report on safa smp survey 2013 - south asian … · icab 12 icap 52 icai (erstwhile icwai) 15 ......

SAFA SMP SURVEY 2013

REPORT ON SAFA SMP SURVEY

2013


TABLE OF CONTENTS

INTRODUCTION

RESPONDENTS AT A GLANCE

CONCLUSION AND WAY FORWARD

ACKNOWLEDGEMENTS


INTRODUCTION

Objective of the Report

With the aim of giving Small & Medium Practitioners (SMPs) who operates in SAFA Region, an opportunity to express their views about significant trends and developments impacting them and their clients, the Small & Medium Practices (SMP) Committee of SAFA conducted the ‘SAFA SMP Survey in July 2013. The objective of the survey is to take necessary Capacity Building measures at respective Institute’s level to raise the profile of SMPs based on the finding of the survey.

This report provides information and, where ever appropriate, some explanation including possible limitations of the data.

Survey Methodology

A self-structured questionnaire containing 10 questions was circulated to practices members of the member bodies of SAFA through mass mail and hosting on the website of SAFA and respective Member bodies with a request to submit their views about significant trends and developments impacting them and their clients. A total 1141members expressed their views on the survey.


RESPONDENTS AT A GLANCE

This report summarizes and analyzes the responses submitted by the respondents to the survey conducted from July 2013 to May 2014. The respondents are members of the following member bodies of SAFA. The majority of the respondents are members of the Institute of Chartered Accountants of India (89.22 %)

REGION

MEMBER BODY RESPONDENTSICAI 1018ICMAP 22CA SL 8ICAB 12ICAP 52ICAI (Erstwhile ICWAI) 15ICMAB 14

TOTAL 1141

RESPONDENTS

ICAI

ICMAP

CA SL

ICAB

ICAP

ICWAI

ICMAB


1. SIZE OF PRACTICE

The vast majority of respondents were from the two smallest categories of practice, with sole practitioners and Firms having 2-5 professionally qualified staff counting for 85.18% of all responses.

Sno Question ICAI ICMAP CA SL ICAB ICAPICAI(Cost) ICMAB

1 What is the size of your practice?Sole practitioner 63.66% 54.55% 50.00% 50.00% 25.00% 66.67% 71.42%Firm/LLP having 2-5

professionally qualified accountants 28.59% 35.45% 37.50% 25.00% 40.38% 26.66% 21.42%

Firm/LLP having 6-10 professionally qualified accountants 5.99% 10.00% 12.50% 12.50% 21.15% 6.67% 7.14%

Firm/LLP having 11-20 professionally qualified accountants 0.88% 0.00% 0.00% 12.50% 5.77% 0.00% 0.00%

Firm/LLP having 21 or more professionally qualified accountants 0.88% 0.00% 0.00% 0.00% 7.70% 0.00% 0.00%


2. COUNTRY WHERE PRACTICE LOCATED

The majority of respondents were from India. In addition, one response received from Nepal (ICAN) did not constitute a large enough sample size to include in the analysis.

MEMBER BODY RESPONDENTSINDIA 1033PAKISTAN 74BANGLADESH 26SRI LANKA 8

TOTAL 1141


3. BIGGEST CHALLENGE FACED BY SMALL AND MEDIUM SIZED ENTITY (SME) CLIENTS

In response to the question that what is the biggest challenge being faced by your SME clients, the largest portion of the respondents from the Institute of Chartered Accountants of India indicated that pressure to lower prices of their services poses the biggest challenge for their clients followed by Compliance of Regulation, Competition and lack of demand of their services.

Sno Question ICAI ICMAP CA SL ICAB ICAP

ICAI(Cost)

ICMAB

3What is the biggest challenge faced by your small-and medium-sized entity (SME) clients?

