Deloitte China CEO: Advancing together, quality as cornerstone
Deloitte Global recently reported its revenue for FY2020, which ended on 31 May 2020. Deloitte China CEO Patrick Tsang was interviewed about the results by major media in China, including China Securities Journal, China Accounting News, Sina and Yicai, and shared Deloitte China's development strategy. He expressed full confidence in a thriving Chinese market, and responded to hot topics of concern raised by reporters. Below is a summary of his interviews:
Deloitte's strategic approach – Multi-Disciplinary Model
- Deloitte China has always been committed to delivering value to clients through our audit, tax & business advisory, and advisory (consulting, risk advisory and financial advisory) services.
- We are a top-tier audit player in China with a No.1 ranking in tax & business advisory. In advisory, Deloitte is also the largest service provider by scale and leading in service capability in China. We are the leading professional service firm, aspiring to lead the profession and deliver the highest value to our clients.
- In China, the troika account for about 40%, 20% and 40%, respectively, of total revenue. However, driven by different levels of market maturity, advisory and tax & business advisory are expected to grow faster than audit.
- Addressing audit quality, Patrick noted that to ensure quality audit service in the era of the digital economy, we need to not only have in-depth knowledge of accounting and audit standards, but also to acquire multi-faceted professional capabilities, including tax (global tax rules, customs and compliance), valuation, information system audit and actuarial services. These capabilities are in fact housed in non-audit functions. It is therefore only with multi-disciplinary service capability that Deloitte can deliver the highest quality audit.
- In talent development, if we focus only on audit, it would not be possible for the firm to grow and retain top talent with the comprehensive skills that are needed by the audit business, not to mention deliver high-quality audit services.
- Turning to clients, Patrick noted that Deloitte clients share the same vision of building world-class enterprises. To achieve this goal requires enterprises to enhance their internal controls, tax & legal, risk management, strategy and IT systems, as well as have sound accounting systems.
- Leveraging its strong integrated professional service capabilities, Deloitte will work to bring relevant advisory and industry/sector expertise into its audit work as much as possible to enhance the quality and value of our audit services. In doing so, Deloitte will seek to share insights in strategy and operations, risk management, information technology, regulatory compliance and talent training for clients' governance and management, aiming to help clients grow more quickly into world-class enterprises while delivering high-quality audit services.
Audit service and audit quality
- At Deloitte, audit quality is the cornerstone of our businesses and brand. We firmly believe that only by staying committed to the highest standards of audit quality can we better protect the public interest, and live up to the expectations of the capital market, the public, regulators and other stakeholders.
- Deloitte's audit practice has experienced rapid growth in China, benefiting from favorable macro policies, including deeper reform and opening up, incentives for mass entrepreneurship and innovation, and an increasingly mature capital market (including the launch of the SSE STAR Market and registration-based system). With a vision to achieve high quality audit growth, Deloitte never holds revenue growth in audit as the sole criterion for success.
- Globally, Deloitte US and Deloitte UK have maintained industry-leading audit quality in the past few years.
- In China, Deloitte has applied globally unified audit quality standards, with increased investment in audit quality over recent years. In 2019 alone, it invested about HKD300 million in talent recruitment, innovative audit tools and audit process redesign, among other programs.
- It has also put in place strict requirements for partners to dedicate more time to audit projects, limiting the number and working hours of projects they manage simultaneously to maintain the highest standards of audit quality. It has made audit quality the sole criterion for audit partners' performance. These management standards and initiatives are seen as industry-leading, Patrick added.
- Deloitte aims to take the lead in reforming the operating model of audit services and promoting the sound development of China's audit industry, leveraging audit quality as its core competence to help align China's audit quality with leading international standards.
Deloitte China tax & business advisory, and advisory services
- The COVID-19 pandemic has prompted significant changes to the economic landscapes in China and across the globe. China has designed a dual-cycle development pattern strategy relying on the domestic and international economic cycles, with the domestic cycle as its mainstay.
- Benefiting from reform and opening up, Deloitte has made historic leaps forward over the past 40 years. It will develop its focus areas by leveraging a dual-cycle development pattern strategy that boosts domestic demand, the digital economy and regional economies.
- With technological disruptions, the digital economy has evolved into a major engine for global economic growth, and China is taking the lead – its digital economy accounted for 36% of GDP in 2019.
- Deloitte will focus more on digital transformation, new infrastructure, commercial 5G, AI and cloud applications, cybersecurity, the future of work, shared service centers, overseas compliance, asset allocation and global supply chain optimization. Besides, by leveraging strong capabilities in tax & business advisory, and advisory, Deloitte is committed to helping Chinese companies develop into world-class players at the same time as serving multinational companies operating in China.
- Digitalization has long been a key investment priority for Deloitte. Digital innovation has empowered Deloitte's services. With digital assets, each of our service lines is better positioned to deliver leading-edge value and digital experience for clients.
- In regional policies, Deloitte has actively responded to China's regional economic strategy by redoubling staffing efforts in middle and western regions and implementing favorable talent mobility policies.
- As a responsible corporation, Deloitte China is committed to driving national development by using its expertise.
- In 2018, it launched the WorldClass initiative to positively impact 10 million people in China through increased investment in education, skills development and access to opportunities. In the year since its launch, we have run a total of 14 programs, supporting more than 230,000 individuals through child and youth empowerment, professional services employment and agricultural modernization.
- During Patrick's recent visit to Wuhan, Deloitte China joined hands with Wuhan University to launch the Hubei Medical Professionals Support Program. As an important component of WorldClass, this program provides support for on-the-job nursing postgraduates at Wuhan University, and nursing specialists at the provincial, municipal and county levels. It aims to upskill medical professionals for further development, especially those working on the frontline in counties and towns. Meanwhile, Deloitte aspires to promote equal opportunities for female medical professionals, empowering them to highlight female leadership, and fostering the diversity & inclusion that underpin our shared values.
- As it reported FY2020 revenue, Deloitte also announced it would step up its climate commitments, which echoes with President Xi Jinping's dialectic notion that "clear waters and green mountains are as valuable as mountains of gold and silver". Patrick said he also pays close attention to climate change. Through WorldClimate, he added, Deloitte is committed to achieving net-zero emissions by 2030, "operating green", and extending its impact beyond the confines of the firm.