Wednesday, December 16, 2015

What can we learn from the changes to the Accounting profession ?

This is my first blog post using my iPad Pro with Apple Keyboard. I am currently blogging from Yishun Library.

One of the more interesting developments in Singapore is the initiative to allow Polytechnic graduates to obtain an advanced diploma while working as an accounting technician to qualify as a chartered accountant without getting a degree. I believe that this news is probably making waves in NTU and NUS where an accounting degree was meant to be an assured ticket to the middle class. Accountants may have some concerns as to how this may impact their earnings capabilities in the future.

The accounting profession is going through some changes which has always affected engineers in the past. In Singapore, a polytechnic diploma holder can always call himself an engineer without getting into trouble with the law ( Try doing that in Germany. ) I remember that when I was in P&G we outsourced our IT operations to Atos Origin and stipulated that our operators must be diploma holders. I remember P&G management being upset that the diploma holders were NCC diploma holders and internally felt that the vendors upheld the word and not the spirit of our agreeement. To our local poly diploma holder's credit, P&G enjoyed greater customer satisfaction when the work was insourced when we hired local diploma holders to support our global IT services. Many of these operators eventually took on hardcore technical roles meant for graduates after a year doing operations support. Those days were the Golden Age, it did not matter whether you were a diploma holder or a degree holder once you joined an MNC, you advanced based on your capabiliities and we had department heads who had neither a diploma nor degree.

[ Sadly this arrangement was not sustainable as after getting outsourced managers without degrees  were rapidly culled when we transitioned into HP. Outsourcing is a lot about showing off to the customer the qualification of the folks that you are deploying into their environment. ]

Interestingly, after going to Hewlett Packard I found that one of these ex-Atos Origin  NCC diploma operators were rebranded "Senior IT Engineers" when they were sent to support the government agencies.

Here's are some of my point for someone's consideration if he is an accountant.

a) For a start, accountants without degrees will still start at a lower base.

By and large, we are still driven by paper qualifications. A degree holder would still start at higher salaries. This measure would benefit SMEs who need accounting bookeepers who will work and study to better their life circumstances. MNCs and Government would still be aggressively sought after by university graduates and would have their choice picks.

Interestingly, some smarter MNCs might build a body of cheap accouting technicians and be willing to upgrade them once they have accumulated a good work track record. I think this is what the government wants to achieve to make the diploma track more attractive. Expect only the top diploma holders to qualify for these seats because studying part-time has no opportunity cost.

b) Redistribution of talent would not change a person's life outcome if he does not academically excel. Don't expect Singapore to be less elitist.

The effect of this measure would likely induce smart students who are assured of his ambition to consider a polytechnic diploma. This means that students with better O level results will consider a diploma if he is sure that he want to be a chartered accountant.

The JC and Polytechnic cohorts will redistribute itself. I doubt elitism would be reduced greatly - More elites will join diploma programs and make those courses as competitive as degree courses.

The number of chartered accountants will remain the same as it is based on industry demand and only small part of the diploma cohort would complete the journey.

c) Overall these measures are good for  everyone but don't expect a Utopian society to arise out of these reforms.

These measures are great because one of the problems is that if every elite go through an expensive and brutally competitive process to get certified to do something, the beneficiaries are MNC and government organisations because no one will push themselves so brutally hard to join a small local company and be paid a pittance with no opportunity for advancement. Even if they like SMEs, they have to justify these decision to future employers. With this program, SMEs can tap into some accounting talent and get support while these book-keepers study part time to get better qualifications.

d) The non-accounting modules you pick up in University will become more important.

One long term consequence of developments like this is that all graduate professionals would need to pay attention to modules which cover non-accounting subjects. Yes, the so called "superflous" modules which teach a graduate how to read, write and think better as opposed to actual accounting work. These modules are critical to differentiating yourself from the non-degree CAs in the future.

Which brings me to this important point. It's easy to reduce a profession into a list of skills. But with the industry evolving at such a rapid clip, some foundation skills in reading, writing and speaking will become more important as these newly minted "apprentices" may not have had the time to really think about a new issue and develop the ability to perform public speaking. Upon getting their charters they would still need to navigate through massive changes to the accouting profession which I predict would involve turning combining datasets of financial figures with economic data to create charts to facilitate management decision making.

e) Academic qualifications becomes a performance art.

In a nutshell, with multiple streams coming in each profession from JC, diploma and ITE programs. The only competitive advantage left if that you need the ability to relearn and reinvent yourself - and show employers that you can do that. Accountants can learn from computer scientists and engineers that in the face of competition, engineers don't really fight fair. Engineers know how to look after themselves and will compete in fields as diverse as banking, management consulting and would happily leave traditional sectors to die if they cannot give them the pay they deserve.

What matters is that the graduate continue to signal to the top employers that they make potentially great executives who can bring value to the shareholder and make their bosses look good. This is a performance art as prestigious degrees continue to have this strong signalling effect along with years in great brand name companies.

This article may end in a cynical note for some.  

Making the chartered accouting qualification to both degree and non-degree holders will not create a society which emphasises skills. Instead, brands and qualification-signalling will matter much more than skill once everyone fights in the same arena and have access to the same qualifications, the Singapore government can try to create a mindset change but this would take decades of social engineering to work.

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