Institute of Certified Public Accountants of Singapore is urging the small and medium CPA firms to re-strategise their business and merge their practices to strengthen their resources, avail of synergies and grow.
Historically, competition and the demand for worldwide service have largely driven the previous Big 8 firms since 1989 to the current Big 4 firms. So, mergers and acquisitions, when successful, can help small and medium CPA firms to better compete, stay ahead of the technology curve, attract better quality staff and expand their client base.
The current financial turmoil provides a huge opportunity for accounting firms. During the downturn, there is an expected increase in demand for forensic accounting and insolvency work. The bad economic times are, in some sense, good for the business. There are opportunities for CPA firms to provide a broader spectrum of services to their clients. However, the firms need to expand their team of professionals that possess the additional expertise needed to offer these new services. Merging would be a way to gain access to a broader range of expertise to boost the firms’ service offerings. It will propel their growth faster and it is also less expensive than attempting to train and develop the current staff.
Since the Enron case in 2002 and several high-profile corporate scandals that followed in the last few years, there are increasing pressures on the profession to provide high quality assurance services that require quality controls and review procedures that only a practice of substantial size can support. By merging, CPA firms can enjoy distinct economies of scale with the combined expertise. Moreover, with combined client bases, there are also more opportunities to grow and expand their businesses.
Most small to mid-size accounting firms are also faced with succession planning concerns or problems. Looking at the profile of the ICPAS membership base, about 54 per cent of its members in small and medium practices are over 50 years of age. Close to one-fifth of those in small and medium practices are over 60-years old. Succession planning would be an issue that this group of CPAs has to grapple with now. Unfortunately, some of their younger staff members may not be willing to accept the responsibility of being co-owners. Hence, firms may wish to consider merging as an exit strategy versus having to sell their accounting practice.
“The new opportunities and challenges ahead will bring with them fundamental changes to the way the business of accountancy is conducted in Singapore. It is exciting and there is great potential for our small and medium practices to grow and expand overseas. Our local CPA firms need to leave their comfort zone, extend their sights beyond Singapore instead of being just a cosy domestic player. While they may not be able to do it alone, merging would give them the muscle to make this possible,” said Dr Ernest Kan, Vice-President of ICPAS at the Institute’s Public Accountants Lunch Talk on Mergers and Acquisitions of Accounting Practices today.
“That said, merging practices is like a meeting of mindsets. You are bringing together two enterprises with separate philosophy, strategy, and vision, culture, structure, management and leadership styles, interpersonal issues and more. These are pertinent issues that CPAs need to address in mergers and acquisitions,” he added.
Public Accountants Lunch Talk on Mergers and Acquisitions of Accounting Practices is part of ICPAS's initiatives to help the small and medium practices maximize their potential and grow their businesses. Moving forward, the Institute will continue to introduce new programmes such as Job Redesign, Succession Planning, Overseas Missions, just to name a few, to help the small and medium practices compete and prosper.
About Institute of Certified Public Accountants of Singapore
Established in June 1963, the Institute of Certified Public Accountants of Singapore (ICPAS) is the national accountancy body that develops, supports and enhances the integrity, status and interests of the accountancy profession in Singapore.
The Certified Public Accountant Singapore (CPA Singapore) is a professional in accountancy, finance and business who has the relevant work experience in addition to a recognised accountancy qualification. They are highly versatile and well sought after as business leaders beyond the accountancy, banking and finance industries.
Today, the Institute of Certified Public Accountants of Singapore (ICPAS) has over 20,000 members and/or CPAs Singapore working and making their mark worldwide, which makes the CPA Singapore a designation with international recognition.
ICPAS’ international outlook and connections are reflected in its membership of regional and international professional organizations like the ASEAN Federation of Accountants (AFA), the Asia-Oceania Tax Consultants’ Association (AOTCA) and the International Federation of Accountants (IFAC).
The Institute also caters for the training and professional development of its members through regular courses conducted by its training arm, the Singapore Accountancy Academy (SAA).
For more information, please contact:
Ms Catherine Chan Communications Manager Institute of Certified Public Accountants of Singapore Tel: 65 6749 8060 Ext 813 Fax: 65 6749 8061 Email: email@example.com
Ms Natalie Leung Communications Executive Institute of Certified Public Accountants of Singapore Tel: 65 6749 8060 Ext 817 Fax: 65 6749 8061 Email: firstname.lastname@example.org