Page 1 | Confidential and Proprietary Information Enhanced Practice Management & New Services Giancarlo Attolini, Chair IFAC SMP Committee New Delhi October 10, 2014

Page 2 | Confidential and Proprietary Information Agenda—Expanding the range of SMPs Services Practice Management Technology Developments Trusted Business Advisor New Service Offerings References

Page 3 | Confidential and Proprietary Information Practice Management — General The SMP has developed resources to help SMPs in their practice management activities The main resource is the Guide to Practice Management for Small- and Medium- Sized Practices Other resources –Practice Management section on

Page 4 | Confidential and Proprietary Information Implications for SMPs—Practice Management I Specialization/ niche –Develop capability to offer and market new services –Choose fields where firm has high degree of industry and/or technical understanding –Choose fields big enough to justify spending on marketing and gaining specialist knowledge –Consider offering your firm as an adviser to second-tier firms, whose clients want top-tier specialist expertise Networking –Forge alliances/network with other practices

Page 5 | Confidential and Proprietary Information Implications for SMPs—Practice Management II Pricing –Consider value over time-based – 77% Gateway poll respondents said it will be the pricing strategy of the future Invest in people –Develop technical and soft skills (branding, marketing, selling, negotiating, etc.) Marketing –Use social media (e.g., Twitter, Facebook, LinkedIn)

Page 6 | Confidential and Proprietary Information Implications for SMPs—Practice Management III Accounting, compilation & other non-assurance / related services (33%) is fastest growing source of revenue for practices (IFAC SMP Quick Poll 2013) Opportunities –Technological advances enable practices to profitably provide outsourced accounting services –Rapid change and increasing complexity are driving up demand for outsourced accounting services

Page 7 | Confidential and Proprietary Information Technology Developments I Three Mega-Trends Digitization (cloud computing) –Paper to paperless to boost productivity Virtualization (systems of engagement) –Physically present to virtually present to improve market reach Transformation (business intelligence) –Compliance provider to trusted advisor to enhance value –On-demand reporting, business analytics, dashboard graphics, target market segment benchmarking and advisory services (discussing how best to respond to revealed issues)

Page 8 | Confidential and Proprietary Information Opportunity, Threat and Challenge Technology is part of step change in accounting Technology = opportunity – the future of practice Technology = threat – commoditization, DIY Challenge is how to implement technological change Technology Developments II

Page 9 | Confidential and Proprietary Information Opportunities Presented by Technological Change Profitable outsourced client accounting services (CAS) Expand geographical scope Real-time round the clock service Time and resource available for analysis and advice Rapid change and increasing complexity are driving up demand from clients for outsourced accounting services Technology Developments III

Page 10 | Confidential and Proprietary Information Technology Developments IV Digital Enablers Help improve practice efficiency and move client interactions online Smartphone apps –Wi-Fi Finder, Evernote, Feedly, Dropbox, Keeper, TripIt, XE Currency, Uber, PrintCentral, The World Clock, HP12C & AirServer Video and instant messaging services –Skype, FaceTime and Google Hangout Search engine optimization (SEO)

Page 11 | Confidential and Proprietary Information Trusted Business Advisor—What it Means Understanding and listening to clients’ needs Using our broad experience/expertise to help clients accomplish their goals Creating an ongoing relationship with clients Providing more than core accounting services

Page 12 | Confidential and Proprietary Information New Service Offerings—Country Examples I Ireland (IFAC Board member) –“If we do not provide bookkeeping services, we encourage the client to purchase an accounts software package, then install it and get it set up and then train the client on how to use it and to take back-ups. Each year we review how they are getting on and attend their premises to tidy up, before doing a year end procedure. The “cloud” is the obvious next move for this service though it is a little cost prohibitive for now. These are all value added services which the client pays a bit more for and gets them more engaged with the financial side of their business. Equally, we are not burdened with quality control issues over low value bookkeeping services.”

Page 13 | Confidential and Proprietary Information New Service Offerings—Country Examples II Australia (SMP Committee Member) –“We aim to become the virtual CFO. We target companies which are large enough to need planning, SWOT analyses, but not so large to have their own CFO. Our role is to facilitate, engage in your clients’ business and make an impact on their life – help them pay off their house loans, pay kids school fees, plan for retirement” Brazil (SMP Committee Member) –“SMPs have been supplying all kinds of services related to tax and accounting issues—including complete outsourced accounting, payroll & tax. Additional services related to evaluation, financial due diligence, and outsourcing of administrative and financial routines, are also an increasing market”

Page 14 | Confidential and Proprietary Information Sustainability Services Insights from IFAC SMP Quick Poll – Mid year % of practices offer sustainability services 27 % respondents current do not offer any sustainability services but plan to in the future May be a growth area for practices New Service Offerings III—Sustainability Services

Page 15 | Confidential and Proprietary Information New Service Offerings IV—Review Engagements International Standard on Review Engagements (ISRE) 2400 (Revised) The Guide to Review Engagements available on

Page 16 | Confidential and Proprietary Information New Service Offerings V— AUP Agreed-Upon Procedures (AUP) Engagements Based on the IAASB’s ISRS 4400, Engagements to Perform Agreed-Upon Procedures Regarding Financial Information Attractive and fast growing service The practitioner provides a report based on the factual findings regarding financial information – no assurance is expressed The report is not distributed publicly – it is restricted to those parties that agreed to the procedures

Page 17 | Confidential and Proprietary Information References—Business Advisory Gateway—embedded various topics: The Role of SMPs in Providing Business Support to SMEs research paper: business-support-small-and-medium-s business-support-small-and-medium-s SMP Committee Business Advisory Interviews (Videos) IFAC YouTube Channel: Good Practice Checklist for Small Business, 2e: How to Build Your Business Advisory Practice article: resources/how-build-your-business-advisory-practicewww.ifac.org/publications- resources/how-build-your-business-advisory-practice Sustainability: Challenges and Opportunities for SMPs and SMEs article: smps-and-smes smps-and-smes

Page 18 | Confidential and Proprietary Information References—Practice Management Guide to Practice Management for Small- and Medium-Sized Practices, 3e (incl. companion manual): practice-management-small-and-medium-sized-practiceshttps:// practice-management-small-and-medium-sized-practices 7 Tips for Accountants on Supporting the Globalization of Small Business article: small-business small-business Social Media Marketing May Be the Key to Practice Profitability article: profitability profitability Tomorrow’s Firm and the Role of Value Pricing: IFAC Interview with Ronald J. Baker article: pricingwww.ifac.org/news-events/ /tomorrow-s-firm-and-role-value- pricing

See you in Rome in November