Fast Future Report for - ACCA on 100 Drivers of Change for Business - Full Report
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Full report on 100 drivers of change for business and the implications for business and the accountancy profession.

Full report on 100 drivers of change for business and the implications for business and the accountancy profession.

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    Fast Future Report for - ACCA on 100 Drivers of Change for Business - Full Report Fast Future Report for - ACCA on 100 Drivers of Change for Business - Full Report Document Transcript

    • ACCOUNTANCY FUTURES ACADEMY100 drivers of change for the globalaccountancy professionThis report was writen for ACCA by Fast Future.
    • About ACCA In this study, professionals workingACCA (the Association of Chartered CertifiedAccountants) is the global body for professional in and close to the accountancyaccountants. We aim to offer business-relevant, first-choice profession identify 100 drivers ofqualifications to people of application, ability andambition around the world who seek a rewarding career change shaping the landscape forin accountancy, finance and management. businesses and professionWe support our 154,000 members and 432,000 students accountants over the next decade.throughout their careers, providing services through anetwork of 83 offices and centres. Our reputation isgrounded in over 100 years of providing world-class The potential impacts and 10accounting and finance qualifications. We champion resulting imperatives are explored.opportunity, diversity and integrity, and our longtraditions are complemented by modern thinking, Opportunities are identified forbacked by a diverse, global membership. By promoting accountants to adopt a moreour global standards, and supporting our memberswherever they work, we aim to meet the current and strategic and trusted role.future needs of international business.About IMA®IMA® (Institute of Management Accountants), theassociation for accountants and financial professionals inbusiness, is one of the largest and most respectedassociations focused exclusively on advancing themanagement accounting profession. Globally, IMAsupports the profession through research, the CMA®(Certified Management Accountant) program, continuingeducation, networking, and advocacy of the highestethical business practices. IMA has a global network ofmore than 60,000 members in 120 countries and 200local chapter communities. IMA provides localisedservices through its offices in Montvale, N.J., USA;Zurich, Switzerland; Dubai, UAE; and Beijing, China.About Fast Future THE ACCOUNTANCY FUTURES ACADEMYFast Future Research is a global strategy, foresight researchand consulting firm that undertakes horizon scanning, The Accountancy Futures Academy contributes toscenario planning and in-depth studies on the future of ACCA’s programme of research and insights withkey sectors. Recent studies have looked at the future of powerful visions of the future. It provides aairports, scenarios for Asia, the future narcotics landscape, platform to look forward, to tune into theemerging science and technology sectors, jobs of the emerging trends and discussions in the globalfuture, demographic change, the meetings industry, travel business and policy spheres and the latest reformsand tourism and the future of HR. Fast Future works with facing the world of finance.clients in global businesses around the world to helpthem understand, anticipate and respond to the trends, By looking to the future it helps the professionforces and ideas that could shape the competitive stay at the cutting edge. The Academy’s worklandscape over the next 5–20 years. Fast Future’s consulting fosters fresh thinking and innovative discussions,draws on a range of proven foresight, strategy and identifies the barriers to and facilitators ofcreative processes to generate deep insight into a tomorrow’s successes, and identifies the potentialchanging world. These insights are used to help clients strategies that will enable business and finance todevelop innovative strategies, create disruptive business navigate the choppy waters that lie ahead.models and define practical actions to implement them. www.accaglobal.com/futures© The Association of Chartered Certified Accountants,September 20122010
    • ForewordACCA has a long history of forward looking research into the future of business andthe accountancy profession. This report, builds on ACCA’s groundbreakingresearch, Where Next for the Global Economy? A View of the World 2030,1 andother strategic studies published by ACCA in recent years. That study consideredissues such as the (re) distribution of global power, the scarcity and competition forresources, shifts in global markets and new business models, leading to newparadigms for governance and assurance.This report thoroughly examines the key factors that ACCA and IMA membersshould be thinking about to prepare for future opportunities and challenges overthe next 5–10 years. In so doing, it identifies 100 emerging drivers of change thatdirectly or indirectly impact business and the accountancy profession. Additionally,it provides a number of future scenarios for the profession while sketching out the‘must do’s’ for them to be successful over the next decade.How will businesses need to adapt to the myriad of changes? On one hand, theywill need to develop an understanding of these forces and their future implications.This, in turn, will enable them to weather forthcoming shocks and capitalise on newopportunities. On the other, there is a need to assess the skills implications foraccountants. The impact of the drivers of change outlined in this researchencompasses everything from the CFO’s role and reporting standards through tothe training and development of tomorrow’s accountants.Uncertainty and volatility are the new normal. The global landscape will continuallybe reshaped by a combination of market volatility, globalisation and innovation in aclimate where shifts of wealth and power, economic uncertainty and politicaltransitions are also occurring. These challenges are also exacerbated by rapidadvances in science and technology, demographic changes and the emergence ofnew business models. In a shifting social and economic environment, all of thesewill have serious implications on businesses and the accountancy profession.This research draws on inputs from members of the Accountancy Futures Academy,members of IMA, and ACCA’s other Global Forums to form the basis for high-levelpractical debates on how the profession can be better prepared to respond to thechanging needs of businesses.Ng Boon Yew FCCAExecutive ChairmanRaffles Campus1. http://www.accaglobal.com/content/dam/acca/global/PDF-technical/global-economy/where-next.pdf 100 DRIVERS OF CHANGE FOR THE GLOBAL FOREWORD 3 ACCOUNTANCY PROFESSION
    • 4
    • Executive summaryThis report presents the results of an and identifying key factors and forces with extensive desk research andACCA Accountancy Futures study on shaping the future. These enable them analysis. In total, the memberdrivers of change for business and the to weather emergent shocks and consultation and desk researchprofession. The aim was to address the capitalise on new opportunities. Others identified 100 drivers of change. Thequestion: recognise that they do not as yet have drivers cover eight domains of such a well-tuned future radar and, as a relevance – the economy, politics andWhat are the key factors ACCA and result, have been caught out by law, society and demographics,IMA members should be thinking changes in both the macroeconomy business, science and technology,about to prepare for future and their operating environment. environment, energy and resources, theopportunities and challenges over practice of accounting and thethe next 5–10 years? FUTURE-PROOFING THE accountancy profession. ACCOUNTANCY PROFESSIONTURBULENCE IS THE NEW NORMAL The analysis was undertaken in four key For accountants there is a twofold stages:The overriding global themes for the challenge: firstly, understanding howdecade ahead are those of shifts in the key forces shaping the future could • collation, definition and evaluationregional wealth and power, extreme affect the organisations they serve. of the driverseconomic uncertainty and political Secondly, they need to assess thetransitions. At the same time, the implications for accounting standards • identification of the critical impactsbusiness landscape is being reshaped and processes and the accountancy and implications for the economy,by a combination of market volatility, profession as a whole. The impacts business and the accountancyglobalisation and transformational encompass everything from the CFO’s professioninnovation. The impact of these role and reporting standards through tochallenges is compounded by rapid the training and development of • prioritisation of key actionadvances in science and technology, tomorrow’s accountant. imperatives to respond to thedemographic shifts and disruptive new drivers and their impacts, andbusiness models. Collectively, these THE ‘DRIVERS OF CHANGE’ STUDYforces of change are driving new • generation of alternative possiblesocietal values, needs and To help accountants and business scenarios of the future forexpectations. In short, they are leaders prepare for an uncertain accountancy based on howtransforming every aspect of our world. tomorrow, the ACCA Accountancy accountants might respond to those Futures Academy commissioned Fast action imperatives.DEVELOPING A BUSINESS RADAR Future Research to undertake this study. The research explores theIn the face of such all-encompassing emerging drivers of change that couldchange, there is a growing recognition have the greatest impact on businessin business of the need to develop a and the accountancy profession overrigorous understanding of these and the next decade. The study draws onother emerging drivers of change and inputs from members of theto prepare for a range of possible future Accountancy Futures Academy,scenarios. Indeed, some businesses members of the Institute ofalready have well-developed Management Accountants (IMA), andcapabilities for scanning the horizon ACCA’s other Global Forums, coupled 100 DRIVERS OF CHANGE FOR THE GLOBAL EXECUTIVE SUMMARY 5 ACCOUNTANCY PROFESSION
    • Figure 1: The ‘drivers of change’ study analysis framework 100 DRIVERS KEY IMPACTS AND ACTION SCENARIOS FOR THE OF CHANGE IMPLICATIONS IMPERATIVES PROFESSION Important factors shaping Critical issues for the economy, Key response strategies Alternative possible the next decade business and the profession responses to the action imperatives  Economy  Economic context  Assume and plan for volatility  Politics and law  Challenges for business  Build your radar  Society  Business strategies and  Pursue technology leadership CHANGEMAKER  Business priorities  Prepare for true globalisation  Science and technology  Accounting’s public image  Develop a curious,  Environment, energy and  Accounting’s positioning in experimental and adaptable resources business mindset  Measurement and reporting  Embrace an enlarged strategic SAFEHANDS  Practice of accounting  Accounting practices and commercial role  Accountancy profession  Skills, training and  Establish trust and ethical development leadership  Science and technology  Focus on a holistic view of applications complexity, risk and BUCCANEER performance  Develop a global orientation  Reinvent the talent pool SURVIVOR6
