The agentic AI phase is upon us and this year looks to set to be the year when this begins to really dominate. We are very excited to see Cowork in Windows available at last. Much has been waxed lyrical about Claude Code and Cowork and we have high hopes that it will work better for us than ChatGPT's agent which we tested last year.

Contrary to conventional logic, we start out by giving Cowork no quarter and asked it to perform a multi-step task with a one-shot long prompt. That experiment failed and it hanged at a certain instruction step. We waited a day with no visible progress so we decided to cancel and start afresh from the other extreme instead : baby steps.

We first used Claude in Excel to prep the data. We were impressed with how the agent took in our instruction and it even gave us the option to execute its plan step-by-step. It also gave us the option to let it just execute everything all at once but it was nice to see it can give this level of assurance to first time users. 

With the data prep, we continue with the baby step approach for Cowork. You must be wondering what we were trying to do to make the agent work. The task was to prepare from management accounts, a consolidation of a group with one subsidiary and then compile the entire consolidated financial statements using our template.

The consolidation data entry was performed with Claude in Excel. We then manually passed the necessary consolidation journals into the template. Cowork was used to mock up the figures into our Word template. We started with the individual financial statements first; the income statement, balance sheet and statement of changes in equity. We saved the cashflow statement for last (baby steps remember) and was amazed that Claude could do a simple cashflow statement using the indirect method.

However, at this stage we hit the first token limit of our Pro subscription. After the reset, it finished up the cashflow statement and we then tasked it to do up the entire financial statements with accounting policies and disclosure notes to accounts.

It remarked that this was a very large piece of work and true enough we hit the token limit again. While we were surprised at how fast the tokens are being depleted, it is also a good gauge for us to know much compute is going into the tasks it was doing.

So you can imagine by now we have a good idea on the scope and scale of what it can or cannot do with the subscription tier we're on.

At this point, a quintessential question might be "are we in danger of being replaced yet?". I would say we are definitely in the "washing machine" stage for this industry/profession. Just how good and intelligent the "washing machine" is will depend on our instructions and the fuzzy logic the machine has. 

Wishing all our Friends and Clients an auspicious Year of the Fire Horse!
Our office will close on 16 February till 20 February during this festive period.

Wishing all our friends and clients a peaceful holiday season. Please note that our office will be closed from December 24th through New Year's Day. We'll be back and ready to serve you in 2026!

We are pleased to announce Echtual is now an ISCA Accredited Training Organisation (ATO) for Singapore CA Qualification (SCAQ) candidates.
This accreditation formalises how we have always trained: structured guidance, competency tracking, reviewed work and regular mentor check-ins, enabling faster staff development and stronger outcomes for clients.
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Pathways at a glance (including the new ACCA routes)

• Enhanced ACCA Pathway (new):
  ACCA full members may apply for CA (Singapore) via an ISCA pathway from 26 Mar 2025 to 25 Mar 2028. ACCA Affiliates and Students have until 25 Mar 2033 to complete requirements and apply. 
• Singapore CA Qualification (SCAQ):
  Complete SCAQ modules + Practical Experience with an ATO (≥3 years / ≥450 days). 
• Recognition Arrangements (RA):
  Ongoing routes for members of selected overseas chartered bodies (e.g., CA ANZ, ICAEW, CAI, ICAS, CPA Australia). 
• Accelerated Pathway Programme (APP) for undergrads:
  A fast-track option that lets eligible students front-load SCAQ Professional Programme modules while studying.. 

Thinking about your CA (Singapore) journey?
If you’re an aspiring CA (Singapore) looking to build your Practical Experience in audit, tax and advisory with real responsibility and mentorship, we’d love to connect. Reach us at [email protected].
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(We’ll publish a short explainer on the available pathways next.)

Wishing all our friends and clients a peaceful season of joy!
Our office will be closed from 24 December to 31 December.

In 2017, ​I wrote about the "seller" pays conundrum that most SMPs face when they have clients that don't need or want an audit. Are there situations where assurance is desired? Yes; when you have shareholders that needs to be assured. And in such situations, they are the ones who would foot the bill.
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That is why the issue is less pronounced for the Big 4, who have the lion's share of such clients. But SMEs form the lion's share of most economies, and assurance is not particularly desired or needed when you have just one or two shareholders. And the SMPs would have the lion's share of such clients.

Audit exemption thresholds alleviates this to a certain extent; lesser companies would find themselves required by law to be audited. But an audit may still be required due to regulatory requirements, bank conditions for loans, supplier demands, or government conditions for grants. So in such situations, we are back to the same conundrum when statutory audits were mandatory across the board - those demanding the audit are not the ones paying for it.

