AP_Yprac_Roundtable_A

This article was first published in the January 2016 international edition of Accounting and Business magazine.

Addressing the theme of ‘the profession the world needs’ at ACCA’s International Assembly meeting in November, panellists identified the challenges facing accountants today.

One of these challenges stems from the need to learn the lessons of the global financial crisis in order to avoid repeating past mistakes while still encouraging growth.

Melanie McLaren, executive director, codes and standards, at the UK’s Financial Reporting Council, said: ‘Our stakeholders want assurance that we have learnt the lessons from what’s gone wrong in the past, as well as capturing what’s worked well. But we have had a crisis and periods of austerity, and people want economic growth. So there’s a particular emphasis on reducing the burden on business.

‘In the UK and internationally, regulators are having to work harder to justify any changes or new standards they put into place. They have to be proportionate and support economic growth over the longer term. That means we have to get better at doing the things accountants are meant to be good at – looking at the cost-benefit analysis.’

However, regulators on their own cannot succeed in raising standards of accounting, reporting or corporate governance, McLaren admitted. She said: ‘In recent years regulators have had to show that we have big sticks to wield and there’s a degree of mandation. But that’s about setting minimum standards, and I encourage the profession to be ambitious around making improvements and working with regulators to nudge things forward.’

This more voluntary approach to encouraging best practice has long been captured in the UK’s ‘comply or explain’ approach to the UK corporate governance code, while Australia has what McLaren termed the ‘clearer and more concise’ version of ‘if not, why not?’

She added: ‘Regulators can’t continue to raise the bar just by setting regulations. We all need to work together in the public interest to attain long-term sustainability.’

The middle ground

Paul Druckman, CEO of the International Integrated Reporting Council, also highlighted the need for a new approach to regulation and a longer-term focus. ‘We have been having a binary discussion about voluntary or mandatory [requirements],’ he said. ‘There is a middle way – where there is something you should do rather than something you want to do or have to do.’

Having recently attended meetings of the G20 and the B20 (independent business associations from the G20 economies) in Turkey, Druckman sensed considerable interest in the idea that ‘we have gone too far towards “hard” law’. He said he had also heard a lot of talk about ‘thinking longer term – that doesn’t mean long term but longer term; and looking forward, not just back’.

Panellists also highlighted the need for greater harmonisation in a variety of maximise its positive impact in the world. Petr Kriz, president of FEE, the European Federation of Accountants, referred to the current audit reforms being implemented across Europe. ‘There are so many member state options that creating alignment is pretty difficult,’ he said, calling on member states to coordinate their actions as far as possible.

Going global

Kriz urged professional bodies to push for more international harmonisation for the benefit of their members. ‘The more international the profession gets, the more opportunities members will have,’ he said. ‘They can move crossborder, or stay where they want and work on crossborder issues.’

Kriz also urged professional bodies to ‘promote and prefer quality over quantity’. He said: ‘This will help society and the public interest, but will also help the good practitioners to distinguish themselves from the bad guys, and build trust in professional accounting organisations.’

The importance of developing highly skilled professionals was emphasised by Sarah Blackman, global treasurer and past president of the Institute of Internal Auditors. She argued that internal auditors already have broad skills – capability in risk management, in financial and non-financial areas, and in assurance around strategic and narrative reporting. These skills are need by audit committees and others having to report externally, who want more assurance to support their reports.

She said: ‘The challenge internal audit has, along with every other part of the profession, is the shortage of highly skilled people to do the work. We are looking for people who can talk to the board, to non-execs on the audit committee, who have knowledge of the organisation and understanding of its culture, and have the ethical resources – which are grounded in being part of a professional body – to understand how their work relates to the public interest.’

She expressed concern that there are fewer opportunities today for individuals to serve apprenticeships in a range of audit and assurance roles and so gain the necessary capabilities. ‘People want instant results, and yet to grow someone who can commune with the board takes time and experience,’ she said. She challenged the profession to find new, faster ways to ‘get professionals up to speed and interacting in the right way’.

Accountant as concierge

All panellists picked up on the challenge facing the profession from new technology, digitalisation and big data.

Kriz warned the profession would face ‘external competition, particularly from IT companies and new economy companies – because this is about big data processing and analysing data, and it will need large investments’.

Blackman suggested that sophisticated data processing and analysis would replace some accounting activities, and that the profession should focus on ‘the luxury end of the market – personal service’. She said: ‘Maybe there will be fewer accountants in the world, but we will be the ones acting as a concierge, helping organisations and individuals through the maze of regulation and all the other pressures they face.’

Druckman endorsed this theme, saying: ‘We need to get away from being those that provide data to those that actually understand data. With technology and big data, the problem we have is data overload. So what is important? What are the key things that your clients don’t understand or management don’t understand that may have a financial aspect and that’s not just about transactions?

‘The risk for the profession is that it gets stuck in bean-counter world, and unless we develop the profession with the skills and talent where it can be more in the world of analysis and understanding, then the profession could face a bleak and underpaid future.’

McLaren emphasised the opportunities provided in a high-tech future world: ‘We may need to take some risks ourselves in addressing this new world,’ she said. ‘We need to use our imagination and all the skills we learn as professionals about exercising judgment and thinking through scenarios in a mindful and opportunistic way.’

ACCA president Alexandra Chin concluded the discussion by summing up the mood in the room: ‘Change is unavoidable. We must all embrace the change that is coming and stay relevant.’

Sarah Perrin, journalist