Jacky Lai, Assurance Partner at EY, did not plan to go into accounting. But after taking part in a simulated stock trading competition as a first-year finance student at the Hong Kong University of Science and Technology, something clicked.
“During the competition, I spent a lot of time studying the financial data of different companies. I became really interested in the financial data, but I had difficulties understanding the story behind it,” says Lai, a member of the Hong Kong Institute of CPAs.
He won the competition and decided to take more courses on accounting, with a view to learning about company data so that he could apply his own analytical skills to stock picking. He enjoyed these courses so much, he decided to change his major to accounting.
Lai joined EY as an audit trainee in the mid-1990s straight after leaving university. He remembers everyone being very bullish about the economic situation at the time. “Everyone was talking about the stock market and pouring money into buying new shares. They all had beepers to get the latest stock prices,” he remembers.
But in 1997, Hong Kong was hit by the Asian Financial Crisis, followed by the bursting of the dot com bubble in 2000 and the outbreak of SARS in 2003. “These were very low times. There were massive layoffs in every industry, even audit – I witnessed team members leaving one by one. There was a very pessimistic atmosphere in Hong Kong.”
Even so, Lai is glad he experienced this challenging environment, as he says it made him more willing to take up requests to work in different places, such as Mainland China, where he spent six months in Wuhan and a year in Beijing. “Going to Mainland China to work 20 years ago was very different to today. The accommodation, the conditions, the traffic was all very different,” he recalls.
Lai still looks back on this period as being the most memorable time of his career. He was working with large state-owned enterprises (SOEs), helping them restructure and do initial public offerings in the Mainland and Hong Kong.
“There would be over 100 team members working on one engagement. We all lived in one hotel. The timelines were very tight, and the pressure was huge, but I built friendships with members of the Hong Kong and Mainland teams and other professional parties. In particular, I found working with cross-border legal teams very fruitful in terms of enhancing my own knowledge and understanding. Before the pandemic, I would meet up with them regularly.”
He adds that there were many challenges and technical issues that needed to be overcome during the listing process, such as sorting out accounting policies for pensions used by the SOEs that did not follow general business rules. The SOEs had also often done transactions, such as the acquisition of schools or hospitals that were not always easy to justify as fair value acquisitions.
“We had to make sure these subsidiaries were carved out and not included in the listed vehicle, and we had to explain to the SOE why we were doing this. The process was very challenging, but it was a very memorable time,” he says. “We spent endless long nights, supporting each other, to accomplish various deadlines one by one. Going through challenges together spurs the team’s spirit and relationship.”
A packed schedule
Lai combines his current role as Assurance Partner with being Digital Audit Leader in Hong Kong, overseeing EY’s digital transformation strategy.
Unsurprisingly, these two roles keep him very busy. He typically starts his day at 6 a.m., responding to emails. He then takes a break to have breakfast with his wife and two children, a girl of eight and a boy of six. “This is the most important moment because I can talk to them and hear their school stories and about their feelings. Many of the family decisions are made at this time. I think it is very critical for our family to have this gathering, or family meeting as we call it.”
Lai usually gets into the office at 9 a.m., when he starts a series of calls and Zoom meetings with clients and leaders of other service lines at EY to discuss the progress of various initiatives and catch up on the audit work being done by his own team. “The work-from-home arrangement has definitely changed our routine work behaviour a lot. The restriction on travels and physical meetings forced us to communicate virtually, and the teams have had to adapt so that we can continue to work in a productive manner and learn the most effective way of using technology.”
As an active member of the Institute, Lai often attends committee meetings or other public service meetings over lunch, followed by more internal meetings in the afternoon. Before COVID-19, his evenings would be spent attending client or Institute events.
While his day is busy, Lai gains a lot of energy from interacting with so many people from different backgrounds. “Because of the audit engagement, I have the chance to work with EY teams in other locations, such as Mainland China, Japan, Greece, Italy and the United States. A lot of the time I also need to work with people in different disciplines, such as tax, IT and even marketing and the media relations team. Externally, there are clients in retail, consumer products, environmental energy, and different professional partners, such as lawyers and valuers. It is challenging but it makes me happy because I like to talk to different people. It really widens my perspective,” he says.
Jacky Lai is both Assurance Partner and Digital Audit Leader at EY in Hong Kong, overseeing the firm’s digital transformation strategy.
Transforming the audit process
A large part of Lai’s work involves leading EY’s digital audit strategy in Hong Kong. He points out that the current period is a transformative age with technology reshaping business and society. “We have to transform the way we do audit to respond to this complexity,” he says.
He explains that there are three key differences between a traditional audit and a digital one. Digital audit focuses on three key principles: connecting, automating and analysing.
Connecting auditors and companies involves a secured audit platform for a data-first approach which can support global accessibility, data or information exchange and mobile application.
Processes are then automated for centralized data capture, and standardized service delivery. Robotic process automation is embedded in tools to remove the more time-consuming, tedious and process-heavy work that auditors did manually. “This makes space for the lead auditors to focus on identifying and addressing risk issues,” says Lai.
