Even as the world population topped 7bn at the end of October 2011, some places continue to struggle with the developmental challenges posed by a lack of people. Big empty places still exist and not just Antarctica or the Arctic, but northern Canada, central and western Australia, Siberia, and the world’s least densely populated country, Mongolia. These places have in common both difficult living conditions — intense winter cold, dry summer heat — and abundant untapped mineral resources. The low population has meant that mineral resources went unnoticed historically and continue to be underdeveloped due to a lack of local industrial demand. Mongolia’s mineral wealth has been well documented in recent years, and every report on its potential has also noted the challenge of exploiting these resources with a small population. Countries such as Australia and Canada, with 7-10 times the population and greater access to advanced mining technology, have struggled in recent years to develop the infrastructure needed for remote mine sites. Not surprisingly, therefore, the challenge is much greater in an emerging economy such as Mongolia.
The mining industry is well used to the challenges posed by labour shortages. Capital-intensive, industrial-scale mining was developed in Australia and the western US precisely to overcome the issues posed by low population. This model requires a highly skilled workforce at all levels and is clearly a model that makes sense for Mongolia, but it poses huge challenges, since Mongolia does not have the benefit of drawing on deep existing technically-skilled human resources or the option of creating such a pool over a lengthy period.
This challenge is just as acute in professional services such as accounting, auditing and tax advisory, as it is for mine engineers or prep plant technicians. The modern accounting profession is only 20 years old in Mongolia. The standard professional bodies, the Mongolian Institute of CPAs (MONICPA), the Mongolian Institute of Internal Auditors (MIIA), and Mongolian Certified Public Tax Accountants and Consultants Association (TINZ), were only set up in 1996, 2003 and 2004, respectively. Membership remains small relative to the size of demand for their services: MONICPA has approximately 1700 members, MIIA has 250 members and TINZ has 410 members. While formal education in business and accountancy has expanded significantly over this period, and government funding has helped send many students to tertiary-level education outside Mongolia, practical experience of international standards and practices has been restricted due to the relative isolation of the country until recently, the small private sector and the one-way flow of skills out of the country.
This situation has slowly started to improve in recent years. During its 10 years of operations in Mongolia, Ernst & Young has taken a leading role in providing both formal and on-the-job training for accountants and auditors. We send some of our staff to Malaysia to train alongside their peers and bring in experienced professionals from our global network to work with our Mongolian staff and share their knowledge and practical insights. The arrival of other leading professional services firms has also broadened the opportunities for Mongolian graduates to develop careers in this area, and we expect this trend to continue.
Nevertheless, there remains an acute shortage of qualified accountants with good practical experience. The upsurge in mining investment has brought this sharply into focus. Sustained expansion of the workforce of qualified accounting and tax professionals requires continuous investment by all parties. Both professional service firms and corporates will need to experiment with a range of initiatives to accelerate the process, including sending employees to overseas affiliates for on-the-job training, short-term training breaks, shared work experience opportunities and programmes to attract Mongolians with relevant expertise back from overseas. Only through such initiatives will the current shortfall of accounting and related expertise be rectified, thereby ensuring companies have access to the skills they require to develop their financial systems.
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