Post on 13-Sep-2018
CHANGING GEARS TOMEET THE FUTUREMeasuring Technology Adoption in theAccountancy Profession
Taking Stock of the RaceIntroduction
On the dashboard
Public Accounting Firms
• About1outof2firmsusepracticemanagementsystemfirm-wide.Thetop3servicesprovidedareStatutoryAudit,CompilationandTaxation–however,majoritydonotuseanysoftware/systemforanyoftheseservices.
• Billingandtimesheetarethemainfunctionsusingtechnology.
• Software/systems are similar toAccounting and FinanceDepartment in beingoff-the-shelf and accessible on-premise.Onaverage,firmshavebeenusingthemfor3.2years(excludingupgrades).Althoughthekeyreasonforpurchasingsoftwarewasfitforpurpose,anumberoffirmsarenotsatisfiedwithperformanceoftheircurrentsoftware.Generatingtimesavingisthemostimportantwhenusingasoftware/systemwithanaverageof22%annualimprovementseen.
• Trainingiskeyandthemosteffectiveactiontakenbyfirmstonurturecompetencyinusingsoftware/systems.Akeychallengewhenusingthemisignoranceoftheirfullfeatures.Whilecostsseemsbekeyreasonfornotusingsoftware/systemswithinfirmsacrossmajorityoffunctions,lackofsuitablechoiceiswhytheyarenotusedforliquidation&receivershipmanagementandrestructuring,valuation&forensic.Keymotivationforfutureadoptionisfitforpurpose.
Accounting and Finance Departments
• 4outof5membersuseatleast1technology/softwarefordailyoperations,84%ofthemforprocessingtransactions.1outof3donotuseanysoftware/systemforcomplianceandcontrolandplanningandanalysis,possiblyduetogreaterneedforhumaninterpretation.
• Most software are custom-developedandonly accessibleon-premisepossiblydue to theamountof sensitive informationstored.Generatingtimesavingismostimportanttomembers,withatleast15%ofannualimprovementseen.Averagelengthofuseis6.2years(excludingupgrades)andkeyreasonsforselectionareeaseofuseandfitforpurpose.Software/systemsarenotchangedfrequentlyunlessrequiredbyacompany’sheadquartersasitinvolvesasubstantialamountoftimeandmoney.
• Trainingiskeyandthemosteffectiveactiontakenbycompaniestonurturecompetencyinusingtheirsoftware/system.Amajorchallengecompaniesfaceisignoranceofthefullfeaturesofasoftware,resultinginunderutilisationandpoornavigation.
• Majorityof respondents (86%)areawareofgovernment schemes toencourage technologyadoption,mainly IRASPIC.67%oftheseusetheIRASPICscheme,while30%donotuseany.Respondentsfeltthatfundingquantumisthekeyareatoimproveon.
• Costsappeartobekeyreasonforcompaniesnotadoptingtheuseofsoftware/systemwithinacrossthe3functions.Lackofmanagementsupportandresourcecommitmentseemtoalsoplayastrongrole.Keymotivationforfutureadoptionisbetterpricingandfitforpurpose.
Highlights and Snapshots
Shift in paradigmWiththeemergenceofnewtechnologiesandrisingcompetition,regulationsandclientexpectations,theaccountancylandscape is rapidlyevolving.Thechallengeofachievingmorewith lessand the increasingcomplexityoffinancerolescallforaparadigmshiftawayfromtheprofession’scurrentnumber-crunchingnormandmovetowardsamorestrategicandanalyticalrole.Hence,itiscrucialfororganisationstostartembracingdigitaltransformationtoimproveefficiency,staycompetitiveandsustaingrowth.
Current SituationCurrentstatisticsdemonstratethatasasector,accountancystilllagsbehindinharnessingtechnologyacrossalmostallofitsmajorfunctions.TheInstitute,asthenationalaccountancybody,withthesupportofSAGESingapore,launchedtheTechnologyAdoptionSurveyandcollecteddatafrom129respondentsfromtheaccountingandfinancefunctionsaswellaspublicaccountingfirms.FocusgroupswereorganisedinMayandJune2016tovalidatetheresults.Thisreport,whichhighlightsthekeyfindingsofthestudy,aimstonotonlyassessthecurrenttechnologyadoptionrate,butalsotheproductivitygainsthathavebeenbroughtabout inordertoencouragefirmstoadoptbestpracticesfrompeers.The Institute,throughourvarious initiatives,willsupportfirmsastheynavigatetheirwayonthe journeytowardshigherproductivity.
