presented by:winnie cheung, chief executive venue:hong kong institute of cpas date:23 july 2009

Presented by : Winnie Cheung, Chief Executive

Venue : Hong Kong Institute of CPAs

Date : 23 July 2009

Financial Crisis Survey 2009

© Hong Kong Institute of Certified Public Accountants Ltd. All rights reserved.

2

Research Methodology & Objectives

The Institute invited members to participate in an online survey, hosted by Cimigo - 2,606 online surveys were completed in April

The main objectives of the research were as follows:

Understand perceptions of the profession amongst Accountants

Understand the impact of the current economic downturn, and how this financial crisis has affected views of the profession

Ultimately, the research findings will help the Institute to increase their understanding towards their members’ perceptions and will provide valuable

insights


3

Respondent Profiles

2,606 online interviews were completed in total– 27% of survey respondents are Professional Accountants in Practice (PAIP)– 73% of survey respondents are Professional Accountants in Business (PAIB)

Majority of respondents were seniors in their company– PAIP: 57% Partner/Director/Sole Practitioner, 25% Manager– PAIB: 28% CFO/COO, 21% Team Leader, 20% Divisional Manager

Respondents have a long history in Accounting – average time as CPA is 16 years

Survey respondents skewed toward Male (59%), especially PAIP (67% vs 57% for PAIB)

High average monthly income: HK$54,860 (PAIP, HK$57,667 & PAIB HK$53,853)


4

Survey Subjects:

• Career Choices

• Career Prospects, Rewards & Remunerations

• Surviving the Financial Crisis


5

Ref: A1, A2

831

33

55Definitely will

Probably will

Unsure

Probably will not

Definitely will not

Motivation to Continue with a Career in Accounting• Vast majority of HKICPA members are committed to the industry: 88% are likely to continue with a career in

Accounting. Job security, esteem and prospects for advancement are the top 3 motivators for staying in the profession

Top 2 boxes 88

Bottom 2 boxes 4

Mean 4.37Base: All CPAs 2,606

Likeliness to continuecareer in accounting

%

N=2,291


6Ref: A1, A2

Motivation to Continue with a Career in Accounting• Vast majority of HKICPA members are committed to the industry: 88% are likely to continue with a career in Accounting. Job

security, esteem and prospects for advancement are the top 3 motivators for staying in the profession

Agreement of motivation areas

22 39 31 8

4 26 54 17

4 22 52 23

3 18 56 23

2 18 55 25

2 16 57 25

3 16 55 26

3 15 54 29

Disagree Somewhat agree Agree Strongly agree

Base: Those CPAs who definitely/ probably will continue a long term accounting career 2,291

%

Overseas working opportunities

Esteem and standing of the profession

Job satisfaction of a professional career in

accounting

Job security

Career prospects/ advancement

Remuneration package

Variety and interest in the work

Career/ training opportunities

3.08

3.05

3.05

3.03

3.00

2.93

2.84

2.25

Mean


7Ref: A3, A4

Impact of financial crisis on career choices • The financial crisis has impacted the career choices of over half of the HKICPA members who took part in the

survey, with 52% saying it has deterred their next career move. Concerns about job security is the major impact of the crisis

Base: All CPAs 2,606

Financial crisisdeterring next career move?

Reasons for deterring next career move

2

1

1

8

49

52

64

76

Base: Those CPAs who claimed financial crisis deterring next career move 1,347

%

Concern about job security

Financial burden

Others

Recruitment market is quiet

Yes52%

No48%

Going to retirement/ too old to change

Personal/ health/ family reasons

Other family members have lost job recently

Less attractive remuneration offered by

new employer


8Ref: A6, A7

Impact of Financial Crisis on PAIP Specialization

Base: All PAIP accountants 699

Expect to change toanother job specialization

Job specialization intend to change

2

22

3

34

5

5

5

8

8

917

21

Base: Those PAIPs who expect to change another job specialization as a consequence of the financial crisis 132

%

Business consulting

Corporate finance (Financing, M&A)

Internal risk control

Forensic accounting/ expert witness

Insolvency and corporate recovery

Company law compliance

IPO

Auditing and assurance

Operations and general administration

IT risk assurance and advisory

Corporate governance

Financial accounting and analysis/ reporting

Yes19%

No81%

Sales and marketing (new business development)

General management/ senior executive role

Others (each less than 2%)

