THE pressure of new regulations, manpower shortages and a tougher business climate are driving small and medium-sized public accounting practices into alliances and mergers.
There were around five such mergers last year, but industry experts say the number could be as many as 15 this year among the 500 to 600 smaller firms in Singapore.
'We've been busy out there meeting a lot of accounting practices,' said Mr Tim Underwood, managing director of Foulger Underwood, which arranges tie-ups for professional service companies.
'They understand there is a value for their businesses and how they can maximise the value.'
He said that there could be 10 to 15 mergers or acquisition deals this year, growing to 20 next year.
The rapidly changing nature of the accountancy landscape is driving the change.
For example, new, more complex accounting standards put pressure on small firms, which lack the technical resources to keep up with the changes. Clients prefer more established firms that have the resources to help them.
Also, when these clients expand overseas, they need audit firms that have staff available to audit these foreign units.
At the same time, smaller accounting firms also face challenges in attracting staff as fresh graduates prefer to join bigger firms.
Proposals to widen the number of small businesses in Singapore that do not need an audit may limit the pool of clients.
These come amid plans for Singapore to transform itself into a global accountancy hub by 2020.
HT Khoo & Associates is one smaller firm that has merged. In April, its partners became partners of a larger firm, PKF-CAP, and the businesses now operate under the PKF-CAP umbrella.
Mr Khoo Ho Tong, who had been with HT Khoo, said that the firm felt some pressure as some of its clients have overseas subsidiaries, raising the need for staff with the relevant experience to travel overseas for the audits.
'With a merger, it's easier,' he said.
PKF-CAP managing partner Sajjad Akhtar added that his firm needed 'to be bigger to be able to make the necessary investment required on a continuing basis so as to increase the breadth and depth of our services to clients'.
Other firms have moved into other areas to offer clients a wider range of services. Philip Liew & Co, another smaller accountancy practice, is one example.
About nine years ago, it had made a move into areas like internal audit and tax and financial management consultancy, and now wants to speed up its expansion.
Partner Lisa Liew said that as Singapore becomes an accountancy hub, more business will arrive.
'When it happens, there will be opportunities for us to provide the (new services).'
Even mid-tier and larger practices have also expanded their services to raise competitiveness.
RSM Chio Lim merged its risk advisory practice with a boutique firm in the same field last year.
Dr Ernest Kan, president of the Institute of Certified Public Accountants of Singapore, noted that there is a trend of 'market- led alliances between like-minded accountancy practitioners'.
This includes banking on the expertise of one another in offering niche services via referrals.
Ms Julia Tay, assistant chief executive (accountancy) at the Accounting and Corporate Regulatory Authority that regulates these accountancy firms, said it is 'heartening to see public accounting practices diversifying and developing niche services'.
Mr Chaly Mah, regional managing director for Deloitte Asia Pacific, said there is an 'increasing trend' that accounting firms are looking into new service lines and areas like big data, analytics and legal services.
Foo Kon Tan Grant Thornton's managing partner Kon Yin Tong added that consolidation, along with mergers, is another trend that is likely to continue globally.