If you're in a business selling a service to customers who don't want or need it but are made to pay for it, there is likely to be no value proposition for them. On the contrary, they would be quite opposed to whatever value you are trying to propose...and price.

To make the situation even more impossible for SMPs, recent changes to the auditing standards and the Accountant's Act require more work to be perform to increase audit quality. But who wants to pay for quality? This coupled with rising staff costs as a consequence to attracting talents, one can imagine the sense of impossibility a SMP practitioner face in doing this piece of business.

Even further raising the audit exemption threshold would not help as I believe the root cause is those who require the assurance is not paying for it. And in the entire industry, only the Public Accountant faces this. In tax compliance, clients need tax agents because they lack the expertise to prepare and file returns. In accounting services, businesses need proper bookkeeping for decision-making.

These systemic challenges also explain why fewer and fewer talents are choosing public accounting. While not all audit engagements are viewed as reluctant purchases, the continuing perception of audit as a compliance burden rather than a value-added service makes the profession less attractive...and less appreciated.

Making the ones who need the service pay for it should not be as radical as it seems. Pre Covid-19, I was told there were considerations to make this happen. I do hope it has not been totally abandoned now. Also, I was told there are already jurisdictions where this was already so.

Removing the opposition to the value of audit is critical as this service is deemed the pinnacle of the profession. And for SMPs, this is existential. How can we attract talented professionals to a service that clients view as a grudging compliance cost rather than a value-add? How can we maintain quality and professional standards when their compensation is constantly under pressure? 

The solution isn't complex. Those who require assurance - be it shareholders, banks, or regulatory bodies - should be the ones funding it. Until we make this shift, audit services by SMPs will remain stuck in a cycle of diminishing perceived value and increasing professional frustration.

About two weeks ago, at the annual Public Accountants' Conference held by ISCA (Practitioner Renaissance), the highly respected Mr. Ho Kwon Ping (Founder, Banyan Group) gave a keynote speech. What struck me during the speech, amongst other valuable insights, was his waxing lyrical of the value his accountants and auditors bring to the table.

It must have been a great surprise for him then to learn that the profession is facing a crisis not only locally, not only regionally, but also globally.

Yesterday, ISCA held another engagement session with the SMPs and sought to gather our feedback and take on what still needs to be addressed to tackle the issue at hand. The efforts taken so far by ISCA (shared to us during the session) in this area are heartening, and kudos to them for even wanting to learn what more can be done from us smaller stakeholders.

One of the efforts to promote the attractiveness of the profession was to market how well the profession can pay. To prove this point, the Big 4 led the charge and publicized raising their starting pay by about 20%.

I opined that while this is one way to make the profession more appealing again, I can't shake the feeling that we are still missing the forest for the trees. Most folks out there still don't know what our profession does, beyond the perceived convention that we are bean-counters and checkers and analysts, etc. What's so great about that?

In contrast, most people know what a doctor does, what a lawyer does. So what does the accountant do? Balance the books? Prepare boring highfalutin statements and reports? Surely this isn't what Mr. Ho values from the accountants serving him?

In 2017, I happened to overhear a loud conversation discussing the importance of financial statements. And while I wished I had been the one to crystallize the concept, this gentleman's take and brilliant point was that the financial statements are the language of business. Any business out there wanting your investment would like to tell you how great and successful their business is, but only through the financial statements can that be articulated properly. The reporting standards form the grammar of the language, allowing businesses to speak a common language when telling their story through financial statements.

From this wonderful snippet, I would (and have said to many people over the years) say that Accountancy is the study of the language of business. And accountants are its linguists. When I shared this with the ISCA President two years ago, his initial remark was 'what's so great about that?' Who would be interested in that?

I countered that while it might not be great and while it might not interest many; at the very least we can now tell people what it is that we do exactly. More importantly, this is our purpose: to help businesses tell their story. The accountant from the business writes the story, the accountancy-trained analyst analyzes the story, and the auditor checks out the story.
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So if that interests you and you aspire to be a storyteller for businesses, go study Accountancy! And do hit us up once you're there and out of there!

Came across this fantastic video on the modern banking system, the type of economies it can create, and the good a sound one can transform a society.  

To all our friends and clients,

Our office will be closed from 8th to 15th February during this festive period.

Please note that our office will be closed from 26 December to 29 December!

We are proud to be associated with Meriam-Webster's WOTD:

ISCA (Institute of Singapore Chartered Accountants) has just celebrated its 60th anniversary and our very own PM-in-waiting graced (yes, she was there too) the occasion. He gave an interesting speech about the profession and industry, and the transcript can be found here.
Of particular interest was where he touched on the future of the profession, where he rightly noted the deteriorating state of our supply chain and how the root cause is fee driven:

His other insights into how to deal with these challenges while valid, fail to, IMO, deal with the elephant in the room.

