ISCA President Kon Yin Tong was interviewed by local radio station CNA938, in the Career Compass segment of the Money Mind show on 4 December 2019.
Mr Kon spoke about the varied career opportunities the accountancy profession offers. He also spoke about technology as an enabler for the profession to provide higher value-added services. He ended with the key skills and competencies required of accountants in the digital age. Find out what else transpired at the interview from the transcript below.
STANLEY LEONG Hello, this is Stanley Leong with Susan Ng. This is CNA938 Money Mind programme. Whenever big companies crash and burn – think Enron in 2001, some banks in 2018, Noble Group last year and water firm Hyflux earlier this year, investors always demand, “Where were the auditors, why didn’t they warn us?” Even regulations in some Asian countries are getting tougher on auditors after landmark defaults.
SUSAN NG This is an increasingly high-stakes game, as investors call for earlier warning signs. But what do the auditors themselves have to say and what exactly is involved in the profession?
Well, joining us to tell us more is Kon Yin Tong. Yin Tong is President of the Institute of Singapore Chartered Accountants. Thank you for joining us today, Yin Tong.
KON YIN TONG Thank you, Susan; thank you, Stanley. It’s a pleasure to be here.
STANLEY The role of auditors has come under much scrutiny recently. Not all of us may know that auditors are part of the accountancy profession. Give us a bit more background as to the accountancy profession and all the different scopes and job roles that it entails.
YIN TONG Accountants and auditors hold a variety of roles. If you are in public practice, meaning in an accounting firm, you can do many things – from cybersecurity to forensic accounting to valuations, risk management, technology advisory, obviously accounting, as well as audit. If you are an accountant in business, meaning in commerce, in industry, you can have varied roles as well – as investment professionals, obviously as an accountant, you can be involved in transformation, you can be an analyst, Chief Financial Officer, and of course CEO. I think accountants, because of their training and versatility, make very good CEOs.
SUSAN So, there are quite diverse roles that accountancy is able to offer?
YIN TONG That is correct. In fact, the career path is one that is varied as well. If you look at what auditors do, you will be using technology and tools in your work. You will work in teams and form strong bonds with your teammates. You get to meet the management, have discussions with them as well as your teammates. No two days are the same. The topics are varied – you will be dealing with IT, tax, valuations, risk and so on. When you are involved in meetings with senior management, that’s where you get to learn about business, leadership and management.
An audit is not just about financial numbers. It’s not just about understanding dollars and cents – it’s about looking at how a company organises itself, looking at the controls and processes in the company. If you look at what some auditors are doing now, they are looking at a company’s investment in sustainable business practices. They are looking into how companies fight climate change, because there are calls from the stakeholders, such as the clients, for auditors to disassociate themselves from companies that don’t have sustainable business practices.
SUSAN I guess our perception of accountants and auditors may have been something from the past? I still have visions of accountants sitting in rows just looking at numbers, and when companies or businesses need to do their taxes, auditors would come in and do them. Perhaps that could have been the misconception over the years that has carried on. From what you have just said, people in the accounting industry are able to look at a company maybe a lot more holistically than most?
YIN TONG Certainly, and this is sort of enabled by technology. One of the key developments in technology is cloud computing. With cloud computing, you can basically get information directly to your mobile devices, your laptop and so on, in the format you want. It’s real time, anytime. It is a double-edged sword, in the sense that you can’t get away from work. I think the other key development would be the use of data analytics in audits as well as in corporate companies. That has enabled companies and auditors to advise their clients as to how to harness data analytics to improve their organisations and businesses.
If I can cite one example: I was in Tottenham Hotspur Stadium in London recently, and they have got a cashless point-of-sale and inventory system. That system is fantastic in the sense that during match day, if the sales of hotdogs are slow in one sector, the system can price the hotdogs dynamically in real time and inform the spectators, via an app, that in that sector, the hotdogs are down by 50 pence and so on. It is great. Depending on who is there on match day, who are expected to come, they can order the inventories accordingly. Auditors are well placed to advise their clients in terms of how to reduce inventory costs, how to reduce holding costs; it’s a great profession.
STANLEY That’s technology at work. We are hearing from Mr Kon Yin Tong, President of the Institute of Singapore Chartered Accountants. Now, Yin Tong, would you say that there’s a lot of misunderstanding regarding auditors, on who they are and the work that they do? Often, when we hear “audit is around the corner”, everybody sort of scrambles, get their act together, the paperwork, the processes, make sure they have got it all penned down. Auditors strike fear sometimes in people. Do you think they are often misunderstood as a profession?
YIN TONG Well, auditors are there for a reason. There is a regulatory or statutory requirement in most cases, but audits are more than just customary, more than just a requirement. They are confirmatory, in the sense that they add value and credibility to the financial statements.
An audit opinion provides value beyond just the opinion you see in the accounts. Auditors obviously share key insights on management controls, on where processes can be improved, finding and addressing emerging issues before they become deep-seated and costly problems. Some of these incipient issues can include investments in or the adequacy of accounting and finance resources, internal control weaknesses that can be exploited for fraud. This gives business leaders more visibility into how their organisations are run, giving deeper and broader insights into their organisations.
