Transcript Strategic Report – [Insert Board/Committee Acronym here]

Global and Regional Trends
Impacting SMPs
Christopher Arnold
Technical Manager, SME & SMP
Affairs
New Delhi
October 10, 2014
Page 1 | Confidential and Proprietary Information
Agenda
• IFAC SMP Quick Poll
• Insights from IFAC Research
– The Role of SMPs in Providing Business Support to SMEs
• Other Research
– ACCA/IMA Digital Darwinism: Thriving in the Face of Technology Change
– Edinburgh Group research, Growing the Global Economy through SMEs
• Resources
Page 2 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll I
• Latest poll Nov-Dec 2013 attracted over 3,700
respondents
• Report at www.ifac.org/publications-resources/ifac-smpquick-poll-2013-year-end-round
• Poll was conducted in 17 languages
• Responses are heavily skewed in favor of practitioners
from Europe and Asia working in smallest categories of
practice
Page 3 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll II
• What is the biggest challenge faced by your SME clients?
Economic uncertainty
5%
Difficulties accessing finance
3%
Pressure to lower prices of their products and services
18%
8%
Rising costs
9%
Lack of demand for their products and services
15%
13%
Compliance with regulation
Competition
15%
14%
Attracting and retaining staff
Other
Page 4 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll III
• What is the biggest challenge your practice is facing right
now?
Attracting and retaining clients
2%
2%
Pressure to lower fees
5%
Keeping up with new regulations and standards
5%
24%
6%
Attracting and retaining staff
Competition
7%
Work-life balance
7%
21%
Rising costs
Other
7%
15%
Ability to adapt to changing client needs
Keeping up with new technology
Succession planning
Page 5 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll IV
• What is the fastest growing source of revenue for your
practice?
Accounting, Compilation, and Other Non-assurance/
Related Services
6%
Audit and Assurance
17%
33%
Advisory/Consulting Services
21%
Tax
23%
Other
Page 6 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll V
• What is the main driver of your practice’s profitability?
Acquisition of new clients
2% 2%
Better retention of existing clients
9%
Increased productivity
34%
9%
Reduced overheads
11%
Increased average fee size
33%
Other
Better utilization of working capital and other assets
Page 7 | Confidential and Proprietary Information
Insights from IFAC SMP Quick Poll VI
• How does your practice expect business to be in 2014
compared to 2013?
About the same
22%
47%
31%
Better than this year
Worse than this year
• Next IFAC SMP Global Survey - 3 November 2014
Page 8 | Confidential and Proprietary Information
Insights from IFAC Research I
• IFAC Research on the role of
SMPs in providing business
support to SMEs
• Extensive literature review
• Interviews with accountants across
the world
Page 9 | Confidential and Proprietary Information
Insights from IFAC Research II
• SME demand for business advice
–
–
–
–
–
Owner-managers can be reluctant to readily seek advice
SMEs lack of in-house expertise
Change in enterprise or external environment
Regulatory demands extending outside financial compliance
Growing information needs of SMEs
• Accountants as external advisers
– Most studies worldwide indicate accountants are preferred and first
source of advice for SMEs
Page 10 | Confidential and Proprietary Information
Insights from IFAC Research III
• Reasons for choosing an accounting firm, especially SMP
– Recognition—SMPs face similar compliance burden as
SMEs
– Technical competency
– Trust
– Proximity and responsiveness
– SMEs wanting a one-stop shop
Page 11 | Confidential and Proprietary Information
Insights from IFAC Research IV
• Changing environment and challenges to traditional
provision of services
– Consolidation within the accountancy profession
– Shift in regulatory environment: fewer audits
– Shift in the nature of the SME population
– Reluctance of some SMPs to provide services other
than core compliance
• SMPs will have to diversify to survive as key advisers for
SMEs
Page 12 | Confidential and Proprietary Information
Other Research I – ACCA / IMA
• ACCA/IMA Report on Top 10 technologies that have the
potential to considerably reshape the accountancy
profession and business landscape:
–
–
–
–
–
Mobile
Big data
Payment Systems
Cyber security
Social
- Cloud
- Virtual and augmented reality
- Artificial intelligence and robotics
- Educational
- Digital service delivery
Page 13 | Confidential and Proprietary Information
Other Research II – ACCA / IMA
• Research – developments in technology:
– 81% expect change “to some extent” or “to a great extent” over next
decade
– 18% expect “a total transformation”
– 2,100 ACCA/IMA Members
• The profession must anticipate the changing needs of
business
• Accountants and finance professional must be open to the
changes created by the cloud, mobile and social platforms
and face up to demands of cybercrime
Page 14 | Confidential and Proprietary Information
Other Research III – Edinburgh Group
• Edinburgh Group research, Growing the Global Economy
through SMEs
• SMEs increasingly international but need more support
• SMPs can help with:
• Identifying markets
• Navigating red tape
• Facilitating finance
• Dealing with FOREX
Page 15 | Confidential and Proprietary Information
References—General
•
•
•
•
•
IFAC SMP Committee: www.ifac.org/SMP
Follow us on Twitter: IFAC_SMP
Join us on LinkedIn: IFAC SMP Community
Global Knowledge Gateway: www.ifac.org/Gateway
Resources and tools (all): www.ifac.org/about-ifac/small-andmedium-practices-committee/smp-resources-and-tools
• IFAC Translations and Permissions: www.ifac.org/aboutifac/translations-permissions
Page 16 | Confidential and Proprietary Information
www.ifac.org/SMP