Making finance count

Many accountancy professionals play key roles in their organisations, roles that go far beyond the stereotypical perceptions of accountants as ‘bean counters’ and ‘number crunchers’. Iwona Tokc-Wilde reports

When asked what accountants do, people often mention bookkeeping, accounts production, tax and audit. Yet the functions performed by the vast number of accountants who work in businesses, and the real impact they have, are often poorly understood or undervalued.

Today, accountants working in the corporate sector are moving away from counting and into consulting, coaching and strategic roles. ACCA’s global programme, Accountants for Business, promotes the role of finance professionals in all sectors as ‘true value creators, advocates of sound business practices and champions of sustainable business development’.

Jamie Lyon, head of corporate sector at ACCA, explains why the accountants are leaving the ‘back office’ behind: ‘The economic crisis, new business models such as outsourcing and shared services, and technological advances including big data, have all contributed to the role of the accountant now reaching into more parts of the business, leading the enterprise in its growth strategies and providing the important financial insight it needs to drive value.’

Creators of value

Finance managers and directors create value by leading the design, testing and implementation of policies, plans, structures and systems.

‘I am a part of the management team in my company and I’m directly involved in new projects and initiatives and in streamlining processes,’ says Doina Munteanu, finance manager with over 10 years post-qualification industry experience. ‘I regularly carry out commercial exercises testing proposed business decisions and advise on the financial implications of the projects.’ 

A big chunk of the value creation comes from the accountants’ contribution to performance improvement within their organisations. ‘My role requires engaging with the business at an operational level to truly understand and challenge performance and the drivers behind that performance,’ says Munteanu. She then works with other managers in the business to provide solutions to problems and find better ways of working and using available resources.

Fire wardens and champions of ethics

Accountants are expected to preserve value too, most often in their assurance, compliance and risk management roles. The risk management role especially has gained in prominence in recent years, after the global financial crisis had shown that corporations often operated with little or no regard to the risk of their activities.

‘We learned from the global economic crisis that accountants couldn't see the wood for the trees; they didn't see the danger,’ says Lyon. ‘That has changed. Financial regulation is now set at an international level as well as domestically to guard against another crisis, so finance professionals need to know what that means for their business.’ As you know, Paper P1 deals specifically with governance, risk and ethics. 

Today, accountants should be able to identify risks in places that have not been traditionally their remit.

‘For example, in recent years tax has become entwined with a company's reputation,’ says Lyon. ‘Accountants, when advising a business on tax affairs, should be able to identify any reputational and knock-on effects to the board. That's why it is important to have complete knowledge and skills – an accountant lacking tax or audit knowledge may not see the risks that are sometimes associated with those aspects of a business.’

Accountants in business also play an increasingly key role in helping organisations act ethically.

‘It's part of the thinking behind the concept of integrated reporting, which is about businesses being more transparent about more than just their financial situation – their sustainability, their impact on natural capital and their footprint in local communities,’ says Lyon.

Investors have become more ethically savvy too. ACCA research shows 93% want more information from company reports about non-financial matters and that includes environmental information.

Navigators and stokers

Technology also plays a big part in shaping and re-shaping the profession's role.

‘There’s much talk about how businesses can use big data to better serve their customers and plan their future strategies,’ says Lyon. ‘Understanding that data and applying it to navigate the businesses' plans is fast becoming the role of the finance professional.’ 

In start-ups and small businesses especially, accountants stoke the flames of budding commercial success by using their valuable knowledge in a way that gives their organisations or clients a competitive advantage.

‘We worked with one company from when they were a five-man team to a 60-strong business, securing equity funding, introducing R&D tax credits, budgets, plans and controls and advising on structuring their commercial agreements, as well as on hiring and building their team,’ says Chris Chapman, an accountant and founder of My Business FD. Over three years, My Business FD took the company from its fledgling stages to flotation.

In small and medium-sized businesses, the accountant’s role can spill beyond finance and into other departments. In her company, Doina Munteanu is also in charge of the personnel department.

‘In our industry (service), the labour cost is the highest cost we encounter. Being in charge of the personnel as well as finance department gives me a very good understanding of the availability of skills across the organisation and the ability to advise how staff could be better utilised,’ she says. Munteanu also oversees insurance and legal issues relating to operational aspects of the business.

It is clear that accountants can no longer only focus on the numbers – they must see and contribute to the bigger, strategic picture.

‘In practice, this means they need to have a complete understanding of all aspects of the business and a complete skillset and knowledge rather than niche, narrow specialisms,’ says Lyon.

‘This is why ACCA regularly updates its qualification to reflect today’s and tomorrow's business needs. For example, we have introduced integrated reporting into the syllabus for December 2014, and had already embedded into it ethics, governance and risk.’

"We learned from the global economic crisis that accountants couldn't see the wood for the trees; they didn't see the danger. That has changed. Financial regulation is now set at an international level as well as domestically to guard against another crisis, so finance professionals need to know what that means for their business."

Jamie Lyon - ACCA