Compliance of regulation 18.28% 9.09%50.00%

50.00%

17.31%

6.90%

35.71%

Lack of demand for their services 13.85% 18.18%0.00%

12.50%

15.38%

17.24%

7.14%

Pressure to lower prices of their services 26.62% 0.00%12.50%

12.50%

11.53%

27.59%

7.14%

Rising costs 9.33% 9.09%0.00%

0.00%

17.31%

20.69%

0.00%

Economic uncertainty 6.98% 72.73%0.00%

12.50%

9.62%

10.34%

35.71%

Difficulties accessing finance 4.42% 0.00%0.00%

0.00%

13.46%

3.45%

0.00%

Competition 14.63% 0.00%25.00%

12.50%

5.77%

10.34%

7.14%

Attracting and retaining staff 5.89% 0.00%12.50%

0.00%

9.62%

3.45%

7.14%

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%

Complianceof regulation

Lack ofdemand for

their services

Pressure tolower prices

of theirservices

Rising costs Economicuncertainty

Difficultiesaccessingfinance

Competition Attractingand retaining

staff

3 Biggest challenge faced by SMEICAI ICMAP CA SL ICAB ICAP ICWAI ICMAB


4. BIGGEST CHALLENGE RIGHT NOW

CHALLENGE RIGHT NOWIn response to above question, largest number of respondent from Institute of Chartered Accountants of India, ICAB and ICMAP indicated that attracting and retaining new clients is the biggest challenge closely followed by pressure to reduce fees. Respondents from ICAP feel that ability to adapt to changing client needs is the biggest challenge.

Sno Question ICAI ICMAP CA SL ICAB ICAP ICAI(Cost) ICMAB

4

What is the biggest challenge to your practice is facing right now?

Keeping up with new regulations and standards 14.04% 9.09% 37.50% 12.50% 13.46% 12.20% 28.57%

Attracting and retaining new clients 32.61% 36.36% 12.50% 50.00% 7.69% 12.20% 7.14%

Ability to adapt to changing clients needs 1.67% 0.00% 0.00% 0.00% 21.92% 9.76% 0.00%

Pressure to lower fees 27.01% 18.18% 0.00% 12.50% 9.62% 24.39% 42.86%Rising costs I Succession

planning 3.04% 18.18% 0.00% 12.50% 11.54% 4.87% 0.00%

Work-life balance 4.12% 9.09% 0.00% 0.00% 9.62% 7.31% 7.14%Attracting and retaining

staff 4.81% 0.00% 37.50% 0.00% 9.62% 12.20% 0.00%Competition 10.01% 18.18% 12.50% 12.50% 6.91% 9.76% 14.29%Keeping up with new

technology 2.66% 0.00% 0.00% 0.00% 9.62% 7.31% 0.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Keeping upwith new

regulationsand standards

Attracting andretaining new

clients

Ability toadapt tochanging

clients needs

Pressure tolower fees

Rising costs ISuccessionplanning

Work-lifebalance

Attracting andretaining staff

Competition Keeping upwith new

technology

4. Biggest challenge right nowICAI ICMAP CA SL ICAB ICAP ICWAI ICMAB


5. FEE SPLIT AMONG AUDIT, TAXATION, ADVISORY, ACCOUNTING AND OTHER

RELATED SERVICES

The response of this question produced considerable diversity of results across member bodies. In response to question regarding fee split amongst various practice areas, the respondents from ICAI, CA Sri Lanka and ICMAB and ICAI (Erstwhile ICWAI) feels that traditional areas of practice i.e. Audit and Assurance and Taxation services has the major share in their total revenue.


5

How is your fee revenue split among the following areas? Please indicate the approximate percentage of fee revenue from each. Total must add up to 100%.

Audit and assurance 23.87% 24.00% 42.50% 15.00% 9.62% 36.00% 35.71%Taxation 30.86% 31.00% 21.25% 20.00% 38.46% 22.00% 21.42%Advisory services 28.16% 24.00% 12.50% 35.00% 25.00% 17.00% 28.57%Accounting and other non-

assurance/related services 17.11% 21.00% 23.75% 30.00% 26.92% 25.00% 14.30%


6. FASTEST GROWING REVENUE SOURCE OF PRACITCE

Nearly 29.07 percent of the respondent from ICAI feels that Accounting and other non assurance related services is the fastest growing practice area in terms of revenue, followed by Audit and Assurance and Taxation Services. A large number of respondents (72.73%) from ICMAP indicated that the taxation is the fasting growing revenue source.