• The majority of PAIP did not expect to change job specialization as a result of the financial crisis. For the 19% who did expect to change job specialization, Financial Accounting and Analysis/Reporting and Business Consulting were the Top 2 alternatives

• Expectation to change was highest amongst members with less experience in the field:

• <5 years 40% expect to change

• 5-10 20% expect to change

• > 10 years 16% expect to change


9

Ref: A8, A9Base: All PAIB accountants1,907

Yes80%

No20%

Financial crisis affectingthe business sector

Yes9%

No91%

Expect to work inaccountancy firm/ practice

Impact of Financial Crisis on PAIB Business Sector - 1• Impacts of the financial crisis are more keenly felt at the business sector level – 80% of PAIB agree that the

crisis is affecting their sector

• However, the majority of PAIB do not think that their job role is so threatened by the crisis that they would have to consider a switch to PAIP status – it is more likely that they might have to consider switching to another industry


10Ref: A10, A11

Base: All PAIB accountants 1,907

Expect to changeto another industry

Industry intend to change

2

2

2

3

4

9

10

16

25

26

Base: Those PAIBs who expect to change to another industry as a consequence of the financial crisis 475

%

Other business services

Government administration

Finance and investment

Import/ export trade/ retail trade

Manufacturing

Real estate

Education

Banking (retail and commercial)

None

Yes25%

No75%

Business management and consultancy service


Impact of Financial Crisis on PAIB Business Sector - 2• One quarter of PAIB expect to change industry as a result of the current financial crisis – other business

services, government administration and business management/consultancy the most likely destinations

• Expectation of change is highest amongst PAIB’s with the least amount of experience

• <3 years 48% expect to change

• 3-5 years 25% expect to change

• 5-10 30% expect to change

• > 10 years 24% expect to change


11Ref: A12, A13

Attitudes to Working Overseas

Intend to reside and workoverseas in the next 5 years

Location intend to work overseas

1

*

1

1

3

3

4

5

7

10

65

Base: Those CPAs who have intention to reside and work overseas in next 5 years 589* less than 0.5%

%

China

Australia

Europe

Canada

Macau

U.S

Middle East

South America

Africa

Not specified

Asia (e.g. Japan, Korea, Singapore, India, Sri Lanka)

26

35

16

17

6

Definitely will

Probably will

Unsure

Probably will not

Definitely will not

Top 2 boxes 23

Bottom 2 boxes 51


%

N=589

• A quarter of the members who completed the survey have intentions to work overseas in the next 5 years, although the majority of this is a “probable” rather than “definite intent”. China is the most likely destination


12

I'm not familiar with standards/ procedures in China

Ref: A14, A15

Working in China – Drivers & Barriers

Reasons for having intention to work in China

2

7

20

21

31

32

84

Base: Those CPAs who have intention to reside and work in China in next 5 years 382

%Better pay than in Hong Kong

Have family in Mainland China

Currently working in China


More career opportunities than in Hong Kong

Like the opportunity to travel, experience new things

More responsibility at same stage of career

No choice in the matter - likely to be employer expectation

Reasons for not having intention to work in China

2

3

5

10

10

12

21

26

35

40

Base: Those CPAs who have intention to reside and work overseas but not in China in next 5 years 207

%

Lower pay than in Hong Kong

Family/ personal reasons

Country/ political/ law issue


Health reasons - environment is not healthy

Concerned about quality of the accommodation

Fewer career opportunities than in Hong Kong

Don't speak Cantonese/ Mandarin

Already stationed in China in the past years

Gain more experience to work outside HK and China

• The main attraction of China is career opportunity – mentioned by 8 out of those who would consider relocating there in the next 5 years – new experiences, career progression & remuneration also factored

• Unfamiliarity with China Accounting Standards & procedures the main barrier, slightly ahead of concerns over pollution


13

Survey Subjects:

• Career Choices




14

Ref: B1

Measuring Positive or Negative Career Expectations

17 33 40 9

8 29 55 8

4 28 60 8

4 19 62 15

3 19 66 12

2 15 71 12

214 71 13

214 69 14

214 63 21

18 65 26

Very negative Somewhat negative Somewhat positive Very positive

Base: All CPAs (exclude “Don’t know”)

%

Professional recognition

Long term job security

Social status relative to other careers

Financial reward (pay, benefits, leave etc)

