SAFA-IFAC Regional SMP Forum 8-10 October, 2014 at Hotel Le-Meridien, New Delhi, India

Presented by: Abdul Wasey Khan Sherani, FCMA Honorary Secretary, ICMA Pakistan

Enhanced Practice Management and New Services Practice Management Practice management covers a wide array of professional services that are required for running a successful accounting practice. The professional services cover both operational and strategic areas such as marketing, networking, pricing, HR management, practice development, succession planning, compensation strategies, recruiting and retention, billing and collection, administration, leadership, and more. The theories, techniques, approaches, and tools of practice management share much in common with those in managing a business. Practice management is likely to get more sophisticated as the practice of SMPs grow.

Small and Medium-sized Accountancy Practices (SMPs) SMPs constitute the vast majority of accountancy practices worldwide and employ majority of professional accountants working in practice. SMPs in many countries account for majority of private sector GDP, employment and growth. SMPs provide high-quality professional services to meet a wide range of client needs, which ranges from well-established services, such as audit, accounting, and tax, to value-adding business advisory services. SMPs provide their professional services in a customized and personal manner. For these reasons, SMEs often seek a broad range of professional services from SMPs.

Definition of SMPs SMP definition varies from one jurisdiction to another. According to IFAC, SMP is an accounting practice/firm that exhibits the following characteristics: its clients are mostly small and medium-sized entities; external sources are used to supplement limited in-house technical resources; the majority of client work may be non-assurance services; it employs a limited number of professional staff and it executes less formal quality control procedures.

Small and Medium Enterprises (SMEs) SMEs are a vital and integral part of the global economy and account for the vast majority of businesses globally. SMEs constitute an overwhelming majority of private sector enterprises in developed and developing economies. According to the OECD, SMEs account for the majority of private sector GDP, employment, and growth as well as large share of new jobs worldwide. SMEs are a major source of entrepreneurship and innovation. They hold the key to the global economy’s continued recovery from one of the most severe downturns in modern times. SMEs have assumed role just like multinationals and manufacture products and provide services and sell to customers and clients around the world.

SMPs services to SMEs as Business Adviser SMEs are the traditional clients of SMPs and they value SMPs as one of the trusted sources of business advice for improving their competence and integrity. SMPs are becoming an important catalyst to SMEs to help them in following ways: Perform in a more effective and efficient way Assist in compliance with the rules and regulations, Provide business support and advisory services Play a pivotal role in SMEs’ financing needs.

NoBusiness Development Corporate Advisory Wealth Creation & Preservation Tax Consultancy Management Accounting 1. Strategic Business Planning Business restructuring Financial Position Evaluation Tax AdviceBudgeting 2. Budgets and Projections ValuationsInvestment Strategy Development Representation on tax matters Management Reporting 3. Sustainable business practice Litigation support Asset AllocationCost Accounting 4. Virtual CFOForensic Accounting Succession Planning Profitability Analysis 5. Debt/Equity funding Pension Planning

Changing Role of SMPs SMEs are increasingly demanding a broader range of professional services, especially value-added business advisory services from the SMPs. SMEs want SMPs to provide proactive business advisory services that could help them in generating business plans and financial forecasts, identifying and managing risk, defining and implementing IT systems, and value the business. SMPs must evolve to meet the growing needs of SMEs and review their level of knowledge, training and management strategies in meeting these demands. SMPs need to equip themselves with the necessary skills and knowledge to satisfy the growing need of SMEs for business advice. SMPs need to develop capacity and overcome the challenges lying ahead due to the changes in market and regulatory dynamics. SMPs need to develop more effective communication networks, involve themselves in strategic decision-making and focus on sharpening analytical skills of their staff. SMPs should adopt new services or ways of delivering those services and also invest in the development of new services

Enhancing Client Relationships through Innovative means Strong and effective client relationships is the backbone of successful accounting firm and the clients are fundamental to the value of SMP firms SMPs should maintain and enhance their client relationships to survive in today’s competitive market environment. They should develop and implement strategies to better know and build relationships with clients. SMPs should identify opportunities to deliver additional value added services to help the clients successfully run and operate their businesses. In the long run, this would help the SMPs in shape of satisfied clients but also in maximizing their income. SMPs should establish relationships with other professional firms, both accountancy and non-accountancy, such as legal, HR, and IT firms, to meet client needs that fall outside their area of expertise. This way SMPs can leverage resources and help convince clients that they have the capability of a much larger practice. SMPs can look into the possibility of joining an accounting network or association, or merging with another practice, to further leverage economies of scale and synergies.

Providing enhanced Services to export-oriented SMEs SMPs can provide proactive support to those SMEs who intend to export their products and services to international markets. SMPs can help them locate potential markets overseas and to improve their capabilities. SMPs can develop knowledge and information resources to guide SMEs as to how to meet the requirement for international documentations and access funding sources. SMPs can establish relationships with banks and financial institutions related to trade financing so as to assist the SMEs in getting the required funding.. SMPs can provide value-added advice to the SMEs in managing foreign exchange risks and forecasting currency needs. SMPs can provide service as a catalyst in connecting SME clients with each other to create mutually supportive environments and information channels.