    • STRATEGIC IMPACTS FOR BUSINESSAND THE ACCOUNTANCYPROFESSIONAnalysis of the drivers and the potentialinteractions between them suggeststhat the decade ahead will becharacterised by a combination ofcritical forces acting on business andthe profession – key among them beingthose outlined in Table 1.Table 1: Forces shaping the business environment and driving change in the accountancy professionForces shaping the business environment Forces driving change in the accountancy professionGlobal economy Trust and reportingContinued globalisation is taking place against a backdrop of persistent Pressures are increasing on the accountancy profession to strengthen itseconomic turbulence and uncertainty and growing pressure to rethink the public image and go beyond current financial reporting practices to provide aentire global economic and financial governance infrastructure. more transparent, simplified but holistic picture of a firm’s health and prospects.Business environment Regulatory expectationsGrowing business and regulatory complexity is coupled with intensified An increasing regulatory burden could drive up the cost of compliance.global competition and shortening business cycles.Innovation and change Standards and practicesRapid advances in science and technology are driving disruptive innovation, There is a drive to globalise accounting standards and practices.overhauling industry structures, challenging and reinventing business modelsand spawning new sectors.Society and work Intelligent systems and big dataChanging social values and expectations of work, an increasing global There is potential to use intelligent systems, data mining and predictivepopulation and an ageing society working well past current retirement age analytics to exploit the repositories of ‘big data’ that firms are amassingare creating challenges for how technology is managed and leveraged to and as a result transform both the operational and interpretative elementsintegrate a diverse multigenerational, multicultural and multinational of accountancy.workforce.Learning and development Organisational remitThe structure, techniques, distribution channels and costs of providing There are increasing expectations that the CFO and accountancy functioneducation and training are being transformed, with a growing trend towards should play a far greater role in everything from strategic decision making toonline courses and accelerated learning. the design of new revenue models. 100 DRIVERS OF CHANGE FOR THE GLOBAL EXECUTIVE SUMMARY 7 ACCOUNTANCY PROFESSION
    • RESPONDING TO THE DRIVERS: 10 key ‘strategic action imperatives’ (seeTAKING STRATEGIC ACTION Table 2). These imperatives need to be addressed as a matter of priority ifThrough exploration of the drivers and business and the accountancyanalysis of their potential implications, a profession are to ensure they canclear set of implications and priorities perform effectively in the decade ofemerges for business and the uncertainty and rapid change that liesaccountancy profession. These ahead.priorities have been consolidated intoTable 2: Ten strategic action imperatives for business and the accountancy professionFive imperatives for business Five imperatives for the accountancy professionAssume and plan for volatility Embrace an enlarged strategic and commercial roleWith uncertainty as the new normal, businesses have to factor in turbulence as As businesses adapt to a turbulent environment, opportunities are emerginga very real possibility and develop strategies for a range of different economic for accountants to assume a far greater organisational remit. The potentialand market scenarios. exists to leverage the capabilities of the accountant across all aspects of corporate decision making, from strategy formulation through to defining new business models.Build the radar Establish trust and ethical leadershipSystematic, organisation-wide approaches are required for scanning the future The profession needs to be seen to be addressing clear public concerns.external environment. Preparing for a wide range of possibilities, tolerance of According to the research conducted for this report, there is a perception thatuncertainty, curiosity and ‘seeing round corners’ are becoming critical the profession could do more to highlight and prevent everything fromdevelopment priorities for managers and leaders alike. small-scale financial irregularities through to the major systemic failures that helped cause the global financial crisis and the ensuing economic uncertainty.Pursue technology leadership Focus on a holistic view of complexity, risk and performanceThe pace and disruptive potential of information and communications There is growing consensus on the need for reporting to provide a firm-widetechnology (ICT) development has placed technology at the heart of strategy view of organisational health, performance and prospects. Such a holisticand operations of businesses of almost every size. New mindsets and perspective must acknowledge the complexity of modern business andapproaches to technology management are required to exploit and extract encompass financial and non-financial indicators of a firm’s status andfull value from the next decade of advances. potential.Prepare for true globalisation Develop a global orientationDevelopment of a truly global operating model is becoming a priority. A clear The pace of global expansion of firms from developed and developing marketsemphasis is required on leveraging technology effectively. Equally important is alike is placing the spotlight on accountancy’s ability to master the technical,developing the capability of management to work with, adapt to and get the language and cultural challenges of cross-border operations.best out of a multi-location, multi-cultural and age-diverse workforce.Develop a curious, experimental and adaptable mindset Reinvent the talent poolA critical success factor in an increasingly complex and fast-changing The diverse range of demands and impacts on the profession is forcing aenvironment is building a ‘curious’ culture. This implies nurturing an rethink of everything from training and development through to the type ofenvironment that is open to external ideas and in which participants are people being recruited. Characteristics such as entrepreneurial spirit, curiosity,encouraged to forge a network of strong working relationships across the creativity and strategic thinking skills could assume far more significance in theentire business ecosystem. selection of tomorrow’s accountants.8
    • FROM ACTION TO OUTCOMES: companies and the profession respond • public perception of the professionSCENARIOS FOR THE FUTURE OF and the relative importance and priority – with a spectrum of possibilitiesTHE PROFESSION they attach to the different imperatives ranging from ‘part of the problem’ could lead to a range of alternative to ‘guardians of integrity’There are significant uncertainties over possible outcomes or scenarios. Toexactly how the driving forces explore these different possible • scope of the accountant’s role –presented in this report may play out. outcomes, the study has outlined four ranging from a ‘narrow complianceWhat is clear is that, however they alternative scenarios for the future of focus’ to a ‘broad organisational remit’.unfold, the resulting impact will be the accountant’s role in a changingtransformational both for business as a world over the next decade. The As a result of considering the extremeswhole and for the accountancy world in scenarios are based on two key of the spectrum, four possible scenariosparticular. The 10 strategic action influencing factors, with a range of emerge; these are presented lookingimperatives provide a clear focus for options for how they might evolve back from a point 10 years into theleadership attention. The ways in which during this time: future and are summarised in Figure 2.Figure 2: Scenarios for the future of the accountant’s role Guardians of integrity Safehands Changemaker Narrow Broad compliance organisational Scope of the accountant’s role focus remit Public perception of the profession Survivor Buccaneer Part of the problem 100 DRIVERS OF CHANGE FOR THE GLOBAL EXECUTIVE SUMMARY 9 ACCOUNTANCY PROFESSION
    • Changemaker particularly in turbulent times where Analysis of the drivers has highlighted(Perceived as ‘guardians of integrity’, firms want to demonstrate exemplary key areas of the economy, business andbroad organisational remit) financial stewardship. the profession that could be affectedIn this scenario, over the decade since the most. Assessment of the impacts2012, many in the profession have Survivor suggests 10 critical strategic actionsucceeded in balancing public (Perceived as ‘part of the problem’, imperatives on which business and theexpectations for responsible financial narrow compliance focus) profession should focus as they try tomanagement with an enlarged and In this scenario, survival seems the navigate through a turbulent economymore entrepreneurial stance within the priority for many in the profession, who and rapidly transforming business andfirm. The need to ensure sound and focus on a relatively narrow technical regulatory landscape. The differentethical practice has been a key driver in and strict regulatory remit. Society ways in which the profession, inthe gradual assumption of a wider remit perceives the profession to have failed particular, responds to theseby the CFO and accountancy function, in its duty of care to highlight and help imperatives could lead to a range ofwhich are seeking to encourage prevent the issues that caused the possible scenarios.performance with accountability. The global financial crisis of 2007–9 and thekey challenge here is maintaining the subsequent decade of financial and Faced with an ever-growing operationalbalance between encouraging economic uncertainty. Again, this might and regulatory compliance workload,entrepreneurial behaviour and ensuring be considered an unstable scenario due an understandable choice would be tothe highest standards of financial to the perceived lack of integrity. Hence opt for the Safehands scenario andstewardship. a goal for those in this scenario may be focus on a purely technical and more to evolve to the positioning of those in traditional definition of the accountant’sBuccaneer the Safehands scenario. role. The emphasis on integrity would(Perceived as ‘part of the problem’, meet with strong public approval.broad organisational remit) However, as the analysis of drivers andHere, many in the profession are playing the scenarios suggest, there is also aa more central role in value creation CONCLUSION: THRIVING IN clear opportunity for the profession toactivities. There is public concern, TURBULENCE, SEIZING THE aspire to the Changemaker scenariohowever, that accountants have OPPORTUNITY and embrace an increasingly strategiccompromised their ethical financial opportunity. This would entail meetingstewardship role in the pursuit of profit. The research emphasises that we are the public’s need for the highestThis scenario may be considered too entering an increasingly uncertain world standards of integrity while taking aunstable by many because a short-term, where almost every aspect of the broader leadership role within bothprofit-driven focus is not tempered by economy, business and the business and the wider economy.ethical financial stewardship, or accountancy profession will be in aentrepreneurship for long-term state of constant transition. The drivers While there is clearly no ‘correct’ scenario,performance. presented in this report highlight the role of Changemaker is perhaps the critical issues that will shape the most exciting and rewarding optionSafehands emerging landscape. The fact that both for those within the profession and(Perceived as ‘guardians of integrity’, these drivers have been identified by for would-be recruits. The quality ofnarrow compliance focus) those working in, and close to, the insights provided by those whoHere, the profession has succeeded in profession is a clear demonstration of participated in the study suggests that,re-establishing public faith in its role the accountancy sector’s ability and although demanding and difficult, thisover the last decade. For many this has willingness to engage in long-term broader remit is definitely achievablebeen achieved by deliberately strategic thinking. A key question is: for many within the profession. Thismaintaining a focus on the largely report and the activities that followtechnical elements of the role while What do we do with these powerful from the ACCA Accountancy Futuresseeking to ensure compliance with both insights that our colleagues have laid Academy are designed to helpthe spirit and the full regulatory before us? accountants on the journey torequirements of the law. This is becoming genuine agents of change inperceived as a stable scenario, both business and the wider economy.10