Analysing is about generating full or large populations of data to produce a more complete business picture, “Our data analytics handle large data sets, and can clearly identify trends and anomalies, correlations and the relationships of different sets of data throughout a business cycle. It enables a more effective audit through targeted testing, focusing on the transactions that matter the most. We also adopt artificial intelligence (AI) technology to enable audit teams to review business documents more effectively by leveraging machine learning technology and improved speed and accuracy of reading and interpreting contracts.”
EY started the digital audit transformation process in Hong Kong eight years ago as part of a global initiative, beginning by developing its own tools. “We have put a lot of investment into digital audit because we think it is the future. It is constantly evolving and creating real benefits for clients,” Lai says.
“We have put a lot of investment into digital audit because we think it is the future. It is constantly evolving and creating real benefits for clients.”
He explains that processing mining technology enables clients to have a more comprehensive view on their processes, hence eliminating process bottlenecks, gaining efficiency and achieving cost-savings.
Blockchain certifications verify the integrity of transaction records from distributed data sources within the supply chain. “This technology helps companies reassure their customers about the authenticity of products in the total supply chain, so they can know, for example, from grapes to glass how a bottle of wine has been produced.”
He says EY is currently developing an AI tool that can read Chinese and other languages to do contract reviews, so that auditors do not need to read the documents manually. It has also developed a process mining tool that helps auditors assess the internal control points of different organizations’ structures for better risk identification and assessment processes.
Lai says the biggest challenges he has encountered in this area of his work are not to do with the technology itself, but rather people’s attitude to it, with some people resistant to change as they feel comfortable with the current audit processes. “We need to change them from having a fixed mindset to a growth mindset. The market is changing very fast and if you change one or two years later than your competitors, you will be out of the market,” he says.
But Lai does not think there will ever come a time when the audit process is completely automated. “Our industry is not a machine-led industry, it is an industry that counts on professional judgement, experience and knowledge. Machines are actually just replacing the tedious, repetitive work. Sometimes you might do 100 audit procedures but only two to three are critical, so it will enable you to focus your efforts on the right thing,” he says.
As an active member of the Institute, Lai is a member of the Professional Conduct Committee, the Registration and Practising Committee and the Professional Development Committee.
Lai believes in giving back to the profession through involvement with various Institute committees. This all began six years ago when he joined the team managing the Institute’s CPA for NGO programme, which explores collaboration opportunities between members of the Institute and charities.
Today he is a member of the Professional Conduct Committee, dealing with complaints about the conduct of members and deciding whether or not there is a case to be answered, and the Registration and Practising Committee, which checks that applications for registration are in order.
He also sits on the Professional Development Committee, giving advice on the professional training members need and how they can advance their careers and enhance their technical competencies. “I think this committee is one of the most valuable functions for providing member support and services. It is visible and tangible, and helps members in their continuous development,” he says.
“It doesn’t matter if you succeed or fail, if in the process you learn something.”
Lai particularly enjoys his work on this committee as he feels passionate about learning and encouraging a growth mindset. “You should not get into a binary mindset of judging in terms of success or failure. It doesn’t matter if you succeed or fail, if in the process you learn something. We can learn new capabilities with dedication and hard work, no matter how old or young we are,” he says.
He adds that he is still learning himself and has recently taken up coding, as he is increasingly recruiting people from a STEM (science, technology, engineering and maths), rather than an accounting, background. “They have a very different mindset and I need to be able to understand the jargon before I can have a meaningful conversation with them,” he says.
Advice for young members
Lai thinks life is harder for young accountants than it was for his generation because they not only face competition from people in the accounting profession, but also from those from other backgrounds, such as STEM ones, as firms recruit people from different backgrounds to keep pace with disruption. At the same time, he thinks there are fewer opportunities in Mainland China than when he first started practising, as the economy there has now developed so that it has its own capabilities and talents.
But he points out that the development of Greater Bay Area offers opportunities for the younger generation, while the increased use of technology is also creating new services that accountants can offer to their clients.
As a result, Lai thinks it is important for new accountants to have STEM-related skills and analytical skills, as well as what he has dubbed an “ABC” mindset. He explains: “A is for attitude and whether you are passionate about learning and adapting your behaviour. You need to be flexible to respond to any change or crisis. B stands for business acumen as you need to have extensive knowledge, and the right approach to provide you with a niche compared to others,” he says. “C is for communication. I think it is a very basic but long-lasting capability that people should have. No matter what technology you are using, the most important part is still how you communicate to stakeholders and other team members.”
When he’s not working Lai likes to keep fit. He is a keen cyclist and runner, regularly taking part in Hong Kong’s half-marathon. He also likes to involve his family in these activities, taking his children out cycling so that it doubles as family time. “Sport improves my physical and mental well-being. When you are under a lot of pressure and have a busy schedule, going out to do some sport really helps to clear your mind,” he says.
Jacky Lai thinks it is important for new accountants to have what he has dubbed an “ABC” mindset. A is for attitude and whether you are passionate about learning and adapting your behaviour. B stands for business acumen, and C is for communication skills.