Mid-tier accounting firms have
recently begun to emerge from the shadow of their larger rivals in
Singapore. Baker Tilly TeoFoongWongLCLoong managing partner Foong
Daw Ching speaks to Asia correspondent David Hayes about new
opportunities in the island state.

Rising audit fees have started to motivate a number
of Big Four clients to transfer their business to mid-tier
accounting firms in Singapore. Baker Tilly International Singapore
member firm TeoFoongWongLCLoong (TFWLCL) is one firm to benefit
from this recent market shift.

“Some clients previously going to Big Four firms come to us now
while some other existing Big Four clients are realising that
mid-tier accounting firms can serve their corporate needs,” notes
Foong Daw Ching, the firm’s managing partner. “Big Four means
having few firms to select from and clients want a larger pool of
competing auditors. Cost is a factor as Big Four fees may not be
acceptable to small listed companies.”

Big Four clients reviewing their audit service arrangements and
moving to mid-tier firms are mainly companies listed on Singapore’s
stock exchange, according to Foong. In addition, local subsidiaries
of foreign-owned companies sometimes move to Baker Tilly if their
parent company transfers to Baker Tilly in their home country.

“There is greater awareness of mid-tier firm capability.
Singaporean businessmen are aware that the mid-tier can handle
large annual assignments. It’s a good base to get more business,”
Ching says, adding that Baker Tilly TFWLCL is among the top eight
firms. “Big Four clients transferring include those from the
construction sector. We had three such transfers from January to
April this year. In most cases they come to us as we are well known
in the market.”

A good marriage

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Baker Tilly TFWLCL has been a member of several international
accounting groups during the past two decades. During the 1990s,
the firm was a member of Nexia International and then joined Mazars
for three years. After parting company with Mazars, the firm spent
a year without any affiliation before eventually joining Baker

“We linked up with Baker Tilly three years ago. Baker Tilly was
not well known in this market when we became a member firm,” Ching
recalls. “They looked at our operations and size. It is a good
marriage. The kind of clients we have and our partner connections
means that people get to know each other quickly. Our client aim
for Baker Tilly is not inward referrals, which are a bonus, but
Singapore clients expanding overseas; so we have good people to
look after them. That aim has proven to be correct. But our service
also must be up to standard for Baker Tilly inward referral

The firm’s Singaporean clients expanding overseas include
companies with operations in China, Hong Kong, the US, Eastern
Europe and Southeast Asia.

“We can serve outbound clients from Singapore. There is no need
for us to have a Singapore desk in Baker Tilly’s China offices, for
example, but we can use Baker Tilly’s China partners. The Baker
Tilly International member firm in China has an Australian in its
Beijing office to co-ordinate work,” Ching explains.

Growing overseas investment by Singaporean companies comes on
the back of domestic growth and a bright future outlook. After
successfully navigating earlier economic difficulties as labour
intensive electronics manufacturing moved out to lower cost
production centres, including China, Singapore has reinvented
itself as a knowledge-based high-tech manufacturing centre and
regional logistics hub. This has created new employment
opportunities and a base for other government development
initiatives, including the expanding financial services sector.

“Singapore’s first quarter economic growth was better than we
expected and overall GDP growth of

Baker Tilly Singapore’s managing partner, Foong Daw Ching
Baker Tilly Singapore’s managing partner, Foong Daw

4.5 percent to 6 percent is expected this year. All sectors are
pushing the economy, including biomedical activities, financial
services and construction,” Ching observes. “The US recession
effect depends on how deep it becomes. If it is prolonged it will
affect us here, but Asia is quite resilient with two giants – China
and India – plus emerging Vietnam giving confidence.”

Government efforts to reposition and strengthen the economy by
focusing on higher value service industries and advanced
manufacturing are encouraging more companies to establish regional
and global operations in Singapore. The changing economic base has
generated a substantial growth in work for Big Four and mid-tier
accounting firms, many of which plan to expand their qualified

Outsourcing growth

Audit is the main service line at Baker Tilly TFWLCL, accounting
for 55 percent of client revenues. Tax work, including tax
advisory, represents 14 percent. Internal audit and risk assessment
services generate 7 percent of annual revenue while outsourced
services, including corporate secretarial, accounting payroll,
liquidations and insolvency, represents a further 15 percent.
Litigation support accounts for the remaining 9 percent of revenue.
“Internal audit work is growing. We started this service line three
years ago because of more awareness of the code of governance in
Singapore,” Ching remarks. “Also, Big Four firms cannot do internal
audit for clients. Internal audit is not mandatory but highly
recommended by the stock exchange commission.