    • 1. IntroductionOVERVIEW METHODOLOGY The ACCA Global Forums andThis report presents the findings of a The exercise was conducted in two Accountancy Futures Academystudy on drivers of change for global stages.business and the accountancy As the global body for professionalprofession. The research was An initial series of telephone accountants, part of ACCA’s mission is tocommissioned by ACCA’s Accountancy discussions and email consultations provide opportunity and access to people of ability around the world andFutures Academy and conducted by were held with members of the ACCA support our members throughout theirFast Future Research. Accountancy Futures Academy,2 which careers in accounting, business and finance. yielded a list of 62 drivers of change. To ensure future success and provideThe report draws on extensive Contributors identified what they members with the best possible service,consultation with members of the perceived to be key drivers of change ACCA developed an innovative programmeACCA Accountancy Futures Academy, that would shape critical business and of Global Forums which bring together respected thinkers from the widerand members of the Institute of policy spheres and, as a result, the profession and academia around the world.Management Accountants (IMA) and accountancy profession over the next As part of this programme, thethe ACCA Global Forums. ACCA and 5–10 years. Accountancy Futures Academy provides aIMA have formed a strategic platform for ACCA to have a forward-partnership to support research. These 62 drivers were then sent to looking radar tuned in to the emerging expert members of IMA, and ACCA’s trends, discussions and reforms in the global business and policy spheres.The findings highlight what global Global Forums, for review, comment Looking at a time horizon of 5–10 years orexperts see as key drivers of change and identification of additional drivers. more, the Academy identifies and exploresover the next decade and beyond. A further 38 drivers were identified at issues of major significance for the globalThese drivers could have a critical this stage. accountancy profession to ensure itimpact on business, the accountancy complements the other ACCA Globalprofession and the global environment This report is based on the output from Forums.in which accountants will operate. this broad engagement and contains descriptions and analysis of a total ofThe starting point of this study was to 100 drivers of change.address the following question:What are the key factors ACCA andIMA members should be thinkingabout to prepare for futureopportunities and challenges overthe next 5–10 years? 2. http://www.accaglobal.com/en/research- insights/global-forums/futures-academy2/ members.html 100 DRIVERS OF CHANGE FOR THE GLOBAL 1. INTRODUCTION 11 ACCOUNTANCY PROFESSION
    • REPORT STRUCTURE When viewed collectively, the set of 100 A PLATFORM FOR ENGAGEMENT drivers explored in this report presentThe 100 drivers are introduced and fundamental challenges for business Strategically, the aim is for this projectsummarised in Chapter 2. A fuller and the accountancy profession. These to provide a platform for engagementdescription of each driver is presented challenges encompass literally every between members of ACCA’s Globalin the Appendix using the following dimension of business from governance Forums, members of IMA, and theircharacteristics: and strategy through to operations and broader memberships and the wider talent development. Chapter 3 explores community of stakeholders on the• a short description those impacts in greater detail. After future of accountants and the this, Chapter 4 examines the accountancy profession. It is also• a possible impact time frame, perspectives shared by members of the intended to help facilitate a debate on suggesting when the originator(s) ACCA Global Forums on the drivers the topics that the Futures Academy think it could affect at least 20% of expected to have the greatest impact. should pursue in greater detail. the profession globally It then goes on to assess the key implications of the 100 drivers for the No future work of this type can ever• possible implications for and economy, business and the hope to be definitive, but this report impacts on business and the accountancy profession. provides an important input into the accountancy profession, and development of future organisational A number of the drivers focus on key strategy. It provides accountancy• key questions and uncertainties advances in science and technology, organisations and professionals, and raised for the accountancy and their potential impact on business the businesses in which they work, with profession. and the practice of accountancy are a framework for preparing for, adapting discussed in this chapter. Chapter 5 to and influencing change. examines the priorities that emerge as businesses and the profession seek to The research partner in this project was move from insight to action. Finally, Fast Future Research, a foresight Chapter 6 considers a range of different research and consulting firm that works possible future scenarios for the with clients around the world to help profession over the next decade. them identify, anticipate, evaluate and respond to the trends, forces and ideas that shape the global economic and business landscape over the next 5–20 years.12
    • 2. 100 drivers of changeCATEGORISATION OF THE DRIVERS ECONOMY SOCIETYThrough the various stages of This set of drivers explores the fallout The rate and distribution of globalconsultation and desk research, a total from the global financial crisis and the population growth, and the resultingof 100 drivers of change were identified. long-term impact of current turbulence. implications for workforce age structureThese are described in full in Appendix 1. They encompass the sustainability of are highlighted as important drivers.Table 2.1 groups the 100 drivers in eight debt, prospects for growth and overall Increased female participation in theseparate categories: effectiveness of the global economic workforce, expectations of emerging infrastructure. Consideration is also generations and cultural diversity are all• economy given to stability of national revenue emphasised as critical social drivers for bases, the role of global reserve business. Issues around workforce• politics and the law currencies, and the need to consider capability are also identified with alternative economic management particular emphasis placed on the cost• society models. and ease of access to higher education and the growing role of online learning.• business Public attitudes to pure capitalism, concerns over protectionism and BUSINESS• science and technology changing notions of currency are all explored as part of the response to There is a clear emphasis on the need• environment, energy and resources both the global financial crisis and for fundamental change in every aspect continuing volatility. In exploring of business from governance and• practice of accounting possible routes forward for the global leadership through to approaches to economy, factors considered include innovation. There is scrutiny of the• accountancy profession. the level of inequality, the role of the critical role of leaders’ attitudes to knowledge economy and that of change, the level of business complexity,The key themes explored in the forces micro-businesses. Finally, consideration the rate of change in business cyclescovered under each category are as is given to factors such as infrastructure and adoption of new business models.follows. investment, labour mobility, stock Other strategic drivers considered exchange mergers and the impact of include the need to consider alternative the BRIC economies on global business and market paradigms and the accountancy firms. management of enterprise risk, accountability and compliance. POLITICS AND LAW Globalisation is seen to create both From a business and accountancy opportunities and challenges. A focus is perspective, drivers considered to be of placed on the scale of international critical importance are the level of mergers and acquisitions, the global political volatility and the rate of talent pool, choice of business democratic transition. Alongside these languages, reverse innovation from the role of global institutions and the emerging economies and the impact of impact of cultural globalisation are also new financial centres. Key managerial highlighted as key drivers. The scale challenges highlighted for the next and complexity of regulation and the decade include the importance of twin challenges of governance and reputation management, the adoption quality assurance of public sector of corporate ‘living wills’, the level of outsourcing are also emphasised. foreign direct investment and the use of integrated systems thinking. 100 DRIVERS OF CHANGE FOR THE GLOBAL 2. 100 DRIVERS OF CHANGE 13 ACCOUNTANCY PROFESSION
    • Business responsibility is identified as a ENVIRONMENT, ENERGY AND ACCOUNTANCY PROFESSIONcrucial issue for the coming decade RESOURCESwith a focus on social business, the level In the wake of the financial crisis, publicof social entrepreneurship, evolution of Concerns over the sustainability of expectations of the profession, itscorporate governance and managing current patterns of consumption loom attractiveness and definitions of its rolediverse stakeholder expectations. large, with particular attention being are central to many of the driversOther important drivers explore the paid to climate change, the biodiversity emphasised. Importance is also placedrole of cash in financial transactions, the impacts of business and competition on the flexibility and suitability ofrole of intermediaries and the for natural resources. Expectations accountancy training. Particularemergence of new industry sectors. about corporate eco-literacy, green attention is given to building capacity in practices, and ethical consumption in transitional economies and developingSCIENCE AND TECHNOLOGY business are explored. Consideration is entrepreneurial skills and business also given to the ‘marketisation of awareness. Other factors highlightedThe digitisation of business and green’ through mechanisms such as include establishing the role of industryeveryday life are highlighted with a carbon trading, environmental financial associations in developing markets andfocus on our growing personal markets and the take-up of green the impact of entrants from outside thetechnology ecosystems, the ease of energy. profession on the accountancy servicesaccess to the internet and social media sector.and their impact on attention spans. For PRACTICE OF ACCOUNTINGbusiness, the impact of cloudcomputing, the valuation of digital Both strategic and operational driversassets, cybersecurity, the rise of ‘big are explored. The changing scope,data’ and the value of data mining are scale and complexity of the CFO roleall emphasised. are examined, particularly in relation to growth in demand for non-financial andAttention is drawn to the disruptive integrated reporting. The ramificationspotential of new industries and of the globalisation of accountingproduction models, and developments regulation, standards and supply chainssuch as digital publishing, intelligent are explored along with the implicationsaccounting systems, predictive analytics for the strategies and structures ofand augmented and virtual reality. accountancy firms. OperationalEmerging areas of science expected to considerations include defining audit’shave significant business and role, managing internal audit, balancingcommercial impact in the next decade managerial and financial accounting,include genetics, personalised health valuation of intangible assets and thecare, brain science, robotics and rate of adoption of XBRL as annanotechnology. accounting data standard.14