The new amendments to the Accountant's Act has just been passed, and for the 1,000 public accountants here, these new measures imposed greater penalties on us if we do not adhere to the higher standards mapped out. Public Accountants make up for less than 3% of Chartered Accountants (1k vs 34K) in Singapore, so the interesting point is that 97% of Chartered Accountants are not governed by this Act. And they are also not under equivalent legislature ever since we changed our designation from CPA (Certified Public Accountants) to Chartered Accountants in 2013.

How this came about is that when we were CPAs, this Act applies to us all, i.e. both practising and non-practising. But when the designation was changed, the wording in the Act did not change, so now it applies to public accountants only. And that means all Chartered Accountants who are not Public Accountants suddenly do not fall under the Act.

It's been a decade since the designation and pathways has changed and the climate we see now is a consequence of the decisions made back then. IMO, this change impacted the appeal of accountancy courses as the necessity of these courses to those who want to pursue the profession declined substantially compared to the previous pathway. Hence we are seeing a talent drain or "leakage" that has been slowly building up over the course of ten years.

While that by itself is significant enough, another pertinent point is that a lack of legislative accountability (pardon the pun) on non public accountants also drove the quality of accounting in the industry down. It has been in my experience that very few accountants these days can draft a proper set of financial statements. Heck, I even saw a social media post describing financial statements as statutory accounts and how they are different from management accounts! (Yes, I can't even...)

And to add insult to injury, the poor public accountant is now expected to deliver a higher quality audit when the quality of the accounts they are auditing continues to deteriorate.

I believe these are the true challenges the public accounting profession face and as long as the elephant is still in the room, it is possible that we may no longer have space to breathe in the future.

By now, I'm sure most of us would have known of Generative Pre-Trained Transformer (GPT) AIs. The AI wave is well and truly upon us and I must say, the pace of adoption and development is well beyond my initial expectations.

I first started experimenting with ChatGPT in January this year. At first, I was very impressed with its cognition. So I was very excited and wanted to find out what it can or cannot do. But when I realised how smart it can be, I became a little scared.

So you can say that I was excited and scared at the same time. And I mused to my friends that its like being in a new relationship.

But I recognised how this was going to be a game changer and started evangelising it's usage to the people I know. So it was heartening to see at a recent event organised by my constituency, quite a number of people there have heard and are trying out GPT AIs. 

It has been suggested that AIs are threatening to replace certain jobs and professions. But I've opined previously where the accounting profession faced the "threat" of digitalization, cloud computing etc, that we should always look to see how technology can enable us rather than fear using it.

So I did put ChatGPT through its paces to try and understand its limitations. And just like what John Oliver said in this episode of Last Week Tonight,
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When GPT4 rolled out shortly after this episode, ​we finally caught a glimpse of one of the ways we can predict.
OpenAI has acknowledged that while the AI would have a propensity to "hallucinate" its responses and answers, it would do so at a lesser frequency with GPT4. Which IMO is just a politically correct way to say it lies.

The issue is, it lies quite convincingly. I've tossed some technical questions to it before and have experienced how it "hallucinates" its response after response before cratering to admit it was wrong. But I have domain knowledge so I could confidently challenge it response after response. Can the same be said for someone with no or little domain knowledge?

And the fact is that its building up its capabilities more and more everyday. I'm sure you have seen reports on how it can already pass the Bar exams etc. So sooner or later, a lot of intellectual jobs would be under threat from AI. Case in point, software coding is very much disrupted by AI already since it can generate code faster than a human being.

So the accounting profession is also, in its response when asked the question, very much under threat. I've decided to test the extent of this perceived threat and this is the result:
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So far so good for simple double entry. I then tested it further:

Still spot on. Now for the ultimate test:

The first query on the left omitted the information that it was sold for cash. And even with that information included in the second query on the right, the journal entries suggested is still incorrect. More importantly, these entries do not even balance. So based on this test, IMO, the profession is safe for now.

But if you look at its responses, it's quite convincing.  I do doubt a person with less or minimal domain knowledge will be able to tell the difference.

Possessing knowledge is thus important in not only in dealing with the possible threats from AI but also to detect misinformation from the use of AI. It's imperative for us to now gather as much knowledge as we can and maintain it. And since it is almost impossible to have domain knowledge in everything, we should learn to be skeptical in processing information to protect ourselves against misinformation in an increasingly AI-driven world.  

And this is why I think 2023 will be THE year the Knowledge Age starts in earnest and takes over from the Information Age.

​(In case you're wondering, this was not written by ChatGPT. But the images above were generated from AI)

Wishing our friends and clients a peaceful holiday and a better year ahead!

Please note that our office will be closed from 26th December 2022 to 2nd January 2023.