Taking Stock of the Race- Introduction
The State of the Race- Technology Adoption Rate of Accountancy Sector
Gaining Power- Productivity Gains from Adopting Technology
Putting on the Brakes- Reasons for Not Adopting Technology
Stepping on the Pedal- Awareness of Government Schemes
Who’s on the Grid- Respondents’ Profile
Visualising the Next Lap
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Of those that adopt technology,majoritypreferon-premisesoftware/systemsascomparedtocloud.Ithasbeen discovered that this is largelyduetoconfidentialityofthedatathatresidesinthesesoftware/systems.
Cloud Systems
Both PAF andA&F report clear andmeasureable productivity gains as a result of adopting technology,with thegenerationoftimesavingbeingthebiggestgainoverallforbothsegments.
Although67% of PAFinSingaporeadoptatleast1software/technologyintheirdailyoperations,mostofthis67%iscontributedby firms which have adopted practicemanagement systems. Judging from ourdata,onlyapproximately18% of PAFarecurrentlyusinganyformofauditsoftware.This also coincides with the results fromthe ISCA audit manual survey conductedin October 2016, which indicates about15% of PAFareusingauditsoftware.
Although transactionprocessing yields thehighestpercentageof timeandcostsavings,itdoesnotdemonstrateanydirectimpactontherevenueofacompany.In comparison, planning and analysis which include tasks like forecasting andbudgeting,havethehighest%increaseinrevenue.
Thisaffirmsthataccountantsshouldbedoingmorethanjustcrunchingnumbersviatransactionprocessing.Instead,theyshouldbeperforminghighervaluetaskslikeplanningandanalysisfortheircompany,whichwouldinturnleadtoahigherincreaseinrevenue.
Transaction Processing
Compliance and Control
Planning and Analysis
AverageImprovement
Time Saving 21.7% 16.1% 15.8% 17.9%
Cost Savings 14.7% 11.2% 10.6% 12.2%
Increased Revenue
5.1% 6.7% 8.1% 6.6%
Cloud On-premise
18% 12% 7%
22% 18% 12%
36% 64%
PublicAccountingFirms(PAF)
PublicAccountingFirms(PAF)
The State of the RaceTechnology Adoption Rate of Accountancy Sector
Public Accounting Firms (PAF)
Accounting & Finance Departments (A&F)
Gaining PowerProductivity Gains from Adopting Technology
TimeSavings CostSavings IncreasedRevenue
21.7%Greatesttimesavingsintransactionprocessing
14.7%Highestsavingsin
transactionprocessing
8.1%Greatestrevenueincreaseinplanningandanalysis
33% 67%
Other systems used by PAF include
AuditAnalytics
CorporateSecretary
Accounting&FinanceDepartments(A&F)
Accounting&FinanceDepartments(A&F)
Tax
TAX
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Currently,only67% of public and accounting firms (PAF) in Singapore adopt at least 1software/technology in their daily operations.This 67% is mostly contributed by usersof practice management systems, with45%of public accounting firms indicateduseof suchsystemsfirm-wide.On theotherhand, 81% of Accounting and Finance Departments (A&F)adoptatleast1software/technologyfortheirday-to-dayoperations.
67%PublicAccountingFirms(PAF)
1theirdaytodayoperations
45%practicemanagementsystems
technology/softwarefor
Technology Adoption Rate
81%Accounting&FinanceDepartments(A&F)
Public Accounting Firms (PAF)
Putting on the Brakes - Why?Reasons for Not Adopting Technology
Despitemanybenefitsof incorporating technology intodaily operations andprocesses toboostproductivity andrevenue,theadoptionrateintheaccountancysectorisstillslowtorise.
Herearethetop3reasonsforthelaginsoftware/systemsadoptionfortherespectivesegments:
Accounting & Finance Departments (A&F)
Lackofmanagementsupport
Financialcosts
Lackofknowledge
Public Accounting Firms (PAF)
Lackofknowledge
Financialcosts
Lackofsuitablesoftware
Stepping on the pedalAwareness of Government Schemes
Withsomuch for theaccountancy sector togain fromtechnologyadoption, ISCAhasbeenhelping to raise theawarenessofthevariousgovernmentschemesavailablehelpingfirmsdoso.