    • Table 3: 100 drivers of change Impact time frame 1–12 months 1–3 years 4–5 years 6–10 years 10+ yearsEconomy Proportion of knowledge- Stability of the global The level of economic Impact of BRIC market Notions of value and creation activities as a economic infrastructure growth development on global currency share of the economy at accountancy firms the national and global Public attitudes to pure Total scale and level capitalism distribution of global inequality and unmet Stability of national Consideration of needs revenue bases alternative economic perspectives Standing of the US dollar Manageability of national as the global reserve and international debt Globalisation vs. currency protectionism in times of Level of investment economic uncertainty Broadening measurement required to maintain of business value and national physical Extent of mergers of progress infrastructure international stock exchanges Freedom of mobility for global labour Number and impact of micro-businesses on the overall health of the economyPolitics and Level of international Rate of democratic Governance and delivery Focus of globallaw political volatility transition of outsourced public governance institutions services Pace and extent of cultural globalisation Volume and complexity of legal regulationSociety Scale and distribution of Cost and ease of access to Spread of cultural diversity Workforce age structure global population growth higher education in society and the workplace Uptake of online learning models in education The workplace expectations of Generations Y, Z and beyond Level of female participation in the workforce 100 DRIVERS OF CHANGE FOR THE GLOBAL 2. 100 DRIVERS OF CHANGE 15 ACCOUNTANCY PROFESSION
    • Impact time frame 1–12 months 1–3 years 4–5 years 6–10 years 10+ yearsBusiness Quality and availability of Speed and duration of Business leader Capitalism next: future the global talent pool business cycles responsiveness to change governing business and and disruption market paradigms Scale of global mergers Experimentation with and and acquisitions (M&A) adoption of new business Crowdsourced funding for Influence of emerging models innovation: the consumer financial centres Extent of foreign direct as investor investment in developed Level of complexity in Choice of global business and developing business Adoption of integrated languages economies systems thinking to Enterprise risk manage business Management of Scale of reverse innovation management capability complexity accountability and flow from emerging compliance within the firm economies to the Evolution of corporate Living wills for businesses industrialised world governance regulation Emergence of new and practice Scope and diversity of industry sectors and Extent of social expectations of external professions entrepreneurship in social Use of cash for financial stakeholders and business sectors transactions Pressure to manage The future role of corporate reputation as intermediaries part of business strategy Level of corporate commitment to social responsibility, investment, philanthropy and volunteer workScience and Impact of the internet and The digitisation of work Adoption of cloud Big data: the development Advancements in braintechnology personal technology upon computing by business and exploitation of large science attention spans, learning, The use of personal organisational databases and knowledge retention technology in business Creation and valuation of digital assets Data mining and Business impact of social Ease of internet access predictive analytics media The future of digital Cybersecurity challenges publishing ‘Intelligent’ accounting for business systems New industries and Scale of business production models Advances in genetic opportunities associated science with augmented and Impact of advances in virtual reality robotic science across The role of genetics in business sectors personalised health care Impact of nanotechnology advances across business sectors16
    • Impact time frame 1–12 months 1–3 years 4–5 years 6–10 years 10+ yearsEnvironment, Global climate change Global competition for Carbon tax and otherenergy and limited natural resources environmental marketresources Level of trade in mechanisms environmental finance markets Extent of eco-literacy, green practices, and ethical consumption in business Developing materiality of biodiversity impacts to business Scale of take-up of alternative energy by businessPractice of Size and complexity of the Clarity in financial Defining the scope of theaccounting CFO’s remit reporting and defining the accountant’s role audit function Internal audit Non-financial information management Impact of size specific and integrated reporting business regulation upon Importance of non- accounting practices Balance between external tangible assets in financial accounting and company valuation Rate of adoption of XBRL internal managerial as an accounting data accounting standard Changing structures and business models for accountancy firms Opportunities arising from adoption of global regulation Evolution of the global accounting supply chain Adoption of globally accepted accounting standardsAccountancy Flexibility, suitability and Establishment and Societal expectations andprofession cost of accountancy recognition of definitions of accountancy training accountancy associations in developing markets Accounting skills capacity in transitional economies Level of entrepreneurial skills in the accountancy Public perception and profession attractiveness of the accountancy profession Impact of competition from entrants outside the profession on the provision of accountancy services 100 DRIVERS OF CHANGE FOR THE GLOBAL 2. 100 DRIVERS OF CHANGE 17 ACCOUNTANCY PROFESSION
    • 3. Evaluating the driver impacts ACCA Global Forum member prioritiesAs part of the broader consultation with The top-ranked selections reflect the The sheer level of complexity inmembers of IMA and ACCA’s Global extent to which the business business is emphasised as an importantForums, respondents were asked to environment is changing and becoming factor. Similarly, concerns are alsoidentify the five drivers from the initial more complex. These factors were raised over the ability of business andlist of 62 that in their opinion would expected to affect both management the finance function to keep pace withhave the greatest impact on the practices and the need for reporting of and control the costs of compliance,accountancy profession worldwide over the non-financial activities of global given a growing volume and complexitythe next 10 years. A total of 29 firms in an integrated manner. The of legal regulation. Equal priority isresponses were received. Table 4 lists legacies of the financial crisis, coupled given to the impact of an ageing societythe highest-ranked selections. with continued economic uncertainty, in Western nations and the resulting are also reflected in the priority given to effects on workforce age structure.The priority issues identified were the stability of the global economic Increasing age diversity in thegrouped into four main topics: infrastructure. In addition, some priority workplace is identified as bringing its is given to public concerns over the own challenges relating to differences• complexity in business viability of and risk associated with the in working practices, use of technology, models of pure capitalism that are seen use of language and developing social• economic uncertainty to have contributed at least in part to cohesion. the current volatility.• cost of compliance• the changing shape of the global workforce.Table 4: Global Forum member rankings of drivers expected to have the greatest impact on the accountancy professionRank Driver1 Non-financial information and integrated reporting2 Stability of the global economic infrastructure=3 Public attitudes to pure capitalism=3 Level of complexity in business=5 Volume and complexity of legal regulation=5 Workforce age structure7 Enterprise risk management capability=8 Focus of global governance institutions=8 The workplace expectations of Generations Y, Z and beyond=8 Quality and availability of the global talent pool=8 Evolution of corporate governance regulation and practice=8 Societal expectations and definitions of accountancy18
    • 4. Assessing the impactThis chapter addresses the ‘so what’ The implications are explored across Within each of the eight areas, aquestion – examining key implications eight key impact areas: number of critical challenges areof the 100 drivers for business decision identified along with the potentialmaking and the future role of the • economic context implications for business and theaccountancy profession. Table 5 and the accountancy profession. To helpdiscussion below draw out key findings • challenges for business connect these insights and theirfrom the analysis of the 100 drivers. The implications to tangible actions,analysis highlights how the drivers • business strategies and priorities Chapter 5 highlights and describes thecould have an impact across critical key ‘strategic action imperatives’. Thesedimensions of the economy, business • accountancy’s public image are seen as the priorities for businessand the accountancy profession over and the accountancy profession arisingthree key planning time frames: • accountancy’s positioning in the from the analysis of drivers and the business assessment by impact area.• the next 3 years • measurement and reporting• 4–10 years • accountancy practices• 10+ years. • skills, training and development. 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 19 ACCOUNTANCY PROFESSION
    • Table 5: Impacts of the drivers on the economy, business and the accountancy profession Next 3 years 4–10 years 10+ yearsEconomic Uncertainty over stability of global economic Continuing concern around volatility and low Key global institutions such as the UN andcontext infrastructure and integrity of the Eurozone levels of economic growth WTO reformulated to reflect the new distribution of global power New economic models and perspectives Risk of increasing income inequality between explored, eg Collapsonomics and closed- and within developed and developing Increase in total global population, but loop economics countries continued population decline across much of the developed world Broader adoption of protectionist policies to Increased global competition for finite protect internal markets and control export resources Greater reliance in the West on economic of valuable raw resources migrants from developing countries Emerging centres of financial power in the Knowledge-creation activities represent a East, eg Shanghai, Mumbai, Seoul growing share of the national and global economy creating a ‘knowledge economy’ Greater private-sector delivery of public services Decreased use of physical currency Governments struggle to control public debt across the developed market economiesChallenges for Shortening of business cycles Increased competition across all sectors from Fundamental reshaping of industry valuebusiness BRICS market firms selling innovative quality chains and business models Increased competition for top global talent products at lower prices Impact of human enhancement (chemical, Decreased business intermediation as A decrease in the mobility of global labour genetic and technological) increasingly consumers interact directly with producers apparent in the workplace An ageing workforce in much of Europe and Challenges of managing a continuously East Asia Shift in industrial logic from machine age digitally connected 24/7 workforce with thinking to biological models of design decreased attention spans and increased Challenges of incorporating of Generations Y distractions and Z into the workforce and meeting their expectations Cybersecurity risks of fraud and theft of intellectual property and sensitive corporate Increased participation of women in the and financial information workforce globally, especially in senior management Growing public and government demands on business to demonstrate greater transparency, regulatory compliance and ethical behaviourBusiness Increased focus on tackling complexity Greater emphasis for business leaders to Significant shifts in global centres of R&D andstrategies and recognise and respond to global changes innovation now apparentpriorities Shift from asset ownership to rental and disruptions, or be left behind Social goals rank equally with financial Wide adoption of new business models, eg Increased focus on organisational resilience returns for many firms crowdsourcing for funding innovative ideas plans vis à vis political volatility, the impacts of climate change and unforeseen ‘black New organisational forms and business Further pressure to manage corporate swans’ models emerge driven by Eastern reputation for competitive advantage and to philosophies address public concerns Greater use of concepts such as chaos theory and integrated systems thinking to manage Intelligent systems now at the heart of Increased corporate social responsibility and complexity corporate decision making sustainability efforts Technology and globalisation enable a new Immersive, multi-dimensional, gesture- Newly democratising countries creating fresh generation of emergent global micro- based, tactile and voice-controlled interfaces market opportunities for foreign business business to most systems and devices Increased digitisation of work and company Adoption of ‘living wills’ helps to facilitate assets orderly financial unravelling of failed companies Greater social entrepreneurship creating social goods and ethical business practices Firms go beyond mere regulatory compliance and strategies by adopting exemplar behaviours voluntarily Use of social media to interact with Exploiting new technologies and production stakeholders and develop new business models, eg 3D printing, nanotechnology, and relationships biomimicry Increased adoption of cloud computing reduces the size of firms’ technology infrastructures20
