It is not unusual to have a chief financial officer based in Europe, who is the authorized signer for a business bank account held with a bank in Singapore, for a client being audited by an accounting firm in Hong Kong.
In the past, when it was time to do an audit confirmation, the Hong Kong auditor had to send paperwork to Europe for the CFO to sign, giving the bank permission to disclose information. The CFO would return the paperwork to the auditor, who would then send it by post or courier to the bank in Singapore. Only then could the bank send a letter to the auditor with the information on their client’s banking arrangements that they needed to complete the audit. The whole procedure was cumbersome and time consuming.
FinTech company Confirmation has shaken up the process by creating a platform that connects the three parties digitally, enabling the exchange of information to happen instantaneously. “Confirmation takes an age-old process that has been done since audit was first invented but has been done on paper. It automates and digitizes that process,” Tony Hallam, Chairman of Confirmations Asia Pacific, explains during a recent visit to Hong Kong.
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Continuing with the example above, the platform has reduced the time taken for the auditor to obtain the banking information they need from weeks to less than three hours, saving both time and money. “The platform enables the auditor to do their work in real time, the client isn’t being chased as much for authorization, and for the bank, the request arrives in an organized digital flow that means they can tick off the requests one by one and complete the work more quickly,” Hallam says.
Confirmation was launched in 2000 and today has more than 4,000 banks and 16,000 audit firms across the world registered on its platform. It confirms more than US$1 trillion in banking arrangements every year.
In Hong Kong, it has more than 500 audit firms registered with it, as well as 20 banks, including major players, such as HSBC, Hang Seng and Standard Chartered, and international banks like Citi, Goldman Sachs, JP Morgan and Bank of America.
A growing platform
Hallam is not surprised by the success of Confirmation. “Accountants and auditors are all grappling with how they can do more in less time, particularly from a compliance and process perspective. We also always get a positive reception when we talk to a bank that receives thousands of paper requests each year,” he says. “Once you have done something digitally that you used to do by paper, you don’t go back to paper.”
Despite this fact, Hallam concedes that getting people to change the way they have always done something can be challenging. “The main challenge that anyone faces when you are changing a process is to bring people to that process and get them to use it and see the benefits,” he says. “We continue to do that through education and communication, as we know that we have a service that adds value, reduces cost and also significantly reduces the risk of audit fraud.”
Confirmation opened its office in Hong Kong, where it has had clients for more than 10 years, in 2016. “To grow in any market, you have to illustrate to that market that you are there on the ground with your customers. That is the reason why we opened an office here. We continue to grow and will continue to invest in Hong Kong,” he says.
Hallam adds that while not all auditors in Hong Kong are ready to adopt new technology, there is a significant appetite among firms for digitization, which is reflected in the volume of growth the group is experiencing. “Hong Kong has its own uniqueness around regulation and scale, and we are constantly told that customers here, be they banks or audit firms, are looking for more efficient ways of doing things.” He adds that with Hong Kong as a major international market, a lot of activity for auditors is taking place across the global financial markets, so they not only need confirmation from local banks but also ones in other jurisdictions.
“The platform enables the auditor to do their work in real time, the client isn’t being chased as much for authorization.”
The scale of the opportunity in the city is also significant. “In Hong Kong every company is audited, no matter the size. That is different to Singapore and Australia, where only the largest 20 percent of the companies are audited. There are over 2,000 audit firms in Hong Kong compared with Singapore where there are roughly 500,” Hallam says.
Confirmation, he says, is focused on building on its portfolio of banks both in Hong Kong and internationally to ensure it can offer auditors as broad a selection of banks as possible.
Tony Hallam worked in the sports and major events industry for 13 years with institutions such as Golf Australia, Football Federation Australia, Melbourne Stadiums, Nimble Australia, Yarra Bend Golf and Melbourne Boomers Women’s National Basketball League Club.
The case for digitization
Hallam explains that throughout the profession, younger qualified staff are coming in, and want to work in environments that mirror the rest of their lives. This, he notes, is one of a number of reasons why accountants and audit firms should invest in digital solutions. “If you want to engage with your staff and show them it is a place they can grow and develop, you have to be investing in technology.”
