Friday, 25 January 2013

Audit value is key to resolving issues of retention of accounting talent

MIA
23/01/2013

Transforming the perception of audit value is the key to optimising accounting talent in audit firms, says the Malaysian Institute of Accountants.

Communicating the true value of audit and assurance services, and closing the audit expectations gap that separates clients and audit firms is the key to resolving the on-going talent retention challenge for the accountancy profession, said the Malaysian Institute of Accountants (MIA) in its initial feedback to the 'Optimising Talent in Accounting Firms' recent survey jointly released by the Audit Oversight Board (AOB) and the Association of Chartered Certified Accountants (ACCA) Malaysia.


MIA CEO, Ms Ho Foong Moi

Unsurprisingly, the survey found that factors like opportunities to gain diversified experience, high future earning potential, job security, competitive compensation, career development support, and optimum work-life balance are pivotal to talent attraction and retention.

"MIA is well aware of these expectations from many years of engagement with its members and stakeholders. Nevertheless, we welcome these findings which reaffirm the challenges and shortcomings facing the profession in the Malaysian environment," remarked MIA's Chief Executive Officer, Ho Foong Moi.

However, the talent challenge cannot be addressed in isolation. In MIA's opinion, the issue of attracting and retaining talent in accounting firms cannot be resolved without concurrently addressing the perception of audit value among stakeholders, particularly audit clients.

"Industries are typically reluctant to pay competitive fees for audit and assurance services. In the experience of local audit firms, companies usually negotiate to bring down audit fees, treating audit and assurance like a commodity rather than a value-added service. Indeed, it is commonly believed that the level of audit fees in Malaysia is the lowest audit fee structure among ASEAN and Asia-Pacific markets," explained Foong Moi.

"Inadequate fees are one reason that audit firms are constrained from investing in talent and are unable to pay competitive salaries to retain staff. This results in inequitable distribution of work. In the long run, audit quality may declines."

However, the profession too is partly to blame for perpetuating the low-fee and low-value audit model.

"Audit firms should refrain from undercutting one another to win market share. They should also refrain from accepting low-fee low-value compliance assignments to educate the market that audit and assurance services are high-value services which deserve competitive fees," said Foong Moi.

"Value, not volume, is the key to erasing this mismatch between auditors and clients."

"MIA firmly believes that the solution to talent sustainability boils down to transforming the perception of the value of audit and communicating the value of audit in order to close the expectation gap between clients and audit firms," stressed Foong Moi.

"If audit firms and the profession as a whole are able to convince corporations about the value of the audit proposition, the entire audit eco-system will be able to move up the economic value chain," she said.

Promoting audit and assurance services as high-value and high-quality premium services should generate higher revenues and enable firms to invest more resources in competitive compensation and defined career development paths, two of the `wants on the bucket list' in the AOB-ACCA report.

This would spur a virtuous cycle whereby more talent can be recruited and retained to increase the audit talent pool. Augmenting audit talent would enable more equitable distribution of work and thus, a better work-life balance, another key factor for talent retention highlighted in the report.

Currently, MIA has embarked on key initiatives to rebrand and differentiate audit and assurance services. Internally MIA has set up a special taskforce which is responsible for creating awareness and communicating the true value and benefits of audits in order to raise the market perception of audit and assurance services.

At the same time, MIA is actively collaborating with our stakeholders such as fellow regulators, institutions of higher learning, professional accountancy bodies and firms to develop a sustainable talent pool. One key focus area is uplifting accounting education in order to produce higher numbers of qualified and competent accountants.

"This is critical because the demand for qualified accountants remains buoyant and is anticipated to increase over the next few years. The Government and the economy are in need of highly competent accountants and financial talents to support Malaysia's economic transformation programme (ETP) towards becoming a high-income and developed nation by 2020," said Foong Moi.

At present, more than 29,000 MIA members are working in a wide spectrum of businesses and industries, both in Malaysia and cross-border.

"Our country is not short of young talents. What is needed is a concerted effort by all quarters to nurture and develop these talents into a competitive professional workforce," she concluded.
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