    • Next 3 years 4–10 years 10+ yearsAccountancy’s Process of rebuilding public trust after the Establishment of accountancy associations in The changing role of accountants withinpublic image perceived failings of accountants that came developing markets to provide a collective business and the use of emerging to light during the financial crisis voice for the profession, as well as training technologies radically redefines the and standardisation of practice accountancy professionAccountancy’s Expansion in the size and complexity of the Accountants take on a more strategic role, Increasing use of big data, predictivepositioning in CFO’s remit helping to explore the merits of potential analytics and intelligent accounting systemsthe business new business models and markets to develop and evaluate strategies, business Growing strategic responsibility for value models and pricing approaches maximisation Greater focus on managerial accounting within organisations alongside external Accountants ensure compliance with Increasingly prominent role in strategic financial accounting regulations such as a carbon tax and other decision making emerging environmental market mechanisms A greater role in constructing M&A strategies Watchdog role to ensure compliance with to help plan for future growth and stability Auditing of the genetic health of the new legal regulations, enforcing transparency workforce and the management and reporting of risk Accountants playing a key role in implementing green practices through the Expansion of the internal audit function from minimisation of waste and identification of being simply an independent assurance green opportunities such as use of function to becoming a management adviser alternative energyMeasurement Greater push for simplified and transparent Accounting in multiple strong global Challenge of responding to a proliferation ofand reporting financial reporting to gauge the true health currencies, ie US dollar, yuan and euro 2.0 local and virtual currencies, and new of an organisation and discourage financial methods of payment, eg ‘time banking’ malpractice Increased use of alternative business measures, eg innovation, trust, happiness Greater experimentation with immersive Increased importance of non-tangible assets and sustainability financial reporting using data mining, in company valuation, eg R&D augmented reality and virtual reality Greater integration of non-financial information into auditing reports Increased auditing of environmental impact of organisations Increasing use of data mining to create tailored financial reportsAccountancy Increasingly complex regulatory landscape Increased global regulation of the Advances in fields such as artificialpractices with regards to different types and sizes of accountancy profession intelligence and predictive analytics could business create truly intelligent automated accounting Widespread international adoption of systems Widespread adoption of XBRL as an common global accounting standards and accounting data standard practices, eg IFRS Increased competition in the provision of Adoption of new structures and business accountancy services from non-accountants models for accountancy firms Increased off-shoring of accounting, especially lower value routine tasks Greater focus on audit of non-tangible and digital assets, eg virtual real estate, digital music, and intellectual propertySkills, training Increased cost of higher education Emphasis on language acquisition and Brain-machine interface allows educationand cultural training to accommodate a diverse modules to be downloaded straight into thedevelopment More organisations offer to pay full or part workforce and operate in emerging markets mind course fees in return for students’ agreement to work within the company. Greater focus on accountants’ ability to analyse larger datasets Increased uptake in online learning for academic study and business training Greater emphasis on basic entrepreneurial skills such as business insight and leadership, Greater emphasis and expansion of creativity, and communication continuous professional development to ensure staff are up to date with a rapidly Widespread provision of free open and changing world unrestricted access to intellectual content Harmonisation of accountancy education in developing countries with international competency standards 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 21 ACCOUNTANCY PROFESSION
    • ECONOMIC CONTEXTMuch of current thinking about the future of the global economy over the next decade has, unsurprisingly, been influenced bythe fallout from the global financial crisis. Thinking is also being shaped by continued economic uncertainty fuelled by highlevels of sovereign debt, and rising concerns over the scale of potential regulatory abuses within the financial system. As aresult, five aspects of the global economic system are expected to see significant - if not transformational - change.i. Societal expectations ii. Rethinking the growth paradigm iii. Reworking financial systems andPublic anxiety is expected to increase The next decade will be one in which governanceover systemic weaknesses and the ‘growth for all’ can no longer universally Much of the economic governancemismatch between a relatively narrow be assumed as the dominant paradigm. focus of the next decade will bedistribution of rewards and a wide While some developing countries in characterised by new thinking,public ownership of the downside risk. particular may be able to pursue an experimentation and debate overAt the same time, the social and uninterrupted 10-year growth path, for alternative models for managing thepsychological costs of economic many the outlook is a lot more global system. The goal will be to try toausterity are expected to cast a shadow uncertain. For developed economies a evolve a new financial architecture,that lasts a decade or more over the major dampening of growth is governance framework and regulatorycountries that are worst affected by expected owing to continued efforts to approach. Any new model must besovereign debt, such as Greece and resolve the debt problems of the capable of managing a complex globalSpain. The income gap and scale of Eurozone, Japan and the US. At the economy in a fairer, efficient and moreinequality between rich and poor same time, potential slowdowns and transparent manner. These changes willnations could also become a growing debt challenges in the major emerging require an unprecedented level ofcause of tension and guilt within the economies such as China and India are vision and coordination amongglobal system. expected to retard expectations of policymakers, central bankers, standard global growth still further. setters, legislators and private sectorImplications financial institutions around the globe.Collectively, these factors are expected Implicationsto lead to demands for more Countries, businesses and accountants The conceptual underpinning of theresponsible approaches to capitalism alike will be forced to consider a range new models may well draw on lessonsand a system that ensures more of possible growth scenarios when from other fields – such as thetransparent and equitable distributions developing their future plans, and biological world – looking, for example,of risk and reward. prepare for the possibility of a low to at the design of resource-efficient no-growth world. closed-loop systems. Ideas may also come from fields such as ‘chaordic’ design (defined as ‘systems functioning on the edge of chaos with enough order to give them pattern’) and Collapsonomics, which seeks to understand the behaviour of systems on the verge of collapse. To gain societal approval globally, any new models will almost certainly need to incorporate a range of measures of human progress and non-financial assessments of systemic performance. Implications Tolerance of uncertainty will become a core competency for business leaders and accountants alike. Accountancy practices and training courses may need to exist in a state of constant evolution for the next decade or more as the world tries to establish sustainable economic management models.22
    • iv. Revisiting the currency debate v. Drivers of future growth entrepreneurship, support for small-to-A number of potentially conflicting Despite immense uncertainty over the medium enterprises (SMEs) and theforces will shape decisions about future of the global economy, nations creation of micro-businesses.currency unions, reserve currencies and must still find ways of feeding theiralternative tokens of exchange. Most populations and establishing whatever Implicationswould acknowledge that 50 years from the ‘new normal’ will be. As a result, Firms may increasingly be evaluated onnow there could well be a single global there is an increasing focus globally on the quality of their science andcurrency represented entirely in encouraging the development of new innovation base and their ability toelectronic form. The issue is how does market sectors ranging from genetics benefit from future growth sectors.the world get there from here? The and human enhancement through to Industrial policy and legislation mayEurozone has demonstrated the new materials and 3D printing. At the evolve to place legal requirements ondifficulty of achieving successful heart of such strategies lies the notion firms to help nurture the developmentmonetary union without close alignment of leveraging science, technology and of micro-businesses and SMEs.of political and economic policies. At innovation for growth.the same time, there is a growingexpectation that the next decade could An example of the search for newsee a number of other currencies, such sources of growth is the Europeanas the yuan, become increasingly Union (EU) Horizon 2020 research andinfluential and share the role of global development programme. The EU isreserve currency with the US dollar. currently in the process of approving this ambitious €80 billion initiative. TheWhile mainstream currencies should goal is to stimulate the growth of keydominate for the foreseeable future, sectors across the continent. Thethere is clear potential for alternatives challenge in such funding programmesto financial mechanisms of exchange to is to ensure that sufficient resources gobe adopted for a range of transactions. to ‘pure’ discovery-based researchA number of examples are already in activities rather than focusing toouse, such as the QQ virtual currency in heavily on ‘applied’ developments thatChina. Others include sub-national are closer to market.currencies, peer-to-peer creditnetworks and time banking. In One of the big concerns surroundingtoughened circumstances, where the industries of the future is theirincomes are expected to remain under impact on total employment. Typically,pressure for some time to come, the these information-age and biological-popularity of such alternative non- era businesses tend to employfinancial tokens of exchange is proportionally fewer staff than theirexpected to grow. industrial-age counterparts. As the major employers of recent timesImplications rationalise in the face of an uncertainFor accountants, currency issues and future, the new entrants are not alwaysthe management of the interface taking up the displaced labour – creatingbetween financial and non-financial the very real prospect of jobless recoveryexchange mechanisms will become and growth. As a result, there ishigher priorities and present new expected to be a major increase inchallenges. emphasis on encouraging 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 23 ACCOUNTANCY PROFESSION
