2 nd Africa Congress of Accountants (ACOA)

1. 2nd Africa Congress of Accountants (ACOA) Building Capacity of SMPs Presented by: Charles Egan ICAG Accra International Conference Centre 15 May 2013

2. AGENDA • Definitions • Competitive advantage of SMPs • Stakeholders in the Capacity Building • Key challenges of SMP • Responses to some key challenges • Some publications on IFAC Website

3. DEFINITIONS SMPs are “ accounting practices whose clients are mostly SMEs, external sources are used to supplement limited in-house technical resources, and contain limited number of professional staff. What constitutes an SME differs depending on the country” Source: IFAC publication “The Role of SMPs in providing business support to SMEs”

4. DEFINITIONS (cont’d) SMEs are “ entities considered to be of a small and medium size by reference to quantitative ( eg assets, turnover/employees) and/or qualitative characteristics (eg concentration of ownership and management on a small number of individuals). What constitutes an SME differs depending on the country”

5. Competitive advantages of SMPs • Reputation for competency and trust • Responsiveness • Geographical proximity • Provide broad range of high quality professional services ( eg audit, accounting, tax services, value-adding business advisory services typically to SMEs)

6. Stakeholders in the Capacity Building • IFAC • National Governments • National IFAC Member Bodies • SMPs

7. Stakeholders in the Capacity Building ( cont’d) IFAC: • Committee to represent SMPs set up • Seeks inputs to new standards/amendments etc from SMPs through the Committee ( eg auditors report enhancement; compilation engagement standard ISRS 4410) • Guidance provided on compliance with standards • Articles ,seminar notes etc posted on the SMP special website • Practical tips on compliance with ISAs and documentation of ISQC1 etc provided on website

8. Stakeholders in the Capacity Building (cont’d) SMP Committee: • Set up in January 2006 • Represents SMPs globally • Helping IFAC member bodies support their SMPs • Building the capacity of SMPs to support businesses (SMEs) • Members from 18 countries and all regions represented

9. Stakeholders in the Capacity Building (cont’d) Objectives of SMP Committee: • Participate in policy making and regulatory dialogue (relevance, stable and proportionate) • Input in development of international standards eg. auditing,ethics (relevance, stable and proportionate) • Raise awareness of importance of SME sector and role of SMPs (voice and visibility) • Provide practical support to SMPs(resources & tools, for member bodies to adapt, translate etc)

10. Stakeholders in the Capacity Building (cont’d) National Governments: • Relevant regulatory framework • Support SMPs with assignments National Member Bodies: • Relevant CPDs ( IFRS, IFRS for SMEs, IPSAS, ISAs and ISQC1 etc etc) • Effective monitoring mechanism for all practitioners • Auditing systems compliant with ISAs( help source supplier) • Training in other specialised areas and soft skills

11. Stakeholders in the Capacity Building ( cont’d) SMPs: • Training( in-house, CPD courses, IFAC website) • Consulting, consulting, consulting • Providing quality service • Manage the practices effectively ( people, clients and firm) • Consider the size of the firm ( partnerships)– Mergers??? • Strategically plan to overcome all other challenges • Voice and visibility ( nationally and globally)

12. Key Challenges of SMPs • Keeping up with new regulations and standards 23 • Attracting and retaining clients 33 • Ability to adapt to changing client needs 2 • Pressure to lower fees 17 • Rising costs 5 • Succession planning 3 • Work-Life balance 5 • Attracting and retaining staff 6 • Competition 5 • Keeping up with new technology 1 Source: IFAC SMP Quick Poll (May to June 2012)

13. Responses to some of the key challenges How to cope with the pressure to lower fees: • Adopt new approaches to pricing • Stress to clients the value of services offered • Focus efforts on most valuable clients -- yield management technique • Leverage on technology to improve processes and lower costs • Re-examine the practices’ service offering • Find cheaper sources of supply • Tackle overheads

14. Response to some key challenges Attracting and retaining clients: • Boost marketing /promotion efforts – winning more business from new clients • Focus on advisory/consulting to newly emerging businesses • Understand the business of your clients so as to be the trusted business advisor (KYC) • Consider new service offering to existing and new clients ( eg sustainability reporting etc) • Quality, quality , quality ( perception of the client)

15. Responses to some key challenges Keeping up with new regulations and standards: • Training!! Training !! Training !!!!! • Be pro-active in the regulations/standards setting where possible ( voice and visibility) • Develop /obtain an up to date checklists

16. Some publications on IFAC Website • Helping SMPs meet the challenges and seize opportunities or tomorrow • The role of SMPs in supporting the business of SMEs • ISA Quality Control Guide • SMP Tips on applying ISQC1 • Staff Q&A ISQC1 Proportionality • SMP Practice Management Guide

17. Thank You “If I have seen farther it is by standing on the shoulders of giants” -- Sir Isaac Newton Questions