Opportunity to travel

3.15

3.02

2.96

2.95

2.94

2.86

2.89

2.72

2.62

2.41

Mean

91 91

81 85

81 84

85 84

82 84

77 78

76 78

70 67

64 62

47 50

Total

PAIP PAIB% %

Very/ Somewhatpositive

91

84

84

84

83

78

77

68

63

49

Top 2%

2,578

2,530

2,527

2,569

2,523

2,559

2,518

2,503

2,431

2,571

Base

9

16

16

16

17

22

23

32

37

51

Bottom 2%

Overall prospects for a satisfying career

Mid term employment prospects (next two to five years in the profession)

Short term employment prospects (keeping your current job/ not being made

redundant)Fast track and opportunity for

advancement

Work/ life balance(reasonable working hours)

(695)

(689)

(684)

(691)

(681)

(691)

(679)

(671)

(661)

(693)

(1,883)

(1,841)

(1,843)

(1,878)

(1,842)

(1,868)

(1,839)

(1,832)

(1,770)

(1,878)

• Survey reveals that both PAIP and PAIB are mainly positive toward their career expectations. Accounting is viewed as a secure career with good long term prospects which also enjoys high social standing.

• The most negative aspect of the profession is the effect on work-life balance

Significantly higher than the other at 95% confidence level within subgroup


15Ref: B6, B7, B8, B9

Most Recent Monthly Salary Review

Best description for mostrecent monthly salary review

7

2

10

2

433

37

24

44

+20% or greater increase

+16% to 20% increase


+6% to 10% increase

+1% to 5% increase

No change at all

-1% to 5% decrease

-6% to 10% decrease

-11% to 15% decrease

-15% or greater decrease

Had no salary review for more than a year


%

N=1,147

N=311

Yes23%

No77%

Salary increase due to promotion

Base: Those CPAs who have salary increase in most recent monthly review 1,147

Yes71%

No29%

Salary decrease due to the resultof company/ firm-wide cutbacks

Base: Those CPAs who have salary decrease in most recent monthly review 311

• The majority last had a salary review before 1st October 2008 – 66% in total, 69% PAIP and 65% PAIB

• 37% had no change in salary at last review and 7% have not had a review in the last year• Of the remainder, 44% received an increase and 12% had a decrease (mainly linked to company-wide

cutbacks

No Change


16

• Majority view amongst both PAIP and PAIB is that there will no change to salary at the next review

• PAIP less expectant of a salary rise, compared with PAIP

Ref: B10

Expectation for Next Salary Review

713

2

23 13

53 4

54

54

53

54

2215

25

8672 22

11 2 11

+20% or greater increase



+6% to 10% increase

+1% to 5% increase

No change at all

-1% to 5% decrease

-6% to 10% decrease

-11% to 15% decrease

-15% or greater decrease

Total

% % %

PAIP PAIB

Base: All CPAs 2,606 699 1,907

Mean (%) +0.87 -0.39 +1.34


17Ref: B2, B3, B4

Bonus for 2008

Base: All CPAs 2,606

Receive bonus in 2008

Yes48%

No43%

Not sure9%

Best description for bonus in 2008

10

30

1416

29

Mean (months) 1.38

%

Equivalent to less than half-month of basic monthly salary

Equivalent to more than two-month of basic monthly salary

Equivalent to 1.5 month to two-month of basic monthly salary

Equivalent to less than 1.5-month of basic monthly salary

Equivalent to half-month to one-month of basic monthly salary

More32%

Less44%

The same24%

Bonus comparison between 2007 and 2008

Base: Those CPAs who received bonus in 2008 1,247

Base: Those CPAs who received bonus in 2008 1,247

• 48% of the members surveyed had received their 2008 bonus – 43% did not, while 9% had been notified at the time the survey was completed. The average bonus worked out to 1.4 monthly salary

• Bonus was similar or lower than 2007 for two thirds of the members


18Ref: C2

Most Liked Aspects of Profession

4

5

6

6

7

8

12

14

23

Base: All CPAs 2,606 699 1,907

%

Nature of the job

Total PAIP PAIB

29 20

11 15

14 11

9 7

4 8

8 6

7 6

3 5

3 5

%%

Job security

Job satisfaction/recognition

Remuneration package

Career prospects

Training opportunities

Challenging job

5-day week

Working environment

• Accountants surveyed like the very nature of their itself the best, and they are happy with the career they have chosen on the whole

