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Role of Professional Accountants in Business in Sustainable Growth of Organizations
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Role of Professional Accountants in Business in Sustainable Growth of Organizations

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Presentation by Roger Tabor, Chair of the Professional Accountants in Business Committee of IFAC, at the Institute of Cost Accountants of India's National Cost Convention, New Delhi, India, March …

Presentation by Roger Tabor, Chair of the Professional Accountants in Business Committee of IFAC, at the Institute of Cost Accountants of India's National Cost Convention, New Delhi, India, March 2012.

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  • 1. Role of PAIBs in SustainableGrowth of OrganizationsInstitute of Cost Accountants of India53rd National Cost Convention, March15 2012Roger Tabor, Chair PAIB Committee Page 1 | Confidential and Proprietary Information
  • 2. Terms of referenceDefining My Terms • Sustainable Success – Development of an organization’s economic, operational and market scope and performance in a manner that creates value for its owners without compromising its ability to keep doing so; that fosters continuing availability of all the resources on which it relies and stability of the communities it serves and draws from; that can respond effectively to threats and opportunities; and maintains the viability of its business model. • Professional Accountant in Business (PAIB) – A professionally qualified accountant, subject to a code of ethics, committed to continuing professional development, working within or in direct support of the management of a commercial or public sector organization/ Page 2 | Confidential and Proprietary Information
  • 3. Terms of referenceDefining My Terms • Sustainable Success – Development of an organization’s economic, operational and market scope and performance in a manner that creates value for its owners without compromising its ability to keep doing so; that fosters continuing availability of all the resources on which it relies and stability of the communities it serves and draws from; that can respond effectively to threats and opportunities; and maintains the viability of its business model. • Professional Accountant in Business (PAIB) – A professionally qualified accountant, subject to a code of ethics, committed to continuing professional development, working within or in direct support of the management of a commercial or public sector organization Page 3 | Confidential and Proprietary Information
  • 4. Drivers of ChangeExternal Impetus • Megatrends demanding response: – Natural resource depletion and scarcity – Climate change, including more common climatic events such as drought – Social inequalities and inclusive growth – Labor exploitation • Sustainable development & sustainability of organizations are current issues for: - Politicians - Business Leaders - Consumers Page 4 | Confidential and Proprietary Information
  • 5. Business ResponseThe Enlightened Business Response• Opportunities and threats are real – Direct to our organizations – Partly indirect via the economy and infrastructure – Indirect via regulatory drive• A business case exists • Safeguard reputation • Cost saving - energy efficiency, waste minimization • Opportunities for innovation leading to new revenues • Pre-empting regulation and ensuring compliance • Stay competitive in the long term Page 5 | Confidential and Proprietary Information
  • 6. Business ResponseThe Enlightened Business Response• Opportunities and threats are real – Direct to our organizations – Partly indirect via the economy and infrastructure – Indirect via regulatory drive• A business case exists • Safeguard reputation • Cost saving - energy efficiency, waste minimization • Opportunities for innovation leading to new revenues • Pre-empting regulation and ensuring compliance • Stay competitive in the long term• PAIBs need to understand the threats and articulate and promote the business case Page 6 | Confidential and Proprietary Information
  • 7. The Profession’s ResponseCompetent and Versatile Page 7 | Confidential and Proprietary Information
  • 8. Competent and VersatileDrivers of Sustainable Success Customer and Stakeholder Focus Sustainable Organizational Success Effective Leadership and Strategy Integrated Governance, Risk and Control Innovation and Adaptability Financial Management People and Talent Management Operational Excellence Effective and Transparent Communication Page 8 | Confidential and Proprietary Information
  • 9. Competent and VersatileDrivers of Sustainable Success Customer and Stakeholder Focus In order to Sustainable Organizational Success Effective Leadership and Strategy articulate the Integrated Governance, Risk and Control business case, PAIBs Innovation and Adaptability need to Financial Management understand and People and Talent mobilize the Management eight drivers Operational Excellence Effective and Transparent Communication Page 9 | Confidential and Proprietary Information
  • 10. Business ResponseBroad Stakeholder Context• No longer enough to focus on the owner/provider of finance• What do environment, climate, community, society and the organization mean to each other? How do we nurture the relationships?• Stakeholder engagement grows understanding• Which environmental, social, and governance factors facing the organization matter most?• Include key business relationships such as customers, suppliers and employees Page 10 | Confidential and Proprietary Information