Innovative Marketing Services to enhance practice growth SMPs should enhance practice growth through marketing services so as to provide efficient services to SMEs. SMPs should proficiently market their professional services e.g. business advisory and other types of assurance services, that they can offer to SMEs. SMPs should train and develop existing staff to implement marketing strategies to make new clients and improve services to existing clients. SMPs can hire external marketing or PR consultant to develop a plan and strategy to position the firm and expand outreach to the target clients.

Embracing new technologies to improve service quality SMPs should enhance practice growth through adoption of advance information technology (IT) so as to provide efficient services to SMEs. They need to improve their understanding of and practical ability to use and leverage technology. SMPs need to stay up-to-date with any new technology trends that are relevant to their business environment and be open to adopting rapidly changing technologies so as to help their own practice as well as to advice clients on technology needs. SMPs should consider automating their processes to improve efficiency and lower costs. This would not only help generate new revenue for them but also boost client satisfaction and loyalty. SMPs should especially embrace emerging technologies to remain competitive in the market and to improve their professional skills and services. These technologies are having great impact on the accountancy services in the present times. The new technologies that can help SMPs in improving their service quality are: 1.Cloud computing 2.Advance Excel for accounting and financial reporting 3.ERP software 4.Data Storage Devices 5.Skype and VOIP (Voice Over Internet Protocol) 6.Smart phone applications 7.Communication through social media

Advantages for SMPs in adopting new technologies SMPs can have following advantages by adopting new technologies: Enhance competency and the efficiency of processes Improve management and operational efficiency of SMP practices Improve competitiveness, profitability and sustainability. Learning more about current and potential clients and enter new markets Carry out audits, especially multiple audits, effectively and efficiently Access to complete databases for audit procedures and consistent analysis Deliver reports and financial information via the cloud Attract new clients via digital marketing Lower costs of providing existing services as well as offer new services Save time that is used to develop client relationships and respond to their queries based on high efficient data analysis tools

Professional Services by Practicing Management Accountants in Pakistan The practicing management accountants in Pakistan perform a diversified range of professional services related to cost audit, accounting, audit and assurance, taxation, consultancy and other relevant services to the business and corporate sector. Some of the services under different categories are outlined below: Cost Audit Services Cost Audit is a critical area in which practicing cost and management accountants extends their mandatory technical services to the manufacturing sector to help them achieve overall efficiency and improve competitiveness. Cost and Management Accountants also provide technical services to the manufacturing sector in implementing costing systems and strong controls. There are following five sectors in which cost and management accountants in Pakistan are offering professional services in performing cost audit services: 1.Sugar Industry 2.Cement Industry 3.Vegetable Ghee & Cooking Oil Industry 4.Chemical Fertilizer Industry 5.Synthetic and Rayon Industry

Accounts-related Services Book-keeping, Financial Analysis, Financial Reporting, Retainer ship services…. Monthly returns Audit & Assurance Services Internal Audit, Financial Audit, Cost Audit, Investigative Audit, Sales Tax Audit, Audit of Sales Tax Refund Cases, Composite Tax Audit, Audit under Federal Excise Taxation-related Services Taxation Income Tax, Sales Tax, Customs and Federal Excise- Filings, follow-up, representation at various forums.

Certification Services Certification of Borrowers Accounts under Prudential Regulations Certification of Audited Accounts of Non-Profit Organizations (NPOs) Certification of Accounts of Leasing and Modaraba Companies Government assigned Services Appointment as Accountant Member in Income Tax Appellate Tribunal Appointment as Committee Member on Custom Matters Appointment as Special Auditors by FBR for Income Tax Audit Appointment as Special Auditors by FBR for Sales Tax Audit Appointment as Inspector to investigate affairs of Companies Appointment as Member of ADR Committee Member Tax Advisory Council of FBR Member Tax Reforms Commission Systems-designing Services Accounting Systems Design, Development and Implementation…. (SAP, Oracle e-Business Suite, Microsoft Dynamics, Sage Peachtree, Quick Books etc.) Costing Systems

Project Management Systems (e.g. MS Project etc.) Document Management & Office Automation (MS SharePoint Solution) Payroll Management System, Human Resource Management System Budgeting and Inventory Management Systems Business Planning and Consultancy Services Feasibility and Pre-Feasibility Studies Business Plans Physical verification of Fixed Assets Assets Revaluations Reconciliation of Fixed Assets Register Development of Financial and Costs Models Business Policy Development Services Accounting Manual, Policies and Procedures Development Procurement Policies and Manuals Development Internal Audit Manual Internal Controls Procedures Performance Based Management System Medical and Transport Policies Training and Development Policies

Training and Capacity Development Services Training to Corporate Clients in core as well as non-core areas such as: Core Areas Financial Management, Accounting for non-accounting Managers, Financial Analysis, Budgeting Financial Systems, Internal Controls etc. Non-Core Areas Soft skills Business Planning Communication Skills, Motivation and Leadership, Personality Development etc. New and Non-traditional Services Software Development Web Sites and Portals Development Outsourced Solutions (Payroll Management, Accounting, IT, Financial Systems etc.) International Online Projects WTO Related Issues, Quality Assurance etc.

Thank you