    • CHALLENGES FOR BUSINESSFor firms with global ambitions, faced with an economy in transition and changing societal expectations of business, threecritical challenges rise to the fore: situational awareness, stewardship and talent.i. Situational awareness ii. Stewardship iii. Talent‘Heads up’ could become the business A clear premium will be placed on Western populations, in particular, arecatchphrase of the next decade as firms leaders who have the ability to steer ageing rapidly and financial pressuresseek to build effective mechanisms to global enterprises in the face of ever could mean that people have to workscan for even the weakest signals of more complex and challenging on into their late-60s, 70s or 80s. Hencepossible change in their environment. stakeholder demands. Factors such as the challenges of managing andMany may struggle with the challenge executive rewards, trust, social values addressing the needs and expectationsof balancing short and long term and business culture are already under of a multicultural, global and age-planning horizons. Some may see a the microscope. Part of the shift that diverse workforce will become evercontradiction between the need for firms will need increasingly to reflect in more complex. Technology and thelonger-term scanning and the constant their governance approaches is the internet now sit at the core of theshortening of business cycles. The latter evolution away from machine-age modern enterprise and may offer somearising from economic uncertainty metaphors of the organisation. In their solutions for workforce integration.coupled with technological disruptions place, there is growing interest in taking They also, however, bring with themthat are driving firms to try to achieve a biological-era view of the firm as a issues of shortening attention spanstheir goals ever faster. living, constantly evolving and adapting and easily distracted employees. ecosystem. Hence the stewardship roleImplications will extend to monitoring and nurturing In the longer term, advances in scienceBalancing both short-term priorities and the health of the firm’s entire and technology applied for humanthe longer-term need to ‘look round ecosystem’ of partnerships and enhancement will create a wholly newcorners’ will become a hallmark of relationships. set of challenges. A range of chemical,well-managed organisations. biological and technological Implications developments offer the potential for Governments, citizens, regulators, significant human augmentation. The customers and partners will all be idea that individuals and even entire demanding greater transparency, firms will seek to enhance themselves is regulatory compliance and ethical becoming an ever more serious issue. behaviour. The ability to work effectively in a constantly evolving Implications ‘ecosystem’ will become increasingly How well a firm manages its global important. talent pool and its stance on issues such as human performance enhancement will assume increasing importance as recruitment factors. The quality of talent management could also be adopted as an evaluation criterion as analysts broaden the set of measures by which they assess a firm’s health and prospects.24
    • BUSINESS STRATEGIES AND PRIORITIESTraditional processes of crafting and implementing strategy will need to be reworked as society begins to embrace the notionof the firm as a complex living and evolving ecosystem. To this end, strategy will increasingly focus on three key issues –mindset, markets and models.i. Mindset ii. Markets iii. ModelsAn emerging development priority for Driven by concerns over sluggish or A key focus in developing competitiveleaders is the need to learn how to negative growth and a lack of optimism strategy is the search for differentiatedmake use of concepts such as chaos in the developed economies, medium business models. There is alsotheory and integrated systems thinking to large enterprises are expected to recognition that the advantages of mostto manage complexity within the firm. make an ever more concerted push to new business models are relativelyThemes such as enterprise social enter developing economies. The short-lived and rarely sustainable.responsibility will also become part of competitive challenge of securing rapid Business model evolution is likely to bethe core planning and management market entry and shortening the time focused at three levels – asset financing,process rather than standalone for achieving profitability in a new new product development and revenueactivities. Notions of responsibility will country will lead firms to focus on their generation. Firstly, at the assetextend to adopting ‘living wills’ that approach to market planning. financing level, a shift is already takingallow for the orderly termination of a place from ownership to rental. Cloudfirm’s affairs in the event of major The emphasis will be on development computing is perhaps the most widelyfailure. of rapid globalisation models. The goal adopted approach for taking assets off will be to enable firms to fast track the the balance sheet and turning them intoEver-present spectres for business process of assessing markets and rented services paid for on the basis ofinclude economic turbulence, identifying risks. Key to this will be usage. With organisations such as Shelltechnological disruptions, understanding business culture, already embarking on majorenvironmental disasters, terrorist accepted practices and critical success programmes of asset divestiture as aincidents and social unrest. These factors. Coupled with these will be a hedge against uncertainty, this is likelyheighten the importance of enterprise focus on rapid execution and to become a mainstream trend.risk management and planning for establishing localised managementresilience and adaptation. This, teams as quickly as possible. Equally At the operating level, models forhowever, typically means building important will be the ‘exit plan’ so the funding new product development areredundancy and spare capacity into the firm’s affairs can be unwound rapidly. already being affected by the adoptionsystem – which runs counter to a lot of Exit plans might be triggered should of crowdsourcing models. Usingmodern day ‘lean management’ the market prove too difficult or platforms such as Kickstarter, customersthinking. expensive to penetrate or the local commit to purchasing a product or government becomes less supportive service before the development hasImplications of foreign entrants. taken place – thus eliminating a majorEcosystem thinking, risk management, source of risk. Finally, the internet, intackling complexity and resilience Implications particular, is opening up a range ofplanning will all need to become part of Cultural understanding, language skills approaches to charging for goods andthe core training and development and ‘street level’ awareness are services. For example, the auctionprogrammes for managers, leaders and becoming increasingly key skills for model has proved popular for vendorsaccountants. those involved in international activities. of everything from consumer This is particularly important for electronics to airline tickets. Similarly, functions such as finance, which may aggregated buying services such as need to have extensive contact with Groupon are now being used to sell overseas operations and manage a items as diverse as personal grooming complex collage of local differences in products and university courses. accounting regulations and practices. Implications The development and testing of new business models will become a core value-adding role for the accountancy function. 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 25 ACCOUNTANCY PROFESSION
    • ACCOUNTANCY’S PUBLIC IMAGEThere is a clear sense that the profession needs to work hard to communicate the value it brings, both to help regain public trustand to ensure it has a strong recruitment brand to attract the best talent.i. Public trust ii. Recruitment brandThe public may not fully understand the Despite concerns over rising graduateintricacies of the accountant’s role. unemployment in many economies, theHowever, there is general awareness competition for top talent remainsthat the profession is there – at least in intense. The profession mustpart – to ensure ethical financial demonstrate that it can offer an excitingbehaviour and regulatory compliance. and rewarding career for graduates andThe consultation for this study those seeking to retrain for a newidentified a feeling in some quarters profession in mid-career. This impliesthat accountants could have done a developing a deep understanding ofbetter job of highlighting risks and the motivations, aspirations andproviding early warnings over the expectations of would-be entrants toproblems accumulating in many of the the profession and tackling head on theinstitutions at the heart of the global trust and image issues that thefinancial crisis. Restoring public trust in profession faces in some quarters.the profession will therefore beparamount. Another key trust-building Implicationspriority will be extending the reach of The profession needs to communicatethe profession into developing how the nature of the accountant’s roleeconomies by helping to establish is changing and emphasise its potentialstrong national professions. The priority for fulfilling an increasingly broadfor associations in developing markets strategic remit in business.will be to provide training, establish andenforce standards, and givepractitioners a collective voice.ImplicationsRestoring public faith in the professionis increasingly a role for accountantsworking in business as well as those inaccountancy firms and the accountancyassociations.26
    • ACCOUNTANCY’S POSITIONING IN THE BUSINESSThe sheer breadth of economic, commercial and regulatory challenges and changes on the horizon suggest that the CFO andthe accountancy function will play an increasingly central role in business. Three particular aspects of this enlarged remit wereemphasised through the drivers – enhanced strategic responsibility, broadening of audit and compliance, and assessment oftotal sustainability.i. Enhanced strategic responsibility ii. Broadening of audit and compliance iii. Assessment of total sustainabilityLong-term volatility combined with Growing compliance expectations, In an austere environment withdownward pressure on profit margins in coupled with demands for broader continuous pressure on headcount,many markets means that even small reporting of firm-wide risk and total CFOs may well assume ultimatechanges can have a major impact on transparency will create an increased responsibility for ensuring totalfinancial performance. In these technical workload. These requirements sustainability of their firms. This impliescircumstances, the CFO and will also drive demand for internal audit pursuing truly sustainable triple bottomaccountancy function could be drawn to play an ever-greater role as line strategies – encompassing people,into a much wider strategic decision- management adviser. Helping firms planet and profits. As themaking role. A particular focus will be ensure prudent financial management understanding grows that financialplaced on helping the organisation will drive a growing focus on sustainability cannot be achievedmaximise value creation through smart management accounting and more without environmental sustainability,financial strategies. holistic reporting of organisational the accountancy function may performance and health. The growing increasingly take on the mantle ofIn the