If there is one quality Clement Chan, Managing Director at BDO Hong Kong, thinks accountants need, it is the ability to be nimble.
In Hong Kong’s dynamic business environment, with ever-changing regulations and fast-paced technological advancements, he believes accounting firms have to be ready to evolve. “We have to be flexible enough, to cater to the changes, to move on with the times, and try to maintain our relevance and competitiveness in the market,” he says.
Chan’s sentiment reflects his firm’s efforts in recent years to maintain its position as a leader in mid-market businesses in a competitive marketplace. BDO, the world’s fifth largest accounting network, recorded total global revenue of US$8.1 billion in 2017. BDO Hong Kong has over 50 directors and more than 1,000 members of staff. Its augmented digital transformation activities, investment in the digitization of its services, and merger and consolidation programme all contributed to its strong growth, according to the firm.
Technological change
Chan, a past president of the Hong Kong Institute of CPAs, thinks technological change is at the centre of the necessary evolution the profession must undergo. “The impact of technology is very important to how we do our work, and how our role is perceived. We should be making use of this to improve our level of service,” he says.
While there is talk of artificial intelligence making accountants obsolete – including one prediction that auditors will be gone within 10 to 15 years – Chan is not worried. Instead, he thinks auditors will continue to have an important role to play, as long as they are able to transform their skills. “Perhaps auditing in the traditional sense such as looking at financial statements, relying purely on the information provided by our clients to do our work, selecting samples from the existing population of financial transactions and tracing them to the source will be gone,” he says.
But he expects this work to be replaced by a whole new approach, as auditors have access to the full population of transactions done by a company for the first time. He suggests auditors can use this data to compare the performance of different firms in the same sector, to spot trends, and to offer higher-level services to companies. “All of this will bring unimaginable changes to the way we do business. We need to be absolutely prepared and properly trained to deal with these kinds of changes, so as to maintain our skill set to be relevant in our role.”
He thinks one of the key skills auditors will have to acquire is the ability to manage data, enabling them to reach meaningful and actionable conclusions. “We will be transforming from a traditional auditor, a number cruncher, to a data manager, interpreting data at a much higher level.”
“Even for a firm of our size, we are definitely seeing a challenge in this area, but it is not something we can duck.”
Chan sees the changes brought about by technological advances as one of the biggest challenges of his role. “Even for a firm of our size, we are definitely seeing a challenge in this area, but it is not something we can duck.” he says. “We have to face it, embrace it and come up with the right strategy to deal with this development.”
He adds that last month, BDO produced its strategic global plan for technology. “It brings a very strong message to the 165 countries within our network of member firms, that we have to converge on technology, and to be prepared to transform our existing means of communicating with clients to the next level in a digitized way,” he says.
He points out that cybersecurity, having the right digital platforms and portals in place, and making the best use of data to perform additional services for clients will become increasingly critical in the future as firms handle more of their clients’ data.
Clement Chan was previously managing director of Shu Lun Pan Horwath Hong Kong CPA, which merged with BDO Hong Kong in 2009, since the early 1990s.
A smaller world
As well as embracing technology, Chan thinks it is important for medium-sized firms to be able to service their clients in different jurisdictions.
He points out that the world is getting smaller, and in today’s business environment, firms need to be able to advise their clients on tax systems and regulations in countries in which they may want to expand. “Nowadays many companies are operating across jurisdictions, and it is very common when we, as auditors and business partners talk to our clients, for them to say they are planning to do an acquisition or listing in another place, not necessarily in our home jurisdiction. The ability to be connected and serve them at different locations is very important.” He also notes that offering services with an international dimension is particularly important in Hong Kong, given its status as an international finance centre and regional finance hub. “Times have changed dramatically from 20 to 30 years ago, when Hong Kong-listed companies had operations mainly in Hong Kong. Today a lot of companies listed on the Hong Kong Stock Exchange are foreign companies with operations outside of Hong Kong that don’t have any local operations. If you don’t have a good international network whereby you can provide your services to clients almost anywhere in the world, you are not going to be very competitive,” he says. This edge, he asserts, has enabled the firm to advise European and United States-based companies wanting to expand into Greater China, as well as Mainland companies that want to make acquisitions in overseas markets. “I think our global presence and the regularity with which we do cross-jurisdictional projects within our network, actually makes us very recognizable in the market, particularly for clients with an international presence. We are one of a handful of firms around the world who are able to serve clients with those kinds of needs.”