“The audit committee of listed companies wants this internal
audit done. Clients outsource internal audit due to their shortage
of professional staff and because CPA firms have the expertise. In
most cases internal audit is required twice a year. If we can get
the staff, internal audit will become 10 percent of our revenue
within two years.

He continues: “Audit work will grow but not as fast and will
remain at a 55 percent share of our total revenue. Tax work will
maintain its share or grow 1 percent or 2 percent.”

Advisory services, which represent 22 percent of the fee split,
are growing as more foreign companies set up operations in
Singapore and more inward referrals are received from Baker Tilly
International. Further expansion of advisory services will depend
on staffing and continued economic growth.

Meanwhile, accounting standards are changing in Singapore and
will create additional work for the accounting profession.

“International Accounting Standards and US GAAP convergence is
happening and will change our work,” Foong notes. “Singapore has
fully adopted IFRS. There is an exemption for the small firm audit
which started several years ago. Our work is scrutinised by the
Accounting and Corporate Regulatory Authority. Scrutiny through
practice monitoring review is to ensure that we are monitored for
standards. We review everything.”

Recruitment drive

As the volume of work is expected to expand in the future, Baker
Tilly is working hard to broaden its number of professionals,
recruiting local accounting graduates and hiring more senior staff
locally or from abroad.

Two universities run accounting degree courses – the Singapore
National University produces about 200 accounting graduates a year,
while Nanyang University produces 600 to 700 accounting graduates.
Other sources of accounting graduates are the ACCA and CPA
Australia along with returning graduates from foreign

Baker Tilly has 185 staff in Singapore, including nine partners
and 130 CPAs of which 40 percent are trainees. Staffing is an issue
for all accounting firms in Singapore, and to ensure its
professional team is sufficient to service clients’ needs Baker
Tilly employs CPAs from a variety of countries in Asia. “We are
actively recruiting, not to replace staff, but to expand. In fact,
with limited qualified people available in the market we have to go
to Malaysia, the Philippines, Indonesia and China for staff,
including Chinese nationals studying here in Singapore,” Ching

“We have quite a lot of Malaysians working here. About 40
percent of our staff is foreign, either with employment passes or
permanent residents. Other accounting firms will tell you the same.
Malaysian accountants want to work here. Also, Malaysian and
Chinese students study here and then want to stay to work.”

Attention to staff working conditions and professional
development are necessary to retain a loyal staff base. The rise of
China as an economic force and the fact that many Singaporeans
trace their ancestry to the Chinese mainland has introduced new
opportunities for junior and more senior accounting staff in recent
years. A growing number of newly qualified accountants are
interested in working in China where opportunities for bilingual
overseas trained accountants are growing quickly.

“We are quite good at staff retention. I am quite happy so far.
Junior staff stay with us for over a year after qualifying and more
senior staff stay for two years upwards,” Ching remarks. “Many
leave as they are head-hunted by local companies looking for a
chief financial officer for China as our CPAs speak Mandarin
Chinese and English. We look after our staff and their welfare. We
expose them to large clients. Also, they travel outside Singapore
for client meetings. We offer very good training and overseas

Importing talent

Baker Tilly has established an international secondment system
to allow accountants throughout the international network to gain
experience working at Baker Tilly member firm offices in several
countries. Ching notes that the firm is looking at using the
secondment system to reward and develop promising staff but due to
the practice’s current workload has not yet taken advantage of the
overseas secondment opportunities that are available.

“We have received inward secondments of one to two months from
Malaysia. We are planning to receive two secondments from Shanghai
and are expecting two more from the United States for three to six
months,” Ching says. “Inward secondments are to gain different
working experience and different culture. More people would like to
come to Asia. The idea is that these better staff are getting
training for future promotion.”