longer term, the accountancy compliance requirements concerning measuring and reporting on the firm’sfunction is expected to play an ever carbon emissions and environmental environmental footprint. The remit maymore central role in developing and performance may also become even extend to driving implementationevaluating business models and pricing embedded in the internal audit remit. of greener processes and practices. Astrategies. An enlarged long-term remit decade or more from today, practicesin merger and acquisition (M&A) activity Implications such as human augmentation may haveis also envisaged. Similarly, in the longer At the operational level, internal audit become a reality. The accountancyterm there is an expectation that may need to re-engineer its own function may also have to take onbusiness decision making could processes to encompass a larger ultimate responsibility for auditing andincreasingly be driven by intelligent advisory role and broader audit and reporting on human augmentation andaccounting systems and predictive compliance requirements. the genetic health of the workforce asanalytics. These would help analyse and part of total enterprise reportingexploit the huge volumes of accounting requirements.data that corporations are building upthrough their daily activities and Implicationstransactions. Technology should go some way towards delivering on the dataImplications requirements of total enterpriseAn enlarged strategic remit may require reporting. In practice, the biggestmany to rethink the organisational challenge will be to realign mindsetsdesign of the accountancy function and and processes in the finance function toits interfaces with the rest of the firm. A encompass this responsibility forwider remit also implies rethinking the providing a perspective on totaltechnical and emotional capabilities organisational health and sustainability.required to fulfil ever-broadeningresponsibilities effectively. 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 27 ACCOUNTANCY PROFESSION
    • MEASUREMENT AND REPORTINGThere is a clear sense from respondents that the fallout from the financial crisis and continued uncertainty, at the macro andmicro levels, are driving the need for fundamental change both in what gets reported and how reporting is done.i. What gets reported ii. How reporting is doneThere is increasing demand from a There is likely to be growing pressurerange of stakeholders for the annual for simplified and increasinglyreport and accounts to provide a transparent reporting mechanisms. Atholistic picture of an organisation’s the same time, as firms extend theirhealth and future prospects. This geographic horizons, so the challengeimplies greater emphasis on factors of multi-currency accounting couldsuch as risk, sustainability of revenue become ever more complex. Thestreams and exposure in volatile challenges could be even greater asmarkets. Typical non-financial measures firms adopt alternative revenue models,might include environmental such as auctions, and transact withperformance, robustness of key other exchange mechanisms such asrelationships, innovation, trust, and virtual currencies and time banking/workforce health and happiness. The trading systems. The technologies forvaluation and reporting of intangible delivering financial reports are likely toassets such as R&D and intellectual evolve dramatically – incorporating 3Dproperty (IP) has always been seen as a presentation of graphics and gesturalsomewhat complex area. The role of IP interfaces. In the longer term, theis growing in importance with the shift process of presenting company accountsfrom physical to virtual assets. The issue could be transformed through multi-becomes even more complex when sensory immersive reportingtrying to value digital assets, which may incorporating augmented and virtualhave a very short lifespan. reality.Implications ImplicationsImportant issues will need to be A key priority will be developingresolved regarding responsibility for effective processes for measuring andsetting the standards for such an reporting on total organisational health.integrated approach to assessing firm Firms will seek to reach out and assurehealth and who conducts the audit(s). diverse stakeholders of theirThe question also arises as to who governance, probity and prospects.internally owns the ultimate Hence, capabilities such as narrativeresponsibility for holistic external construction, business storytelling andreporting – the CFO, CEO or board and visual presentation of data couldmanagement team collectively? assume increasing importance.28
    • ACCOUNTANCY PRACTICESAt the operating level, the spotlight is expected to fall on regulation, standards and systems on the one hand and on theaccountancy services sector on the other.i. Regulation, standards and systems ii. The accountancy services sectorThe regulatory compliance and In the short term, the industry muststandards backdrop is expected to address the twin challenges ofbecome increasingly challenging. The globalising firm structures and copingdriver here is the desire of governments with the emergence of non-accountantsand standards bodies to prevent who offer services to clients. Thefinancial excesses and provide demand for lower-cost service provisiongovernance to an increasingly complex on outsourced activities will forceand highly digitised business accountancy service providers tolandscape. While efforts will be pursued respond. Solutions may include a driveto minimise the burden on smaller firms, to automate tasks and conduct them inthere are concerns that new regulations whatever location that can undertakecould increase complexity. them at the lowest cost for a given level of quality.The universal adoption of globalstandards and practices is expected by As requirements grow for firms tomany to take a decade or more, while provide a more holistic view of theirothers doubt if it is even possible. organisation, opportunities may open upNonetheless, if implemented, global for some accountancy firms to providestandards could bring major benefits in services advising clients on how to setthe form of consistent reporting and up such mechanisms. The potential forfinancial management of multinational conflict between advisory and auditenterprises. The take up of XBRL as a roles could arise – leading to a newdata standard is expected to contribute wave of calls for accountancy firms tosignificantly to streamlining accounting divest their advisory and consultingprocesses – particularly across borders. activities. In the medium to long-term,Finally, adoption over time of firms in more mature economies mayincreasingly intelligent accounting also experience the entry of energeticsystems could lead to far greater competitors from the emerging markets.automation, even of expertise-driven Collectively these challenges could seeand creative tasks such as interpreting the accountancy services industryand commenting on results. embark on a period of continuous change, adaptation and innovation. AsImplications a result, the next decade could see bigConcerns over the cost and complexity shifts in business strategies, choice ofof compliance could drive accountants geographic locations, business modelsand service providers to seek process and operating structures forefficiencies and accelerate the accountancy firms.development and deployment ofincreasingly intelligent systems. Implications Pressure could mount on the accountancy services sector to demonstrate that it is sharing the burden of economic uncertainty with its clients by reworking its business models, and placing a greater emphasis on innovation. 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 29 ACCOUNTANCY PROFESSION
    • SKILLS, TRAINING AND DEVELOPMENTThe training agenda is going to be influenced by the sheer scale of change anticipated within the accountancy profession,coupled with an equivalent set of transformations under way in higher education. Together, these suggest that both thecurriculum and delivery methods for training tomorrow’s accountants will evolve significantly in the decade ahead.i. A new learning agenda ii. Transforming education deliveryBoth the core accountancy curriculum The online environment, cost pressuresand continuing professional and new insights on learning aredevelopment programmes will be combining to reshape the provision ofaffected by the need for accountants to higher education. Well over 1,000play an increasingly strategic and universities such as Harvard and MITentrepreneurial role within the firm. The and others such as the Khan Academy,cultural and language requirements for are making a wide range of coursesoperating in a global environment will freely available online to anyone aroundalso have an impact on in-service the world who wants to take part. Thetraining. As technology penetrates ever only charges applied are typically forfurther, so accountants will need to those who wish to receive some form ofacquire a deeper understanding of how examination accreditation at the end ofto deploy intelligent systems to best the course.effect. Key here will be learning how tomanage and exploit the ‘big data’ that Increasing use is also expected ofsits at the heart of the modern firm. virtual worlds, simulations and serious gaming to help enhance the quality ofImplications education and training experiences. InCore accountancy training and the much longer term, advances incontinuing development programmes cognitive science and brain–machinewill need to be reviewed and updated interfaces offer the potential foron a regular basis to reflect the downloading content directly tochanging expectations and needs of students’ brains.business and the profession. Implications The profession needs to ensure that it is taking full advantage of the potential of online education and developments in educational technology. At the same time, education business models may need to be reworked in a world where accountancy course content is freely available online.30
    • THE IMPACT OF SCIENCE AND TECHNOLOGYThis section explores key science and technology developments that could have a major bearing on business and accountancy.Advances in science and technology lie at the heart of many of the developments that will shape the commercial landscapeover the next decade. They offer the potential for disruptive innovation in literally every aspect of human life, society and work.The ability to master these developments could be the key differentiator between success and failure.Throughout the analysis of the drivers, i. Increasing spread and ease of ii. Big data and the digitisation ofthe direct and indirect impacts of internet access workemerging science and technology With low-cost smartphones offering the As automation spreads through everyadvances are explored. The impact of potential to take the internet to almost aspect of business and private life, vastseven key areas of development are every citizen on the planet within a quantities of transactional data areexamined below and summarised in the decade, the true potential of the Web being amassed. Tools will increasinglyfutures wheel presented in Figure 3 (see has yet to reveal itself. The internet is become available to enable mining ofpage 31). These seven areas are: transforming industry supply chains in this data and the prediction of future many sectors and threatening to possibilities on the basis of past• increasing spread and ease of reinvent completely some industries, patterns of events. internet access such as publishing. Social media are creating new mechanisms for Advances in the sophistication and• big data and the digitisation of work engagement with friends, customers power of mobile devices, such as tablet and business partners. Social networks PCs, are also driving a revolution where• increased use of augmented and are providing a genuine platform for these tools are becoming an essential virtual reality two-way exchange and forcing a level of part of our personal ecosystem. The transparency and openness for which ease of use of these personal platforms• new industries and production few are prepared. is driving the desire to ‘bring your own models device’ (BYOD) to work and use it for Use of the Web enables the renting of core business activities. Such• advances in robotics processing capacity, applications and developments offer a potential cost storage via cloud computing. Operating saving, reducing the need to provide• advances in brain science in the digital environment is also computers for staff, but they create enabling firms to create electronic major operational challenges for• advances in genetic science. assets and spawning virtual currencies ensuring the security of data held on as a medium of exchange in both the these devices. virtual and physical world. The downsides of this growing dependency Implications on the Web are the risks of cybercrime, The ability to exploit big data and infer increased workplace distractions and future behaviours from past patterns decreasing attention spans. offers the potential to transform the cost and effectiveness of processes Implications such as new product development, Future measures of firm health could market targeting and price setting. For include the extent and quality of a firm’s the accountancy profession, adoption exploitation of the internet. of intelligent tools that can analyse and interpret large volumes of data rapidly could transform activities such as audit and forensic accounting. 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 31 ACCOUNTANCY PROFESSION