Opportunities in China
Even if they do not have a global network, Chan thinks the Mainland offers significant opportunities for small- and medium-sized practitioners (SMPs) in Hong Kong. “We have an advantage because of our situation with Mainland China. We have such a big market in our backyard, and that market has a special relationship with Hong Kong, so we derive a lot of benefits and advantages from it,” he says.
He points out that after over 30 years of opening up, many large companies no longer need to go through Hong Kong to get into Mainland China, but smaller companies still need help. “Small- and medium-sized enterprises (SMEs) might not have the resources and experience to go into the Mainland directly,” he says. “Because of our peculiar advantage of knowing how business is done there and in the western world, medium-sized firms in Hong Kong can play a very meaningful role in holding the hands of SMEs.”
Chan adds that many SMPs have already established their own bilateral relationship with accountants and service providers in the Mainland, serving as a bridge to the outside world.
Chan was the president of the Hong Kong Institute of CPAs in 2014 and is a past chairman of the Asian-Oceanian Standard-Setters Group.
A long-time auditor
Chan was born in Hong Kong and completed his early education here, transferring to the United Kingdom for his secondary education and university. After qualifying as an accountant, he came back to Hong Kong for five years, before moving to Australia and returning in 1990 to join Shu Lun Pan Horwath Hong Kong, which merged with BDO in 2009. “All my career, apart from a very short period of eight months during which I was seconded by my firm to a Japanese client to help them set up a plant in Shenzhen, I have primarily been working as an auditor.”
“Even right now I still regard myself very much as an auditor because I am the Managing Director of the assurance division at BDO Hong Kong,” he says.
Chan was always interested in going into auditing, but he never imagined he would spend his whole career in this field. “When I started off fresh from university, I looked at it as a very interesting job through which you could poke your nose into a lot of other different industries,” he says. “Auditing enables you to gain a fast track to building up knowledge in a whole lot of industries and disciplines within the business community,” he says.
“I never thought I would stay in this profession for over 30-something years, and right now, it looks very likely that it will be my lifetime career.”
He adds: “To be honest, I never thought I would stay in this profession for over 30-something years, and right now, it looks very likely that it will be my lifetime career.”
There is a lot more to auditing than some people think. “In our job, apart from looking at the numbers, we have to look at the reasons behind commercial decisions to see if it makes sense for the shareholders,” he points out. “It is not just black and white decisions all the time, particularly with the current auditing standards – a lot of judgment is needed to do your work properly.”
To Chan, auditing and being an accountant is very fulfilling. “It will give you a very stable and rewarding life,” he says, pointing out that the chairmen and chief executives of many multinational corporations and banks are from accounting backgrounds.
“The profession is one where you can build up a lot of useful knowledge and experience that will carry you a long way, not just in accounting, but in a lot of other industries. Just like any profession, one has to invest time in getting qualified and in building up your experience. Once you have that, the sky is the limit.”
For him, being nimble at work is not the only important thing. “I am a person who loves my sport. I believe that one of the reasons why I can stay so energized and interested in my work is because I do a lot of things outside of it,” he says.
At the weekends he likes to hike and go horseback riding, while he is also a keen skier and runner. “Basically, every weekend if I am not travelling, I will either run or swim, and I go horseback riding on a Sunday afternoon. I usually go to the gym twice during the week.
“My activities outside of the office keep me very busy.”
BDO is the world’s fifth largest accounting network. In 2017, it recorded a total global revenue of US$8.1 billion.
