ACCOUNTING: Big risks, big gains too

TOP accountants may draw big bucks, but with starting salaries of only $2,200 per month for the thousand or so fresh accounting graduates who start at accounting firms annually, only a rare handful - under 1 per cent - will finally hit the big time.

After slogging away on public holidays and weekends and being at the beck and call of clients, they only qualify for admission to the hallowed circle of a firm's partnership in their mid-30s, earning in the $300,000 range.

If they can bring in clients to increase the profit pool, these high-flyers are likely to hit senior partner level in their 40s. That's when the serious money starts to roll in. With a larger share of the profit pie, they will bring home nothing less than $1 million a year.

Their pay will continue rising annually until they retire, usually at 55, which is the traditional retirement age in the industry. The relatively early cut-off is partly to make way for fresh blood.

As accounting firms are set up as partnerships, the profits - after expenses and salaries are settled - are shared among the dozens of partners, based on a formula known only to those in the partnership. A firm like PricewaterhouseCoopers (PwC) has some 80 partners out of more than 1,800 employees.

The last decade has been good to these partnerships. Back in 1998, there were only some 400 listed companies but now there are around 700 listed companies - all of which need audit checks.

Mr Gautam Banerjee, the managing partner of PwC, points out that compared to 1998, there has been some consolidation in the accounting profession, going from six firms to the Big Four now.

He adds: 'Accounting firms have also become multi-disciplinary firms, offering a range of professional services. They have benefited from Singapore being a global hub, serving a range of clients who are international giants.'

Recent corporate scandals in the United States may have indirectly brought down accounting firm Arthur Andersen, but the ensuing tightening of accounting rules and standards has helped the survivors in the industry. New laws passed as far away as the US have meant companies, even those based here, need more checks and reviews from the auditors.

In Singapore, the deals keep getting bigger and more varied. Large IPOs raising more than $100 million are no longer a rarity, with companies hailing from China and elsewhere around the world. And with new financial products like real estate investment trusts, the auditors' work is never done.

Estimated salary range of top earners: Between $1 million and $6 million.

Oft-cited top earners: Chaly Mah, Deloitte & Touche's chief executive; Ong Yew Huat, Ernst & Young's managing partner; Danny Teoh, KPMG's managing partner; Gautam Banerjee, PwC's managing partner; Fang Ai Lian, chairman of Ernst & Young; Nicky Tan, who set up his own boutique firm NTan Advisory. This list could include other senior partners of these firms.

Who they are: The first four are the heads of the Big Four accounting firms who go through the books of 85 per cent of all listed companies in Singapore. Mrs Fang stepped down from the post of managing partner but has stayed on as chairman.

Mr Tan set up shop on his own, making a reputation for himself after he and his small team got creditors to accept a repayment deal for Indonesian company Asia Pulp & Paper's US$12.2 billion worth of debt.

What you need to be in the top tier: One way is to join a global firm and shine there; another is to find a niche market to specialise in.

'Someone who joins the PwCs of this world will find a firm with global branding,' says a senior partner. This gives aspiring top earners an edge, but there's no running away from burning the midnight oil and poring over financial records and meeting deadlines. And, hopefully, a financial scandal doesn't happen on your watch.

Dr Ernest Kan, vice-president of the Institute of Certified Public Accountants of Singapore (Icpas) and a senior partner at a Big Four firm, says of those aspiring to the big time: 'You have to be at the right place at the right time. Having to work hard, and having the technical skill, is a given.'

He adds: 'You must be able to handle the people who work for you and your clients. And you must manage your bosses well - because they are the ones who are going to eventually vote for you and decide if you make partner.'

All the top earners cut their teeth doing audit, but managed to prove that they could manage people, manage clients and expand the business.

Taking a niche route will be akin to Mr Tan, who left a Big Four firm to specialise in helping troubled companies.

Where the most money is: Many auditors start off at the Big Four firms and move on to head finance divisions at listed companies, and do very well too.

SingTel's incoming chief executive Chua Sock Koong, for example, earned $1.44 million in 2005 as chief financial officer, while Keppel Corp's finance director Teo Soon Hoe was paid between $2.5 million and $2.75 million in 2005.

For auditors who stay on at the Big Four, working on mergers and acquisitions and advising on IT systems may be a quick path to partnership.

Point to consider: Accountants say they face big risks because they are partnerships, not companies. Do a lousy job and watch the lawsuits roll in. All the partners stand to lose all their capital, plus even their homes, and end up bankrupts.