Singapore: Building a Nation of CFOs and CPAs

As a permanent resident of Hong Kong, I hate to say this, but it seems Singapore is once again surging ahead in an important area of business. I refer to the final report of the government-formed Committee to Development the Accountancy Sector (CDAS) that was released last week. After a year of work, the group has come up with what it calls “a holistic view” of Singapore’s accountancy’s sector and presented recommendations to “transform the accountancy sector for the next 10 years.”
It’s a bold and ambitious plan. The committee wants to establish a CFO Institute and Centre of Excellence in Internal Audit and Risk Management, Business Valuation and Tax. The aim is to promote “the professional development of Chief Financial Officers, as well as the development of specialisation pathways in internal audit and risk management expertise, business valuation expertise (especially in the areas relating to intellectual property, brands, corporate finance and arbitration proceedings), and international tax expertise.”
It also wants to create a new professional accountancy qualification “of global repute and standing” while at the same time keeping the city a welcoming regional centre for international professional bodies such as ACCA and CIMA to offer other accountancy qualifications. “This will provide the diversity of the professional accountancy qualifications and add to the vibrancy of the Singapore sector,” says the committee.
“A strong accountancy profession and a talented pool of qualified accountants will support Singapore's position as the Global-Asia Financial and Business Hub,” the report adds. “Singapore accountants will be sought after to support Singapore companies having businesses in the region.” An Accountancy Services Research Centre will provide intellectual stimulation to this pool, promoting high quality and market-relevant research and “attracting local and international talent from the academia and the professional practice industry.”
Can Singapore pull it off? The island republic has a good track record of hitting its big targets, from becoming a completely wired and wireless island (done) to fostering arts and culture (getting there) to transforming itself into an entertainment and gaming tourism destination (still in the first stages). But building up a services and talent-oriented industry like accounting and finance is a different order of business. It requires a deep pool of young and trainable talent with numerate and business bent – a challenge given Singapore’s tiny population.
Grand Dreams
Still, you can’t blame a small city for dreaming big. Led by Bobby Chin, chairman of the Singapore Totalisator Board and former KPMG managing partner, with members from other Big Four firms, the Institute of Certified Public Accountants of Singapore (ICPAS) and the country’s business schools, CDAS has drawn up a thorough report. Do you know, for example, that accountancy in the Asia Pacific is a US$30.8 billion business? By 2013, says the committee, billings will jump 24% to US$38.3 billion on the back of growing demand in China, India, Indonesia and Vietnam and resurgent businesses in the rest of the region as economic recovery and expansion take hold.
That’s a juicy pie that Singapore is finding irresistible. At the moment, its accountancy market is valued at just US$862.4 million, 2.8% of the Asia Pacific total and 0.47% of the local GDP. In contrast, accounting in Australia contributed US$9.2 billion to the economy, almost 1% of GDP. “As Singapore aspires to be a leading global accountancy hub for the Asia Pacific region, it should seek to double the sector’s existing GDP contribution from the current level of 0.4% to about 1% over the next 10 years,” says CDAS.
For CFOs and would-be CFOs, particularly those who feel overwhelmed by the ever growing demands of the job, the mooted CFO Institute and Centre of Excellence can be a godsend. Companies coming face to face with a resurgent finance talent crunch should also be excited by the proposal to develop a new professional accountancy qualification, which can possibly expand the supply of accountants, financial controllers, treasurers, internal auditors, risk managers, tax specialists and other finance staff. 


Book-Learning Vs. Experience

Sceptics would scoff about the limits of book-learning and they have a point. Many CFOs today will tell you that almost everything they know they have learned, and continue to learn, on the job. But it helps if you have a good foundation in accounting and business management to build on, and this is possibly what the CFO Institute and Centre of Excellence will do. That said, there are already any number of business-oriented institutions in Singapore, including NUS Business School, Singapore Management University and Nanyang Business School (the last two of which have representatives on CDAS).
It is still too early to say how the CFO Institute and Centre of Excellence will work. The report mentions the “acquisition of core competencies which could apply across all industries, e.g. corporate finance (valuation, M&A transactions), risk management (credit and market risks), financial markets and instruments,” a regional examination centre, and a CFO certification scheme, although it says this should be promoted as best practice rather than made mandatory. The certification is envisioned to “form the minimum standard of quality desired of a proficient CFO.”
CDAS also calls for steering committees to be formed, including a CFO Steering Committee composed of CFOs and ICPAS representatives. Hopefully this committee will focus on actual, hands-on, on the job training and interaction with practising CFOs, and will involve secondment, mentorship and shadowing, not simply book-learning.
CDAS stresses that its proposed “globally-recognised, Singapore-branded, post-university professional accountancy qualification” should have a unique value proposition. It envisions international portability and an “Asian market value factor” as among the elements that will set the programme apart from current qualifications from ACCA, CPA Australia, CIMA and, yes, ICPAS, which will administer the new qualification programme under the oversight of a proposed Singapore Accountancy Council. This new council will be a high-level body to be established via legislation, whose members will come from the public accountancy profession and sector, business and financial community, academe and the public.
Shallow Pool
One immediate challenge, and one that CDAS freely acknowledges, is Singapore’s shallow talent pool. “There is an overwhelming reliance of the profession on the single source of supply of accountancy graduates from the three local universities,” notes the committee. “The supply of accountants is close to 1,000 per annum for the past three years. At the same time, the job of an auditor remains in the Top 3 job vacancies in professional services. The job of an accountant was the Top 6 job vacancies in 2009.”
Where will Singapore source the talent to take up the new qualification and train in the CFO Institute and Centre of Excellence? Mainly from non-accountants. CDAS calls for a conversion programme to facilitate entry of degree-holders from non-accountancy disciplines and a pathway to facilitate re-entry of former professional accountants. The committee cites a survey that says 34% of members of the three professional accounting bodies in Singapore no longer practice as auditors or accountants in commerce, mainly because of the difficulty of balancing the demands of the profession with the responsibilities of looking after a young family.
Curiously, the report is silent on recruiting accounting talent from neighbouring Malaysia, for example, or the Philippines, Indonesia and Vietnam. There are possibly some political sensitivities here, but it is difficult to see how tiny Singapore, with fewer than 5 million inhabitants, can pull off its plans with only the shallow talent pool it currently has. That’s hardly enough to meet domestic demand, let alone the grand ambition of exporting accounting services. Another CDAS recommendation is to ease regulations on foreign accounting firms setting up business in Singapore and helping local small and medium scale accounting firms set up and expand, which could mean additional demand for talent.
It will be interesting to see whether the Singapore experiment will work. The traditional approach to accounting and finance is essentially laissez faire, with the government providing the legal framework and self-regulating private-sector professional bodies granting CPA certificate and promulgating accounting, auditing, financial reporting and ethical standards. That is the case in Hong Kong, where the government has not been active in providing direction and extending financial and other incentives to the accounting sector. It remains to be seen what effect Singapore’s initiative will have on Hong Kong’s approach to the profession and those of other jurisdictions in Asia.
About the Author
Cesar Bacani is senior consulting editor at CFO Innovation.


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