He points out that similarly, clients are increasingly living in a digital world, and they want to be dealing with accountants and auditors that are comfortable in that world. He adds that digitization saves time and reduces operating costs for firms themselves.
But he thinks technology will only be able to take the accounting profession so far, and there will always be a need for a human element. “I think the key to being a great accountant is being able to bring a view to the table and give an opinion that is based on good solid thinking, data, professionalism and experience,” he says. “I don’t think that is any different today than it was 20 years ago, but I think it is more important nowadays because technology is going to replace some of the base work that accountants have done.”
Accounting firms also cannot afford to ignore FinTech developments. Hallam highlights that FinTech is by its nature disruptive, although he adds that it will ultimately lead to improved customer service offerings by traditional industry players. “I think that is the opportunity it represents,” he says.
But he does not see Confirmation as a disrupter. “We would say we are a transformer of a process, but we actually support the current regulation around the confirmation of audit reports.”
“If you want to engage with your staff and show them it is a place they can grow and develop, you have to be investing in technology.”
The right experience
Hallam is no stranger to the audit process, having started his career at PwC in Australia, where he worked for 20 years. “I am an auditor by trade, so I know this process because for every junior auditor, it is the first job they are given.”
He thinks auditing gave him a great base on which to build his career. “I wouldn’t be doing any of the work I have been doing in the past 15 years without the 20 years I spent at PwC. It gave me a depth of experience working with people and trained me in a way that is quite structured and analytical.”
One aspect of his current role that he most enjoys is building relationships with people as he helps them to understand Confirmation’s service, and he credits his time as an auditor for helping him in this area too. “Underlying it all is the issue of building relationships, either internally or with customers, and earning people’s trust,” he says.
Hallam was a national assurance leader at PwC in Australia during a time when the audit profession was coming under heavy scrutiny following company failures such as Enron and Worldcom, and he thinks this has continued.
“I think generally over the last 20 years the scrutiny of auditors has become more significant. It is now much more of a regulated industry.” He adds that this development has led to auditors having to change how they carry out their role and evidence their work. Technology, he says, can assist auditors in this area by helping them to do their work more effectively and efficiently.
Hallam graduated from Monash University and worked at PwC for 20 years, where he spent nine years as partner
A passion for sport
Hallam became involved with Confirmation five years ago, after he and business partner, Natalie Lewicki, approached the group to see if it needed a representative based in Asia Pacific. “Confirmation already had users in the region but we saw the opportunity to grow with operations based in the key financial markets of Hong Kong, Australia and Singapore, and being closer to our customers. We were fortunate enough that they did, and we now run that business,” he says. The company was already operating in Canada, Europe, the Middle East and Africa.
Confirmation has a particular focus on Hong Kong and Singapore in Asia Pacific, given the importance of these markets in the region, while it also has offices in Australia, New Zealand and Malaysia.
In addition to PwC and Confirmation, Hallam has spent 13 years working in the sports and major events industry. This experience included being chief executive officer of Golf Australia, which oversees golf in the country, as well as chairman of Melbourne Stadiums, the operator of Etihad Stadium.
Despite being a very different industry to auditing, he says there are still significant similarities between working in sport and his current role at Confirmation. “In sport, you have to make sure you have a very solid brand that is supported by very solid service, and you can never forget the importance of people relationships to growing a business,” he says. “People often say to me that sport must be very different, and although every industry is different, there is a great commonality around this and what I do now, in terms of dealing with people and relationships, conflict and trust.”
Unsurprisingly, sport is a major passion for him. “I am a fan of many sports. I am part-owner in a professional women’s basketball team called the Melbourne Boomers. I chair that club along with a golf business that operates a public golf course, Yarra Bend Golf. I also like Australian football, golf and soccer,” he says. “That, along with my two daughters and my wife, and work takes up most of my time.
Confirmation announced a partnership with Allied Irish Banks in Ireland and De Surinaamsche Bank in Suriname in November, and partnered with Confirmations Ltd. Saudi Arabia in January. Over 16,000 audit firms use its services globally.