• Other areas that please them are job security, remuneration, status as well as opportunities for training and career advancement


19Ref: C2

Least Liked Aspects of Profession

2

3

4

5

5

6

14

19

19

Base: All CPAs 2,606 699 1,907

%

Workload

Total PAIP PAIB

16 21

23 17

16 14

10 4

9 4

3 6

2 5

5 2

3 2

%%

Deadlines/time pressure

Long hours

Job challenges

Accounting Standards

Job nature

Working environment

Poor remuneration

No balanced life

• Workload is the least liked aspect of the profession, causing the most stress. This is especially true for PAIP• Contributing to the dislikes/stress are tight deadlines, long hours and the general challenges of the job• PAIP have a wider range of dislikes than PAIB


20

Survey Subjects:

• Career Choices




21Ref: D1

Estimated Recovery Time for the HK Economy

Mean (Years) 2.21 2.18 2.23

Base: All CPAs 2,606 699 1,907

Total% % %

PAIP PAIB

3 3 3

4 6

343322

1079

363837

41 40 42

5

Less than 1 year

One to less than two years

Two to less than three years

Three to less than four years

Four to less than five years

Five years or moreDon't know


• General consensus between Accountants in Practice and in Business is that it will take roughly two years before the Hong Kong economy has recovered from the current financial crisis

• PAIB more cautious that PAIP in their estimation


22

Ref: D2

Expected Effect of the Financial Crisis on Operations

1 3 41 47 8

1 3 38 46 12

111 29 44 14

*3 34 50 13

*5 26 52 17

*3 21 52 24

*313 52 32

Definitely for the w orse Somew hat for the w orse No change Somew hat for the better Definitely for the better

Base: All CPAs 2,606 699 1,907* less than 0.5%

%

Overall corporate governance

Capital structure

Board structure and function

4.12

3.95

3.80

3.71

3.59

3.65

3.59

Mean

80 85

74 76

68 69

65 62

58 59

58 58

56 55

Total PAIP PAIB% %

Definitely/Somewhat

for the better

84

76

69

62

59

58

55

Top 2%

3

3

5

3

13

4

4

Bottom 2%

Internal controls and risk management

Reporting of related party transactions and relationships

Remuneration policy and directors and senior management's

remuneration packages

Nomination of committee's composition, role and functions


• There is an expectation that the financial crisis will have a positive effect on operations, most of all in terms of Internal Controls/Risk Management and Overall Corporate Controls – expectations that both of these will definitely change for the better

• PAIB have stronger expectation that internal controls will improve for the better, suggesting a greater need for such change in their establishments


23Ref: D3

Thoughts on Dealing with the Financial Crisis

2

2

4

4

7

23

33

35

51

Base: All CPAs 2,606 699 1,907

%

Cost reductions/Cost controls

Total PAIP PAIB

48 52

35 35

33 33

21 23

6 8

3 4

3 4

2 2

2 1

%%

Focus on customer service/competitiveness

Encourage & motivate staff

Review & reorganize company structure

Review debt structure/increase cash holdings

Look for investment opportunities

Stay calm/don’t panic

Strong leadership/fast action

Mergers & Acquisitions

• The Number 1 suggestion for dealing effectively with the financial crisis is to look for cost-savings & cost efficiencies – closing unprofitable areas, salary reductions and job cuts all seen as effective quick wins

• Secondary suggestions were to focus internally: be more competitive, encourage staff to be part of the business and take an opportunity to reorganize the company to work more effectively


24Ref: D6

Expected/Work Life Change Resulting from the Crisis

1

1

3

7

8

17

26

53

60

Base: All CPAs 2,606 699 1,907* less than 0.5%

%

Greater financial pressure

Changes of remuneration package

Workload and work pressure lessening

Reducing working hours and more free time

Transfer to work in other offices in China

Workload and work pressure increasing

No change

Increasing working hours

Chance to be layoff

Total PAIP PAIB

57 61

56 52

31 23

27 13

7 8

7 7

2 4

1 1

* 1

%%



• The greatest expected effect of the financial crisis for the Accountancy profession is greater financial pressure on companies and changes to employees remuneration packages

• PAIP much more likely than PAIB to expect a reduction in working hours and work pressure

presented by:winnie cheung, chief executive venue:hong kong institute of cpas date:23 july 2009

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