded by SMEs and other corporates, were non-regulated services, as follows:
One of the most critical observations from the report is that there is a significant increase in demand for non-regulated services in recent years. Moving forward, your firm would do better if it explores advisory services, rather than remaining firmly fixed on compliance services.
Tip #3: Be aware and anticipate the demand for professional services to ensure a more sustainable practice.
Review and scan the latest industry data on the most demanded professional service lines. The ACCA-SAC Market Demand report (2018) is a good source for this information. It tracks demand for professional services in the Asia-Pacific region. When embarking on new services, it is equally essential to ensure that it also leads to higher productivity.
The Top 10 Demanded Services
Tip #4: Evaluate and mobilise internal skills and competencies to ensure efficient use of resources and lower transformation costs.
To identify your firms current readiness to embark on a new service or transformation journey, you will need to assess where the company is presently with regards to digitalisation and diversification. The matrix below can help you in identifying your firm’s current ‘’persona’’ for this purpose; as well as your ‘’target’’ persona.
Tip #5: Start from your strengths and work on it!
Your current skillsets may very well be the starting point to developing expertise that enables you to provide new and innovative services in the future. So, begin with your current strengths. For example, we usually think of a service line like ‘’statutory audit,’’ for example, as a single service. However, look more closely and you may be surprised that it is actually a bundle of different services: risk assessments, internal control evaluation, valuation and other services.
See below for an illustration of how Statutory Audit can be unbundled and new services identified. For example, inherent risk assessment is an integral part of a statutory audit. If we intensify the development of skillsets in your firm relating to the evaluation of inherent risks, we can generate a new separate risk advisory service. Similarly for the other tasks.
So do scrutinise your current services and unbundle the distinct tasks that could be used as the starting points for new services.
Tip #6: Move incrementally towards greater diversification.
To minimise pain points, use specific progression pathways towards best practice and higher productivity. Review the illustrative progression pathways in the SAC-ACCA Quick Guide below to help you to review your current service and see how it could help you reach your target service, through incremental steps.
The SAC-ACCA Quick Guide and the six crucial things you should do in this article requires you, the SMP business owner, to assess your environment, as well as your strengths and weaknesses, while keeping an eye on the demand for various professional services, that changes in response to business practices and needs. It also requires you to be selective about your journey; and not to imitate what others are doing but independently decide for yourself what is the correct transformation pathway for your firm, considering profitability and productivity. This will help you and your staff to feel more confident that you are on the right pathway to transform your business.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Joseph Alfred is the Head of Policy and Technical of ACCA – the Association of Chartered Certified Accountants, Singapore.
In this role, he is responsible for the formulation of policies as well as development and implementation of Professional Insights initiatives to drive ACCA’s public value mission and brand objectives, ensuring that ACCA members, regulators and other stakeholders are updated on ACCA’s global technical policies.
He also works closely with stakeholders and organisations to identify opportunities where ACCA can contribute to the agenda in relation to accounting and business in Singapore and in ASEAN.
Joseph has been with ACCA since 2004. He is currently a Fellow member of ACCA, Fellow Chartered Accountant of Singapore. He holds an MBA from the University of Strathclyde.