ACCOUNTANTS AND VALUE FOR BUSINESS
Over the past two years, finance professionals have worked hard to demonstrate its importance to business. They have been on hand to steer businesses through stormy financial waters, keeping a close eye on not only the core aspects of accounting but also by advising on business’ more strategic concerns.
Finance professionals were vital to supporting businesses during the time of greatest need. But beyond the recovery, in a changed, infinitely more globalised and knowledge-driven global economy, will the finance profession still have such an integral role to play?
It may not surprise you to hear it from me, but the short answer is ‘yes’.
According to ACCA’s latest piece of research The value creation model for business: 2010 and beyond, the finance profession is expected to be at the forefront of value creation for business in future. From surveys and interviews with over 500 business leaders across nine countries, over half of business leaders (55%) agree that the role finance professionals have to play will become more important in the aftermath of the global economic crisis. As the economy grows in complexity; this creates a need from businesses for greater insight from finance professionals in strategy and decision making.
The process in which accountants contribute to businesses can be looked at in three areas as part of a cycle of value creation; from ‘Sourcing Value’ to ‘Delivering Value’ to ‘Sustaining Value’. Or rather: ‘People’, ‘Performance’, and ‘Professionalism’.
PeopleEmployers can best source value by recognising the skills that professional accountants bring and considering the interventions businesses need to make to harness these. Recruitment and training of the right kind of finance professional thus becomes key.
With employers competing to recruit finance talent, we expect to see a new emphasis placed by organisations on how they source suitably skilled finance professionals aligned to their business strategies; across regions or specific economies, across specialised finance areas, or within specific niche sectors.
To remain relevant in a fast-changing global economy businesses and organisations must also ensure that the skills of their finance professionals are up-to-date. To up-skill and retain the best and brightest, businesses will need to blend the best traditional learning methods, such as experiential learning, with the very latest learning technologies.
PerformanceOnce equipped with the right skills, finance professionals are ready to deliver value to business through their performance. On top of the traditional stewardship roles expected of finance professionals, the profession will continue to build on the strategic role it has carved out since the crisis.
The Value Creation survey found that 46% of business leaders saw the role of finance professionals in guiding strategy as ‘critical’. Finance professionals will become the major interface between business and stakeholder, whether shareholder, regulator, or customer, and will also be expected to take charge of shaping new business and finance structures to reduce cost , improve efficiencies, and capitalise on growth. Going forward, strategic business skills were seen as important skill for finance professionals to acquire.
At the same time however, there will be a distinct counter-trend with the emergence of overtly-specialised accountants. We are already seeing accountants employed specifically to respond to company legislation, or disclosure rules for listed companies, and the like. Asked if they expected to employ more specialised accountants in future, 71% of our business leaders said they were ‘quite’ or ‘very’ likely to.
This specialisation is born of the fact that finance professionals’ long-standing core offering of financial insight analysis will still be valued by businesses. The increasing complexity of business operations creates a need for someone to shine a light on the myriad of implications of a business’s decisions. The demand for risk management and internal control is one of the reasons why the 500 business leaders in our sample identified business analysis skills as the most important for finance professionals to master.
ProfessionalismRunning alongside accountants’ role as a creator of value, is their role as a sustainer of value. Sustaining value will take many forms and will require flexibility from the profession.
The role of the accountant in business’s Corporate Social Responsibility (CSR) and sustainability activities is just one area through which accountants can sustain value. 2010 will see 3,000 companies issue full CSR or sustainability reports; this number is set to climb for the foreseeable future, while over half the business leaders in our survey (56%) expect finance professionals to be involved to ‘a much greater extent’ in business’ response to the increasing importance of CSR.
CSR reporting isn’t just a charming add-on to a business’s financial results; it really should be integrated into the overall corporate reporting model. The real need for CSR reporting is built on the growing awareness that financial results alone do not adequately represent a business’ performance or prospects. A financially healthy business will not have much of a future if its activities are undermining its reputation and physical environment.
There is also important work to be done on an ethical level. A combined 60% of business leaders expect the role of accountants to be more or much more important in improving ethical standards across business. Committed to the public good and schooled in ethical practices, the good accountant serves as an independent voice of trust for stakeholders.
An important development in the accountant’s role as a guardian of a business’s integrity will be a restating of the value of the auditor. While criticised in the wake of the financial crisis, the audit model is not broken, but it can be improved. New approaches to auditing larger entities will be developed, that look not only at narrow financial statements but also at governance processes and the viability of the business model itself.
The impact of accountants’ professionalism will be most keenly felt in developing economies. Aided by their integrity and commitment to sustainability, accountants will be able to help create sustainable economic infrastructure, regulatory mechanisms, and codes of governance in places where there were none before. Most importantly of all, they will be vital to the development of the educational infrastructure that will equip the next generation of accountants.
The Virtuous Cycle of Value Talented finance professionals producing sustainable results for businesses will only ever feed a demand for finance professionals and accountants long into the future. This is the virtuous cycle of value creation; a vision for the profession to work towards.
So long as the profession remains committed in upholding the highest standards of performance and ethical behaviour, and be prepared to continue to change and improve; accountants will increasingly play a significant role as value creators in the business world, serving the public interest, restoring stakeholder confidence and ensuring long-term sustainable wealth creation.