Sno Question ICAI ICMAP CA SL ICAB ICAPICAI(Cost) ICMAB

6What is the fastest growing source of revenue for your practice?

Audit and Assurance 26.03% 9.09% 37.50% 29.07% 17.30% 25.00% 35.72%

Accounting and other non assurance/related services 29.07% 18.18% 37.50% 19.94% 25.00% 25.00

% 7.14%

Taxation 24.96% 72.73% 12.50% 26.03% 32.70% 30.00% 21.43%

Advisory services 19.94% 9.09% 12.50% 24.96% 25.00% 20.00% 35.71%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Audit and Assurance Accounting and other nonassurance/related services

Taxation Advisory services

6. Fastest growing revenue of firmICAI ICMAP CA SL ICAB ICAP ICWAI ICMAB


7. MAIN DRIVER OF PRACTICE’S PROFITABILITY

For the largest portion of the respondents, the main driver of practice profitability is business from new clients followed by enhanced quality of services. Respondents from ICMAP indicated that the better retention of existing clients is the main driver of practice’s profitability.


7What is the main driver of your practice's profitability?

Acquisition of new clients 35.86% 27.27% 50.00% 45.00% 28.85% 22.58% 14.30%Better retention of existing clients 19.54% 45.45% 25.00% 15.00% 28.85% 29.02% 0.00%Increased average fee size 6.19% 0.00% 0.00% 5.00% 9.62% 9.68% 0.00%Reduced overheads 2.45% 0.00% 0.00% 5.00% 1.92% 9.68% 0.00%Better utilization of resources 5.40% 0.00% 0.00% 10.00% 11.54% 3.23% 42.85%Enhanced Quality of Services 28.79% 36.36% 25.00% 5.00% 17.30% 22.58% 42.85%Others, please describe 1.77% 0.00% 0.00% 15.00% 1.92% 3.23% 0.00%


8. DOES PRACTICE OFFER SUSTAINABILITY SERVICE (ADVICE, REPORTING AND/OR

ASSURANCE ETC.) ?

Majority of the respondents feels that they offer sustainable service to their clients or they have plan to offer sustainable service to their clients in near future. The only exception is the respondents from ICAB as 29% of the respondents indicated that that they do not offer sustainability services and they have no plans for the same.


8

Does your practice offer a sustainability service (advice, reporting, and/or assurance etc.)?

Yes 64.15% 90.91% 100.00% 50.00% 67.31% 71.43% 50.00%No, but we plan to 31.04% 9.09% 0.00% 21.00% 30.77% 21.43% 50.00%No, and we have no plans to 4.81% 9.09% 0.00% 29.00% 1.92% 7.14% 0.00%


9. BIGGEST BARRIER FACEBY BY SMP’S IN FULLY ADHERING TO IESBA CODE OF ETHICS FOR

PROFESSIONAL ACCOUNTANTS

The response of this question produced considerable diversity of results across member bodies. Majority of the respondents indicated that understanding the requirements of the Code is the biggest barrier faced by SMPs in fully adhering to the IESBA Code of Ethics for Professional Accountants.


