“Accountancy in the digital future”
Mr Yeoh Oon Jin, Divisional President of Singapore for CPA Australia,
Ladies and gentlemen,
Good morning. It is my pleasure to be here today to share on the various Smart Nation initiatives, and how they might provide an opportunity to transform your profession and the organisations that you serve. Overall, we hope that what we are doing, and the global trends around us, will provide a bright outlook for Singapore’s accountancy sector.
2 First, the overall shift in our global economic centre of gravity – moving towards a growing Asia, bolstering the growth of professional services like accountancy in the region. MarketLine’s Accountancy in Asia Pacific report in 2016 estimates that the market here will grow at a CAGR of 6.5% from USD71.1 billion in 2016 to USD97.5 billion in 2021. As businesses become more international in their outlook, we expect demand for professional services, especially those associated with cross-border trade and investments, to grow.
3 The second important trend is the increasing complexity of financial regulations fostering macroeconomic stability. The need for these regulations and the associated increased complexity presents opportunities for you as accountancy professionals. There are increasing expectations of fairness, transparency, sustainability and ethical business practices, driven by industry stakeholders as well as the clients they serve, making the role of accountancy more important than ever. There is also an increasing demand for new services in corporate governance, sustainability practices, compliance, risk management, and business valuation.
4 And of course, there is the increasing trend of digitalisation and its impact on the accountancy sector.
Technological trends can pose some anxieties
5 These trends – digitalisation and technologically-based transformation – do generate a significant amount of anxiety. But there are some realities we have to acknowledge, and let me go through them.
6 First – and the often most cited anxiety – is the extent to which automation and new technologies can replace traditional job roles in your sector of accountancy and finance. Robotic Process Automation, or RPA, can automate key finance processes, such as operational accounting, bookkeeping, and financial reporting. Once you marry that technology with what artificial intelligence can bring – the technological platforms can do a first cut of auditing by combining structured and unstructured data to identify rogue activities, patterns and trends, and mitigate risks such as fraud or cyber breaches. These are all areas in which you may have a sense of anxiety about – the loss of a professional role. Transparency Market Research has estimated that the overall IT robotic automation market will expand at 47.1% between 2016 and 2024, doubling every two years!
7 Cloud and Software-as-a-Service solutions have further facilitated the automation of finance processes, enabling companies to streamline operations, reduce costs and easily keep pace with rapid developments in technology. For example, there is a wide base of firms now offering software-as-a-service solutions. The ability for small businesses to easily and accurately enter and edit accounting information on their own without bookkeepers presents another threat.
8 The widespread digitalisation of the operational backbone of enterprises exacerbates the displacement of traditional accountancy and finance jobs. And in truth, some of our efforts here in Singapore to accelerate this process could increase the pace at which jobs like yours may be at risk. We have a national effort to drive end-to-end digitalisation of business functions to equip companies for the digital economy. The Infocomm Media Development Authority, or IMDA, is working to encourage all companies in Singapore to adopt electronic invoicing using a common set of standards. With e-invoicing, administrative job roles in finance, such as the scanning and data entry of invoices, may also be at risk.
9 And we have to make those choices here in Singapore. Do we try to mitigate the pace of transformation? Do we try to slow down the digital disruption or do we have the opportunity to embrace those things, accelerate the pace of change and move to become early adopters, being resilient, ahead of the curve, to the changes that are happening to the rest of the world? As more and more businesses, not just those in Singapore but also those in other countries, digitalise their invoicing and various other business functions, and develop common standards, there is a risk that financial statements and informational reports could be automatically and seamlessly generated, quickly and accurately. There are some companies even working on the other end of the loop, digesting these reports and market intelligence, doing so in an automated, AI-based manner. The value-add of accountants would then have to come from analysis and synthesis of the data to better understand these reports that are automatically generated; getting involved in the strategic decision-making and the personal engagement of stakeholders.
10 When 100% of a company’s financial transactions can be audited, continuously and in real-time, it could be seen as a threat to your profession on one level. For example, AI-enabled solutions in future may be able to review massive amounts of data to identify anomalies, such as spikes in orders from a particular source, expense items recorded by an individual, or unusually favourable terms for a specific supplier. It may be that some of the basic precepts of sampling in order to detect fraud or manage risks, may be at risk because of the technological ability to process entire data sets, instead of a small subset.
11 But ultimately, we can detect these trends, we can worry about them and create a whole range of scenarios threatening our job scopes, but what is our response? Do we respond in a way that empowers the profession to leverage and create new opportunities?
