Accounting organization leaders are meeting at the World Congress of Accountants in Rome this week to discuss issues such as the future of accounting, problems with government accounting and outsourced workforces, and the state of accounting research.
Ian Ball, chairman of the Chartered Institute of Public Finance and Accountancy and former CEO of the International Federation of Accountants, said in a speech that one of the largest and most opaque risks to the global economy is the accounting practices of governments.
“With public sector spending making up around one-third of the global economy, it is unacceptable that many governments can’t demonstrate what they spend and what assets they have to a basic level expected of any business,” he said. “Though governments are fond of boasting about their levels of economic growth, the truth is that it is all built upon sand unless they can properly account for how they run their public finances. The lessons of the past few years of economic and financial turmoil are that unless governments have a grip on the basics of their public sector balance sheets, they cannot deliver for the citizens that elect them and who they are supposed to serve.”
Ball called upon all governments to move towards accrual accounting and the adoption of International Public Sector Accounting Standards as a way of underpinning and supporting economic growth and stability in their countries. At the conference, he received the IFAC Gold Service Award in honor of his contributions to the global accounting profession.
The award was presented during the opening ceremony Monday by Warren Allen, outgoing president of the International Federation of Accountants. “It is indeed a great honor to present Ian with this award,” said Allen. “As an international thought leader, Ian has played a lead role in addressing issues associated with government financial reporting and financial management. He has been and continues to be a strong and vocal proponent of government transparency and accountability.”
The American Institute of CPAs and the Chartered Institute of Management Accountants also presented research at the congress on how organizations around the world are rapidly reshaping their workforces with a complex mix of internal teams and external talent, but are outpacing their ability in many cases to effectively manage costs, performance and decision-making.
A survey of more than 1,100 senior executives conducted by Longitude Research on behalf of the AICPA and the CIMA found that organizations are increasingly relying on consultants, contractors, freelancers and outsourced providers as they seek greater operational flexibility and agility in developing new ideas. This shift to the “open workforce” is expected to accelerate in the next five years, with more than a third of those surveyed expecting at least half their workforce to be made up of such external talent by 2020.
“Adapting to the open workforce will be a defining challenge for business leaders over the coming decade,” said AICPA president and CEO Barry Melancon in a statement. “Finance teams must take a leadership role to make sure agility does not erode accountability. They must equip organizations with the tools, structures and insight to balance the benefits against the risks and keep organizations on a path to long-term sustainability.”
Many organizations are encountering significant challenges as they adapt, according to the report,
“The converging forces of globalization, digitization and market flux have given rise to a powerful new force—the open workforce,” said CIMA chief executive Charles Tilley. “This trend holds the potential for new levels of agility, creativity and cost savings, but most organizations aren’t yet equipped with the controls and practices necessary to maximize opportunities and offset risks. Management accountants must play a critical role in creating the frameworks and discipline required to unite today’s disparate organizations and their more fluid workforces.”
The global survey spanned 35 countries and showed strong interest in deeper engagement with the finance team. Nearly 9 out of 10 executives said that a closer partnership with finance in the decision-making process would help them better manage their organizations in the coming years. The same majority also want a better process to pull insight from financial and non-financial information and a way to model value creation to make the benefits and risks of opportunities clearer. While all organizations are struggling to find the right balance, executives who said their organizations are outperforming their peers also showed a higher propensity for leveraging an open workforce. Among other factors, high-performing organizations are better at balancing control and autonomy and are more likely to have the tools, strategies and frameworks in place to manage these complex structures.
Representatives from two other accounting organizations, the Association of Chartered Certified Accountants and the Institute of Management Accountants, discussed their research on a new vision for the future role of accountants at a session discussing “Digital Darwinism.” The ACCA and the IMA also confirmed a commitment to their recently announced research program, which will focus on a future pathway for the accounting profession.
The two organizations’ research during the past two years has identified several drivers of change affecting the profession, concluding that this has been the beginning of a period of significant evolution for the profession as a whole. They contend that it is being driven by new technological capabilities, an expanded responsibility for finance professionals, and increasing demand for real-time data and insights that can drive business decisions.
“The pace of change has shifted up a gear, and developments that we could see in the distance are now more rapidly approaching us,” said ACCA director of policy Ewan Willars. “This future is full of big opportunities—and some major threats—for the finance profession. This research, and sessions like those at the World Congress, will educate, inform and elicit debate. After all, research is a powerful tool to advance the value of the profession to all stakeholders.”
In order to shape the future direction of the profession and take advantage of the new opportunities and respond to threats effectively, the ACCA and IMA believe a focused research program is needed to identify a clear vision for the future finance professional.
The first three projects of their research program will focus on technologies and data use, looking at social, mobile and cloud computing, cyber-security, and the flow of data and its management throughout a business. In addition, the ACCA and IMA will issue an international call for research proposals in 2015 to engage major global businesses, practices, academics, educators, members and employers in delving further into the future, and identifying topics for further research.
“Credible independent research can change the profession—it can transform opinions, inform policy and help to engage the profession itself, businesses, politicians, regulators and the public,” said IMA vice president of research and policy Raef Lawson. “What we aim to do with these three projects—and our ongoing work examining the global economy—is to examine current and future issues, challenge opinions, and also offer practical advice and insights for those working in the profession or with it.”