Audits are not new to us. All of us have been through an audit before, and that is called examinations. If you think of the examinations we take in school – ‘O’ Levels, ‘A’ Levels, university and professional exams – they are a check on where we stand, what our progress is and whether we can make it. Audits are just like an exam, there’s nothing to be too worried about.
SUSAN You mentioned technology several times and obviously you need to keep up with it. It’s a double-edged sword if you look at it. You can look at it like what the Tottenham guys do at the Hotspur’s stadium, but that’s one way to look at it. The other way to look at it could be, “Could technology take over my job?” because you can compute all these numbers into the system and then technology takes over.
YIN TONG I think there is some job displacement and we can’t run away from that. Certainly, job displacements will happen most at the lower end of the scale where you are looking at low-level tasks, more mundane and routine tasks like bookkeeping. Technology will take care of (the work previously done by) these bookkeepers, especially those outsourced ones in India, Philippines, for example. In fact, there is also a lot of skills displacement in the sense that auditors have to learn to employ technology and use it in their work.
But it has helped auditors in that sense. I think you have alluded to the fact that auditors are boring – they just go through invoices, vouchers; they cast ledgers and they use the calculators and so on but it is actually quite different now.
Let me share with you an example. We have a client who’s a contractor. Contractors sometimes outsource part of their work; they get supplies from vendors. So, this contractor client of ours issued about 20,000 purchase orders during the year. What we found using data analytics was that a lot of payments were approved for payment before the goods were delivered, or before the service was provided. Ultimately, the payments were made only when everything’s hunky dory, everybody’s happy. But that raises a few questions: Why did management approve payments before work was completed? One, you need to think about whether the system is adequate; two, you need to think about the integrity of the management and a whole host of other issues.
In the past when we looked at invoices, we picked 30 to 50 out of thousands and we vouched them accordingly. It is quite different today. Today, we can look at 100% of the population, look at outliers, look at anomalies. Before technology, you couldn’t do that. Technology has enabled, enhanced and given auditors a tool to provide higher value-added services and advice.
STANLEY We are hearing from the President of the Institute of Singapore Chartered Accountants, Mr Kon Yin Tong, and hearing more about the role of auditors. The landscape is changing. Apart from technology which we have spent quite a bit of time talking about and how it’s shaping the way auditors go about their work, especially affecting those people doing the basic administrative aspects of things and how it is also enabling auditors to do more higher-level, meaningful tasks, what other factors may be changing the way auditors are doing their work apart from technology?
YIN TONG I mentioned sustainability development goals earlier. You cannot just look at numbers alone now. You need to be equally comfortable with sustainable development goals, as well as robotics and artificial intelligence. Auditors need to be versatile; the audit profession needs to be more multi-skilled. Once you are multi-skilled, you are better placed to address the variety of issues that clients will throw at you.
The ability to deal with numbers is important. If you look at what auditors do and in fact, what CEOs do, they exercise judgement and they communicate that judgement. If you don’t communicate well, and when I talk about communication, it’s not just about holding a conversation or writing well, you need to be able to persuade, negotiate, convince people to accept your decisions, see your point of view. You can do all these technical stuff, you can deal with sustainability, RPA, robotics and artificial intelligence, but if you can’t communicate, your skill set is probably incomplete.
STANLEY So you are talking about soft skills, not just knowing your numbers.
YIN TONG That is correct. There are other soft skills as well. I would like to talk about two – one being adaptability, and the other resilience.
If we just look at resilience, being an accountant/auditor is quite hard.
SUSAN It sounds hard.
YIN TONG Yes, you need to probe, you need to ask the last question. That’s how you cut your teeth. There will be many roadblocks and hurdles. For example, if you can’t go to the bottom of issues, it can be quite difficult for you.
The other key competence is the need to be adaptable. We live in a complex and fast-paced environment where things change regularly. There’s a lot of volatility, uncertainty and ambiguity. If you are adaptable, then you can handle these things. Let’s look at what are the necessary ingredients to be adaptable. Obviously, critical thinking comes to mind. Critical thinking is not just joining the dots, it’s about weighing the pros and cons of the evidence you have obtained, exercising your judgement about the evidence, and coming to a conclusion and decision. These are the soft skills you need to have to be a good accountant, to be a good auditor.
STANLEY Yeah, to be good at numbers, to be very aware of the laws, the roles, the regulations. To be abiding, adhering and to be a good communicator. You also mentioned resilience and adaptability, very important points for being an effective auditor at that.
SUSAN Yes, critical thinking skills.
STANLEY Thank you so much for allowing us to peer into the role, the lives and the purpose of auditors and the auditing profession. We have been speaking with the President of the Institute of Singapore Chartered Accountants, Mr Kon Yin Tong, our guest for this part of Money Mind. Thank you, Yin Tong, for your company.
SUSAN Thank you.
YIN TONG Thank you, Stanley; thank you, Susan.