Current Awareness Level of Government Efforts to Help the Sector
0504
IRAS Productivity
and Innovation Credit (PIC)
SPRING Capability
Development Grant (CDG)
SPRING Innovation
and Capability Voucher (ICV)
IDA Enhanced
iSPRINT
IDA iSPRINT
Others
None
90% 50% 28% 42% 2%8%58%
IRAS Productivity
and Innovation Credit (PIC)
SPRING Capability
Development Grant (CDG)
SPRING Innovation
and Capability Voucher (ICV)
IDA Enhanced
iSPRINT
IDA iSPRINT
Others
None
22% 85% 18% 9% 7%2%0%
AWARENESS OF GOVERNMENT SCHEMES IN TECHNOLOGY ADOPTION
GOVERNMENT SCHEMES USED CURRENTLY
Possible Areas of Improvement to Encourage Higher Technology Adoption
Public Accounting Firms (PAF)
Accounting & Finance Departments (A&F)
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Accounting & Finance Departments (A&F)
71%
57%
55%
Funding quantum
Eligibility criteria
Ease of claiming process
76%
75%
65%
Funding quantum
Eligibility criteria
Ease of claiming process
IRAS Productivity
and Innovation Credit (PIC)
SPRING Capability
Development Grant (CDG)
SPRING Innovation and Capability Voucher (ICV)
IDA Enhanced
iSPRINT
IDA iSPRINT
None
84% 30% 29% 17% 9% 14% 67% 8% 10% 0% 0% 30%
IRAS Productivity
and Innovation Credit (PIC)
SPRING Capability
Development Grant (CDG)
SPRING Innovation and Capability Voucher (ICV)
IDA Enhanced
iSPRINT
IDA iSPRINT
None
AWARENESS OF GOVERNMENT SCHEMES IN TECHNOLOGY ADOPTION
GOVERNMENT SCHEMES USED CURRENTLY
Visualising the Next Lap
WHY? The rapid advancement of technology has brought about a shift in the current business environment, altering markets, value networks and clients’ expectations. These changes, albeit posing multiple challenges to the accountancy sector, also bring along many opportunities and possibilities. Hence, there is no doubt that technology would be at the heart of the accountancy sector in the near future.
WHAT? As highlighted in the ISCA-ICAEW June 2016 report, “Our Future Together”, digitalisation of accounting information in the last two decades has changed and improved how accountants work. The advancement of technology has freed accountants from the
drudgery of menial and mundane tasks, enabling them to perform more meaningful work such as analysing and advising enterprises on the financial implications and
impact of various business decisions. Technology is a major driver of change in business processes and models in today’s business world. Although we do not
anticipate robots fully replacing judgment in accountants in the next 5 to 10 years, the advent of machine learning and cognitive computing is slowly
pushing the realm of artificial intelligence into the accountancy world. Businesses should ride the digital wave to avoid being disrupted. Due to
improved data connectivity and access, technologies like blockchain, predictive analytics, cloud systems, drones, could eventually render
the roles of bookkeepers redundant, as accounting information can now be captured and authenticated via technology.
HOW? Although globalisation and technological changes will lead
to job disruption in various roles, it is also an opportunity for redevelopment of the accountancy sector, whereby
menial work can be replaced with higher value-added services. This would effectively help accountants move
up the value chain and motivate them to keep up with the technological race. Therefore, it is crucial
for the accountancy sector to adopt an open mind and learn to embrace technology, as it is
the future not only of the profession, but of all businesses.