9

What is the biggest barrier faced by SMPs in fully adhering to the IESBA Code of Ethics for Professional Accountants

Understanding the requirements of the Code 46.66% 9.09% 62.50% 45.00% 28.85% 40.00% 21.44%

Our jurisdiction does not use the IESBA Code 27.70% 63.64% 25.00% 25.00% 0.00% 30.00% 0.00%

The requirements of the Code itself 13.45% 9.09% 0.00% 10.00% 36.54% 5.00% 35.71%The length of the Code 4.42% 9.09% 12.50% 8.00% 17.31% 10.00% 0.00%The Structure of the Code 7.77% 18.18% 0.00% 12.00% 17.31% 15.00% 42.85%


10. MOST SIGNIFICANT ISSUES FACING ACCOUNTANCY PROFESSION IN SOUTH ASAIN

REGION In response to above question, majority of the respondent feels that reputation and credibility of the profession is the most significant issues followed by issues like Auditors Independence, evaluate the need of SMPs and SMEs and increased regulation.


10

What do you think will be the most significant issues facing the accountancy

profession in South Asian RegionReputation and credibility of the

profession 28.98% 18.18% 50.00% 45.00% 42.31% 17.39% 0.00%

Increased regulation 14.35% 0.00% 25.00% 20.00% 26.92% 6.52% 0.00%Evaluate the needs of SMPs and

SMEs 15.32% 9.09% 0.00% 10.00% 7.69% 17.39% 0.00%The Competency of Financial

Statement preparers 3.15% 9.09% 0.00% 5.00% 3.85% 6.52% 0.00%

Auditor Independence 14.63% 9.09% 0.00% 2.50% 7.69% 10.87% 57.14%Attracting new talent to the

profession 5.40% 18.18% 0.00% 2.50% 3.85% 4.35% 0.00%Information technology and

innovation in accounting and auditing 5.50% 18.18% 0.00% 3.50% 3.85% 6.52% 0.00%

Corporate Governance 1.97% 9.09% 12.50% 1.50% 0.00% 10.87% 42.86%Issues related to audit firm rotation 5.30% 0.00% 0.00% 2.50% 0.00% 6.52% 0.00%Government Accounting 1.67% 0.00% 0.00% 2.50% 0.00% 4.35% 0.00%Sustainability and Integrated

Reporting 2.06% 0.00% 0.00% 2.50% 0.00% 6.52% 0.00%

Any other issues 1.67% 18.18% 12.50% 2.50% 3.85% 2.18% 0.00%


0.00%10.00%20.00%30.00%40.00%50.00%60.00%

10. Most significant issues facing the accountancy profession

ICAI ICMAP CA SL ICAB ICAP ICWAI ICMAB


CONCLUSION AND WAY FORWARD

The structure of the Accountancy Profession in the SAFA Region significantly dominated by SMPs. They provide professional services in diverse areas particularly to the professional services requirements of SMEs. SMPs market share of professional services is very significant in the SAFA region but varies from country to country. It is essential for the SAFA member bodies to strengthen the SMPs, so as to enable them to address the wide variety of professional services requirements, and ensure requisite quality assurance for effective management of professional risks. The SAFA must resolve to work together coherently, by pooling their resources, sharing each other’s experiences, in responding to the emerging challenges and opportunities of global financial markets. Some of the important measures are mentioned below that should be taken at Institutional level by respective SAFA member bodies:

Capacity Building Measures through education

The SAFA member bodies should conduct various Workshops/Seminars/Interactive Sessions so at to create awareness amongst the SMP sector on the various capacity building measures. The apprehensions in the minds of the SMPs on Networking & Merger should try to be addressed and the benefits of the capacity building measures should be highlighted to SMPs. In such programmes, Open Networking Sessions can be conducted wherein the small and medium practitioners as well as the small size CA firms can be encouraged to form Networks.

Providing infrastructure and funds at cheaper rates for helping them in establishing their own practice

The respective SAFA member body should start working for establishing tie-ups with banks, preferably with nationalized banks, inviting customized schemes to provide short and long term loans to Professional Accountants and to firms at very concessional rate of interest for setting up of infrastructure and expanding their practice.

To understand the needs and expectations of the SMPs from the Institute in regard to the Capacity Building Measures.


The respective SAFA member body should organize various interactive sessions/meetings with SMPs to understand the needs and expectations of the SMPs from the Institute in regard to various Capacity Building Measures.

