Here is why finance outsourcing will become more important due to the required role of an accountant in every organisation. .

The radically different role of accountants in tomorrow’s world

Management Written by Ng Boon Yew and Rohit Talwar Wednesday, 10 October 2012

THE world is undergoing a period of profound transformation driven by political, economic and technological shifts. Taken together, these forces suggest that the role and expectations of the accountant of tomorrow and the accounting sector as a whole could be radically different from what they are today. So, how can the profession prepare for an uncertain future when we all feel there is already a full agenda dealing with today’s challenges?

Recognising the need to help accountants explore these long-term drivers of change, ACCA has started the Accountancy Futures Academy. Its mission is to highlight the key trends, driving forces and ideas that could shape the future global business and accountancy landscape.

The first initiative from the academy is a consultation with members of ACCA’s Global Forums. The objective is to identify the drivers of change that accountants should be thinking about to prepare them for future challenges. This article looks at some of the emerging findings from the study, which is being coordinated by Fast Future Research.

The changing economic landscape is seen as central to any exploration of the future of business. We are in the middle of a period of deep economic uncertainty. For accountants, this puts the spotlight on our risk and resilience plans — how are we factoring in the potential partial or total collapse of key parts of the economic infrastructure in individual markets or globally?

Increasing influence of BRIC nations While mature economies focus on surviving and navigating the current turbulence, emerging economies —particularly the BRIC nations — are growing. It is clear that Brazil, Russia, India and China will have an increasingly influential say in how global economic systems are shaped and governed. These countries are presenting global accountancy firms with opportunities in terms of markets to expand into, but also challenges as a potential source of future rivals. Will multinationals transfer their accounting business to BRIC firms?

Political power can be expected to follow financial power, with both China and India having more of a say on the evolution of the key institutions of global governance. This could give both countries the platform to set the rules and agenda for the new so-called Asian century. This could have far-reaching implications on how the global accountancy profession evolves, especially with regard to the definition and adoption of uniform global accounting standards. Could these standards increasingly come to reflect Eastern rather than Western practices?

Demographic shifts are reshaping the make-up of the global population. By 2050, Asia-Pacific will have grown by more than the populations of Europe and North America combined, with Europe itself expected to shrink by around the size of Germany. Global life expectancy is projected to continue increasing and enforced retirement ages will be abandoned.

This raises questions about how we effectively manage and provide career opportunities for multiple generations in the workforce.

The business of business is also undergoing fundamental change, with new models offering the potential to transform our notions of risk and value. Firms are increasingly opting to switch from ownership of fixed assets to renting the services provided by those assets —cloud computing is one such example. The risks of new product development and venture creation are also being transformed by crowdsourcing models such as Kickstarter.com, which let entrepreneurs and innovators raise the necessary financial commitments from the customer before embarking on the project. Sales approaches such as aggregated buying and the auction model are increasingly being used by businesses to sell their offerings.

How will accounting practices and risk assessments need to adapt to take into account rapidly changing business models with often unpredictable revenue streams?

‘Living wills’ The chaos of the financial crisis has highlighted the need for businesses to construct “living wills” to facilitate an orderly unravelling of their affairs in the event of insolvency. Accountants can be expected to play a key role here, but how deeply will the finance function need to be embedded in the transactions, products, pricing models and market behaviours of the organisation to appreciate the scale and detail of what needs to be unravelled?

The growing complexity of business and the need for more integrated measures of performance are placing greater demands on information technology. IT has already revolutionised the workplace by digitising workflows and assets, and creating new opportunities, with people generating real-world fortunes from buying and selling virtual assets in online environments such as Second Life. Advances in areas such as artificial intelligence could lead to further automation of core accounting functions, including the more value-adding tasks requiring analysis and judgment.

Multiple scenarios Further down the road, technological advances could mean that we download core accounting data directly into our brains. The core question is whether the road map for the development of accounting systems will be flexible enough to cope with a range of possible business scenarios. Taken collectively, all these drivers suggest that we are now entering a period of fundamental change for the global economy and the general world of business, as well as the accountancy profession.

Accountants must learn to plan for and think in terms of multiple possible scenarios. An emerging competence is developing the agility and processes to cope with ever-shorter business cycles. Accountants also need to become adept at navigating and tackling operational and regulatory complexity and the rising number of non-financial indices used to measure value. The need to play a bigger role in business decision-making and the globalised nature of work mean accountants seeking international opportunities will have to expand their strategic, language and cultural skill sets. The backlash from the financial crisis, combined with greater moves towards environmental sustainability, will also result in growing regulatory requirements for accountants to act as public-interest watchdogs.

Ng Boon Yew is chairman of ACCA’s Accountancy Futures Academy, executive chairman of Raffles Campus and chairman of Strategic Foundation. Rohit Talwar is a global futurist and founder of Fast Future Research. This article first appeared in ACCA’s Accountancy Futures, Edition 5, 2012, and later in The Edge Singapore on Oct 8, 2012.

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