12 Considering each of these trends and issues that I have mentioned in isolation can be extremely worrying. But the reality is that throughout history, in every revolution and every industrial transformation, technology adoption has been part and parcel of the renewal of every economy and profession, and ultimately advancing every single aspect of society. For the accountancy sector, that should be no different. Technology should, and is, an enabler to bring every accountant into higher-value, less mundane work, and increasing the fulfilment of the profession.
13 We are already seeing this happening. In Singapore, the attempt at technological transformation of our economy has been going on for fifty years. And yet we see that the total number of accountancy jobs has grown beyond 100,000, an increase of 5% from 2016 until now. And we also see the increase in value-add of those jobs – the number of PMET jobs has increased while the number of non-PMET jobs has been decreasing, indicating an overall shift towards higher-value accountancy jobs in Singapore in the midst of this economic and digitally-driven transformation.
14 We have to recognise that ultimately the professional skills, the value judgement and the role of accountants will not be replaced by machines. Human judgment and analysis is not going to be replaced. That sense of trust in a person is not going to be replaced. AI systems can assist auditors with the acquisition, processing, generation of reports, and trawling through massive amounts of data to identify patterns and anomalies. But the need for human judgment in investigation, deduction and reasoning is required to investigate and deduce the reasons behind the pattern or anomaly. And ultimately, AI is informed by the refinement that human judgement brings today – leading to the reduction of false positives and avoiding false negatives.
15 But this means that the accountants of tomorrow need to have deep technical knowledge within your profession, but also a significant degree of comfort with new technologies – an understanding of how you may improve the algorithms, the effect on the inputs and outputs to these technologies, and to be involved in the system and solution design of machines, programmes and algorithms. Accountants and auditors will have to get involved in the reliability, rigour, and accuracy of these systems and machines.
16 The finance units of every organisation will increasingly move from a reporting function with a focus on balancing the books, to becoming a data-driven decision-making unit at the centre of every organisation, using advanced data analytics and forecasting to predict outcomes and manage strategic risks.
And we are here to support you on this transformation.
17 As part of our Smart Nation drive, the Government is dedicated to ensuring that everyone and every business can benefit from technology. We will push ahead on accelerating the digital transformation of all economic sectors. As we do so, one key priority is to ensure that we do not leave our SMEs, and people who might naturally be excluded, behind.
18 We want to help companies across all sectors and sizes embark on their digital transformation. IMDA launched the SMEs Go Digital programme in March 2017, helping SMEs use easily-available solutions to transform their operations, and ultimately make them available as your customers for technologically-driven accountancy services.
19 Specific to the accountancy sector, as part of the Accountancy Sector Roadmap shared by the Singapore Accountancy Commission, or SAC, in June this year, a $2.4 million Digital Transformation for Accountancy, or DTACT, programme was launched to help small and medium-sized accounting entities defray some of the initial costs of adopting baseline technologies. Applications for the DTACT programme has opened earlier this month and there is the availability to get 70% of funding support for the first year of adopting solutions in each of three categories of software - Practice Management System, Tax, and Internal Audit – up to a maximum total grant amount of $30,000.
20 For those of you in accountancy roles in non-accounting entities, you can tap on Enterprise Singapore’s Productivity Solutions Grant, adopting pre-approved technologies.
21 The fundamental foundation of our success in this arena is going to be the skills of our people using the technology and working professionals equipped with key digital skills. IMDA drives the TechSkills Accelerator, or TeSA programme for a number of years in partnership with Workforce Singapore, SkillsFuture Singapore, and various industry partners. TeSA facilitates the reskilling and upskilling of individuals and is part of our larger SkillsFuture approach, taking a fundamentally different approach to adult learning for reskilling.
22 For the accountancy sector, we want to help to support the adaptation of your existing skillsets in response to technological trends. The Government launched the Skills Framework for Accountancy in October last year as part of this effort to help you better understand the range of career pathways, skills requirements, and training programmes available to meet those needs. This was developed in partnership with the industry, identifying emerging skills and career opportunities.
23 The various initiatives that Mr Yeoh also announced will provide a concrete suite of avenues for you to future-proof your skillsets, and I commend CPA Australia and partners in developing these tools to improve and strengthen the resilience of the accountancy profession.
24 Accountancy as a profession has played a crucial role in the value-add of Singapore to the world, safeguarding trust in financial systems and transactions in business processes. What you do is a critical enabler of our economy and the economic decisions that people make. This role will always remain – we will enhance the role by technology, allowing the automation of lower-value work and focusing your time and energy on delivering higher-value insights. This crucial role that the profession plays will continue to give us an opportunity to create jobs and value for Singapore and Singaporeans.
25 Thank you very much.