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WHO’S ON THE GRIDRespondents’ Profile
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1-5
6%
6-10
7%
Morethan 500
7%
11-20
3%
21-30
10%
31-50
13%
51-100
16%
101-200
17%
201-500
1-5
36%13%
11-20
10%
21-30
1%
31-40
1%
41-50
24%
6-10
15%
Morethen 50
21%
FULL-TIME EMPLOYEESIN PAF
FULL-TIME EMPLOYEESIN A&F
1-5
23%
6-10
17%
11-20
20%
21-30
10%
31-50
17%
51-100
7%
201-500
1-5 6-10 11-20 21-30
31-50
51-100
101-200
6%
40% 19% 15% 10% 8% 3% 5%
IT TEAM STRUCTURE IN SINGAPORE
PAF A&F
42%Both 31%
In-houseIT team
27%Outsourced
IT team
10%Both
25%In-houseIT team
65%Outsourced
IT team
AUDIT STAFF IN SINGAPORE FULL-TIME EMPLOYEES IN
A&F IN SINGAPORE
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PAF A&F
PROPORTION OF REVENUE IN IT BUDGET
PAF A&F
ANNUAL TURNOVER
PROPORTION OF IT SPENDING - OPERATIONAL VS CAPITAL EXPENDITURE
PAF A&F
1%21-30%
9%Less than 1%
80%1-10%10%
11-20%
Average: 5.3%
10%11-20%
2%Less than 1%
88%1-10%
Average: 6.0%
23%>1-5
18%>5-10
35%>10-50
5%>50-100
5%>100-500
2%>500-1000
2%>1000-1500 4%
1 and below10%
1 and below
14%>10-50
7%>50-100
19%>100-500
13%>500-1000
6%>1000-1500
6%>1500-2000
21%>2000-3000
7%>1-5
3%>5-10
in SGD Hundred Thousand
1-10%
11-20%
21-30%
31-40%
41-50%
51-60%
61-70%
71-80%
81-90%
91-100%
50%48%
15%
13%
2%
0%
8%
3%
7%
2%
8%
5%
5%
10%
2%
5%
15%
2%
Average Operational Expenditure
22.5%
Average CapitalExpenditure
29.8%
1-10%
11-20%
21-30%
31-40%
41-50%
51-60%
61-70%
71-80%
81-90%
91-100%
43%37%
12%
11%
4%
20%
3%
3%
3%
10%
3%
3%
20%
3%
9%
7%7%
1%
1%
Average Operational Expenditure
31.6%
Average CapitalExpenditure
30.5%
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Audit Partners Non-Audit Partners
NUMBER OF PARTNERS (PAF)
Lessthan1
10%
1-10
85%
11-20
3%
Less than1
40%
1-10
58%
11-20
2%
41-50
2%
About ISCA
About SAGE
TheInstituteofSingaporeCharteredAccountants(ISCA)isthenationalaccountancybodyofSingapore.ISCA’svisionis tobeaglobally recognisedprofessionalaccountancybody,bringingvalue toourmembers, theprofessionandthewidercommunity.Thereareover30,000 ISCAmembersmakingtheir stride inbusinessesacross industries inSingaporeandaroundtheworld.
Establishedin1963,ISCAisanadvocateoftheinterestsoftheprofession.PossessingaGlobalMindset,withAsianInsights, ISCA leverages its regional expertise, knowledge, and networkswith diverse stakeholders to contributetowardsSingapore’stransformationintoaglobalaccountancyhub.
ISCA is theAdministratorof theSingaporeQPand theDesignatedEntity toconfer theCharteredAccountantofSingapore-CA(Singapore)-designation.
ISCAisanAssociateofCharteredAccountantsWorldwide–supporting,developingandpromotingover620,000CharteredAccountantsinmorethan200countriesaroundtheworld.
Formoreinformation,visitwww.isca.org.sg.
Sageisthemarketleaderforintegratedaccounting,payrollandpaymentsystems,supportingtheambitionoftheworld’s entrepreneurs. Sagebeganas a small business in theUK30 years agoandover13,000 colleaguesnowsupportmillionsofentrepreneursacross23countriesastheypowertheglobaleconomy.Wereinventandsimplifybusiness accounting through brilliant technology,workingwith a thriving community of entrepreneurs, businessowners,tradespeople,accountants,partnersanddevelopers.AndasaFTSE100business,weareactiveinsupportingourlocalcommunitiesandinvestinmakingarealdifferencethroughthephilanthropyoftheSageFoundation.
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Acknowledgements
ISCA Industry Support
MsFannKor–DeputyDirector,QualityAssurance&IndustrySupport
MsJoelleLoy–Manager,SMPDevelopment
MsSharonTanBaoru–Executive,SMPDevelopment
Sage Software Pte Ltd
MsSeeAiLing-MarketingDirector,Asia
MsReginaTan-MarketingExecutive
Taylor Nelson Singapore
MsAureliaLeopold-Director,FinanceandBanking
MsRuchikaTalwar-SeniorManager,QualitativeResearch,
MsNabilah-SeniorClientServiceExecutive,QuantitativeResearch
INSTITUTE OF SINGAPORE CHARTERED ACCOUNTANTS
60CecilStreet,ISCAHouseSingapore049709
Tel:+6567498060Fax:+6567498061Email:isca@isca.org.sg
www.isca.org.sg