To publish research based publications /Checklists/other need based publications for SMPs and to arrange the Free/discounted price downloadable software like Income Tax, Service Tax, VAT, Excise Duty, Custom Duty and other aspects of the Financial Management

The respective member body should try to provide them free/discounted software on various relevant subjects like Income Tax, Service Tax, VAT etc. Further research based publications/checklists should also be provided to them.

To arrange the hand holding exercise for development of SMPS i.e. requesting Big 4 firms to delegate the work to SMPs.

The respective member body may organize meetings with Big 4 firms and encourage them to delegate some work to the SMPs. This type of handholding exercise by big 4 firms would be very beneficial for the development of the SMPs


AKNOWLEDGEMENTS

SAFA wishes to thank the member bodies of SAFA that helped in popularizing the survey through their

newsletters, bulletins and journals, or otherwise helped to promote it.

Member Body Member Bodies Address

ICA Bangladesh The Institute of Chartered Accountant of Bangladesh Chartered Accountant Bhaban 100 Kazi Nazrul Islam Avenue Dhaka-1215, Bangladesh Tel: +880-2-9117521, 9115340, 9137847 Fax: +880-2-8119399E-mail: [email protected]: www.icab.org.bd

ICMA Bangladesh ICMA BangladeshICMA Bhaban, NilkhetDhaka-1205Bangladesh

[email protected]

Phone: 88-02-9615460, 9611799, 9615477, 8628293,8615989 Ext. 12For Admission/Education: 9615460, 9611799, 9615477, 8628293 Ext. 22/24Fax: 88-02-8615703E-mail: [email protected]

ICA India Permanent SecretariatC/o The Institute of Chartered Accountants of IndiaAddress: ICAI Bhawan,P.O. Box No. 7100,Indraprastha Marg,New Delhi – 110002IndiaE-Mail: [email protected]

ICA India(erstwhile ICWAI)

THE INSTITUTE OF COST ACCOUNTANTS OF INDIA12 ,Sudder Street ,KolKata - 700016Phone: +91 3322521031/1034/1035/1492+91 33 22521602/1619/7373/7143/2204Fax: +91 33 22527993 / 91 33 2252 1026Website:www.icmai.in

Delhi Office3 ,Institutional Area Lodhi Road ,New Delhi - 110003Phones : +91 11 24666100, 24622156/57/58


Fax : +91 11 43583642

ICA Nepal The Institute of Chartered Accountants of NepalBabar Mahal, KathmanduPost Box No.: 5289Tel.: 4269130, 4258569, 2030021Fax: 4258568Email: [email protected]: http://www.ican.org.np

ICA Pakistan Chartered Accountants Avenue Clifton Block 8 Karachi -75600, Pakistan.Phone: +9221-111-000-422, +9221-35820694-6Fax: +9221-99251626

ICMA Pakistan The Institute of Cost and Management Accountants of PakistanAddress: ST-18/C, Block-6,Gulshan-e-Iqbal,Karachi – 75300PakistanEmail: [email protected]

Fax: [+92] (21) 9924 3342PH(O):-[+92] (21) 99243027

CMA Sri Lanka Institute of Certified Management Accountants of Sri Lanka29 / 24, Visaka Lane,Colombo 04,Sri Lanka.

Call/Fax:Tel : +94 (0)11 2506391, 2507087FAx : +94 (0)11 2507087

CA Sri Lanka No.30A, Malalasekera Mawatha, Colombo 07,Western Province 700, Sri Lanka

Telephone : +94-11-2352000 (General)Telephone : +94-11-2352099 (Student Inquiries)Fax : +94-11-2352060

Email: [email protected]

Permanent SecretariatC/o The Institute of Chartered Accountants of India, ICAI Bhawan,

P.O. Box 7100, Indraprastha Marg, New Delhi - 110002, IndiaEmail: [email protected] Website: www.esafa.org

report on safa smp survey 2013 - south asian … · icab 12 icap 52 icai (erstwhile icwai) 15 ......

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