  • 11. Business ResponseDevelop Understanding of Relevant Data Flows• Capture and interpret data on environmental, social, governance (ESG) issues• Examine cross-linkage, dependency, cause & effect• Identify and manage what’s important• Communicate/report effectively to the organization and to stakeholders Page 11 | Confidential and Proprietary Information
  • 12. PAIB ResponseDevelop Understanding of Relevant Data Flows• Capture and interpret data on ESG• Examine cross-linkage, dependency, cause & effect• Identify and manage what’s important• Communicate/report effectively on what matters - to the organization and to stakeholders• PAIBs should be good at – Interpreting data & synthesizing usable information – Dealing with financial & non-financial information together – Identifying links between different drivers of performance and value – Connecting processes, systems, and data across organizational functions and along the extended supply chain Page 12 | Confidential and Proprietary Information
  • 13. Non-Financial Value Provided to the Business (Percentage of those who selected 8-10 on a scale of 1-10) Source: CGMA: Rebooting Business: Valuing the Human Dimension 13 Page 13 | Confidential and Proprietary Information
  • 14. Business ResponseShape and Respond to Events• Excellence in identifying and managing strategic and operational risk• Scan the environment for change and trends• Prepare for the inevitable e.g., water scarcity, high commodity prices, greater regulation• Move beyond the comfort zone Page 14 | Confidential and Proprietary Information
  • 15. PAIB ResponseShape and Respond to Events• Scan the environment for change and trends• Excel at identifying & managing strategic & operational risk• Prepare for the inevitable e.g., water scarcity, flooding, high commodity prices, greater regulation• Move beyond the comfort zone• The PAIB role: – Both strategic and analytical – Spotting the causal and connections – Risk to opportunity – Risk management a core PAIB competency Page 15 | Confidential and Proprietary Information
  • 16. Business ResponseThe Business Model• Insights from all sources must inform the business model – For management: what drives our value creation? how to manage it better? – For integrated reporting: how do we report on performance of our business model? Compliance reporting alone insufficient• Relevance of the business model today and tomorrow• How best to deal with inter-temporal conflicts? Page 16 | Confidential and Proprietary Information
  • 17. PAIB ResponseThe Business Model• Insights from all sources must inform the business model – For management: what drives our value creation? how manage it better? – For integrated reporting: how do we report on performance of our business model? Compliance reporting alone insufficient• Relevance of the business model today and tomorrow• How best to deal with inter-temporal conflicts?• The PAIB role: – key area - requires capabilities and skills to perform as integrators – Many tools at disposal, e.g. ABM/C, the balanced scorecard, driver- based forecasting and budgeting Page 17 | Confidential and Proprietary Information
  • 18. Competent and VersatileAccountants as Strategic Team Leaders Professional Attitude and Mindset will require: – Ethical and strategic leadership – Organizational and environmental awareness – An investor and wider stakeholder focus . – Professional judgment – Being comfortable dealing with change, uncertainty and complexity Page 18 | Confidential and Proprietary Information
  • 19. Competent and VersatileAccountants as Strategic Team Leaders Professional Attitude and Mindset will require: – Ethical and strategic leadership – Organizational and environmental awareness – An investor and wider stakeholder focus . – Professional judgment – Being comfortable dealing with change, uncertainty and complexity The PAIB will need to be: – Politically astute – Alert to changes in relationships and events – Always armed with the facts – Courageous in support of ethics Page 19 | Confidential and Proprietary Information
  • 20. Supporting Sustainable GrowthEmbedding Sustainability • Leadership and ownership at board level • Clearly defining the business case and strategy • Identifying stakeholders and engaging them effectively • Sound governance and oversight • Establishing value-driven goals and targets Page 20 | Confidential and Proprietary Information
  • 21. The Accountancy ProfessionWhat Is The Profession’s Role? • Accountancy bodies to support getting relevant know-how • Foster skills and mindset needed by accountants • Develop simple guidance for small businesses • Influencing regulators and others • Beating the drum for effective governance and oversight, finance professionalism, etc. • Professional input in the development of an integrated governance and reporting model • Promoting integrated reporting as a catalyst to integrated internal management of sustainable business models Page 21 | Confidential and Proprietary Information
  • 22. IFAC Professional Accountants in BusinessQuestions? • Also see www.ifac.org/PAIB Page 22 | Confidential and Proprietary Information

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