    • iii. Increased use of augmented and v. Advances in robotics vii. Advances in genetic sciencevirtual reality While industrial robots have been in The mapping of the human genome hasApplications that enable augmentation service for over 20 years, the next created a vast range of new possibilitiesof what one sees by overlaying digital decade should see a massive expansion ,such as the pre-birth scanning ofinformation over real world objects in their deployment in business and possible medical problems in an unbornoffer the potential to enhance a range domestic settings. Advances in artificial child. Genetic science has also openedof reporting and analysis tasks. Virtual intelligence, materials and mobility up the potential to create syntheticreality offers the potential for going a open up the potential for robots to be life-forms that could be in a variety ofstep further and immersing oneself in a used in roles as diverse as hotel butlers applications such as generating energymanner that enables the delivery of through to companions for the elderly. and absorbing waste.multi-sensory experiences – for In the field of medicine, the goal is toexample feeling, tasting and smelling develop miniaturised robots that can be Implicationsan earnings forecast. ingested and then used to repair Genetic profiling of the workforce will damaged cells within the body. enable firms to assess employee healthImplications risks more accurately and, thereby, helpAugmented and virtual reality offer the Implications control health insurance costs.potential to simplify and enhance the The opportunity will emerge within fivecommunication of complex information years or less to use robots to perform ato diverse non-expert stakeholder diverse range of accounting and auditgroups. tasks reliably.iv. New industries and production iv. Advances in brain sciencemodels Neuroscience is helping to explain theThe industrial landscape could be functioning of the brain and interpretreshaped over the next two decades. the patterns of electrical impulses thatThe transformation is being driven by go with each thought or action. Basic‘blockbuster’ industries resulting from applications already include headsetsthe convergence of advances in fields that can be trained to recognise theas diverse as materials science, biology, pattern of brain activity associated withinformation technology and the particular thoughts. The headset thencognitive sciences. For example, uses the signals identified to controlsectors such as human augmentation, electrical devices and computers. Thepersonal genetics, vertical farming, 3D evolutionary path of such developmentsprinting (additive manufacturing) and could lead to the widespread use oflaboratory-grown meat all have the brain-machine interfaces that allow forpotential to become trillion-dollar the direct uploading and downloadingindustries in 20 years or less. of information to our memory.Implications ImplicationsNew skills will be required to assess the Firms will need policies regardingrisks and potential of rapid growth cognitive augmentation of their ownindustries for which there are few staff. Will analysts place higherprecedents or comparable valuations on firms whose staff have haddevelopment models. their mental faculties enhanced, thus enabling them genuinely to ‘out-think’ their competitors?32
    • Figure 3: Futures wheel – the impact of advances in science and technology upon accounting and the accountancy profession Increased distractions and Immersive real-time decreased workforce financial reporting attention spans Threat from Adoption of cybercrime Immersive and interactive cloud computing 3D presentation of financial information Mobile apps developed Use of social Theft of to overlap business media Digital assets financial information over the real and virtual information world currencies and IP INCREASED USE OF INCREASING SPREAD How do you AUGMENTED AND VIRTUAL Rise of digital and AND EASE OF INTERNET fall of print audit virtual REALITY ACCESS wealth? publications Employees Auditing of the living longer genetic health of a and retiring workforce later ADVANCES IN GENETIC NEW Vertical SCIENCE INDUSTRIES AND farming Personalised ADVANCES IN PRODUCTION medicine and SCIENCE AND MODELS healthcare TECHNOLOGY Lab-grown Nanotechnology meat ADVANCES 3D printing IN BRAIN SCIENCE ADVANCES IN Brain-machine ROBOTICS Increased learning interfaces and brain BIG DATA AND THE and memory function stimulation DIGITISATION OF capacity WORK Increasing numbers of robot s in the workforce and at home Creation of tailored An in-built user-centric financial accountancy function reports in the brain Increased use of personal technology in the workplace Increasing AI leads to robots carrying out accounting functions Sophisticated analysis Increasing amounts Data mining tools of financial data and prediction highlight data patterns created, stored and algorithms create which can be used for analysed automated ‘intelligent’ strategy and prediction accounting systems 100 DRIVERS OF CHANGE FOR THE GLOBAL 4. ASSESSING THE IMPACT 33 ACCOUNTANCY PROFESSION
    • 5. Strategic action imperativesFROM INSIGHT TO transformational developments that will Clearly, most of the imperatives map, inTRANSFORMATION be required for businesses to survive some way, to all the impact areas. For and thrive in the decade ahead. In example, the imperatives to ‘EmbraceThe analysis of the 100 drivers has practice, few have the capability or an enlarged strategic and commercialhighlighted the sheer scale of change inclination to try and tackle all the role’ and ‘Reinvent the talent pool’they could bring about for individuals, issues and opportunities at the same could both help in responding to all thesociety, business, entire nations, the time. Recognising this need for focus, driver impacts identified. Equally, theglobal economy and the accountancy the priorities have been consolidated need to ‘Build the radar’ to scan forprofession. So where and how can the into 10 key ‘strategic action imperatives’ emerging trends and developmentsmassive set of issues, opportunities and which are described in this chapter. and ‘Develop a curious, experimentaloptions for change laid out here begin Table 6 below outlines how these 10 and adaptable mindset’ are arguablyto be addressed? imperatives can help to address the essential parts of anticipating and challenges and opportunities created responding to an uncertain future.The leadership challenge is one of by the eight impact areas and the Nonetheless, for clarity, the focus hereusing these insights to catalyse the science and technology advancements is on highlighting the criticalkinds of evolutionary and identified above. imperatives that could help most in addressing each of the impacts.Table 6: Mapping of strategic action imperatives to major driver impact areas Accountancy practices The impact of science Business strategies Skills, training and Measurement and Economic context positioning in the and technology Challenges for Accountancy’s Accountancy’s development and priorities public image reporting business businessBusiness imperativesAssume and plan for volatility    Build the radar    Pursue technology leadership    Prepare for true globalisation   Develop a curious, experimental and adaptable mindset    Imperatives for the accountancy professionEmbrace an enlarged strategic and commercial role    Establish trust and ethical leadership    Focus on a holistic view of complexity, risk and performance    Develop a global orientation  Reinvent the talent pool    34
    • FIVE IMPERATIVES FOR BUSINESS developments and individuals that strategy formulation through to could shape the global economy and business innovation and talenti. Assume and plan for volatility the operating environment within the recruitment and development.Expectations of economic uncertainty industry. Scanning and preparing for a Although technology is a criticaland turbulence now stretch out for a wide range of possibilities, tolerance of enabler of the effective operation of thedecade or more – driven by serious uncertainty, curiosity and ‘seeing round global enterprise, the key factor is theconcerns over the scale of debt at the corners’ are becoming critical capability of management to work with,sovereign, corporate and individual development priorities for managers adapt to and get the best out of alevel. At the same time, rapid shifts of and leaders alike. multi-location, multicultural andwealth and power are taking place age-diverse workforce.across the globe while concerns remain iii. Pursue technology leadershipover the robustness of the global The pace of ICT advancement, the v. Develop a curious, experimentaleconomic infrastructure. Under such sheer potential of what it can deliver and adaptable mindsetconditions, a single business plan and a and the pervasiveness of adoption now The pace of business change and theset of governing assumptions are no place technology at the heart of strategy rate of growth of operationallonger sufficient. and operations of businesses of almost complexity can render changes any size. New mindsets and approaches obsolete before they have even beenLeaders have to ensure that their to technology management are required implemented. Hence, organisationsorganisations can survive and thrive for this rapidly evolving environment must learn to balance the focusingunder a range of scenarios. Leaders where the firm owns less of the effect of a clear long-term vision withmust also develop a core competency computing and communications assets the pragmatism of a flexiblefor thinking the unthinkable and it relies on. The key drivers here are a implementation approach. There is apreparing for it. Planning assumptions shift to staff using their own devices, clear need for operational flexibility andmust consider the potential for applications and databases being run adaptability in the choice of strategieseconomic collapse, nationalisation of remotely through cloud computing and and tactics adopted to achieve theassets by governments and disruptive the internet becoming the backbone of desired outcomes. For many, this meansinnovations that could transform most enterprises. Each new generation adopting asset-light business models. Itmarkets, industries or entire economic of systems offers increasing also requires a willingness tosystems. intelligence, enhanced flexibility and experiment continuously with ever-greater potential to transform everything from product and serviceii. Build the radar working practices. Technology design through to revenue models andThinking about the future is no longer a advances are enabling new business distribution channels.luxury or a short discussion in the models, disrupting value chains andannual management retreat. Systematic transforming entire industries. A critical success factor in this newand organisation-wide approaches are order is developing a culture that isnow required to scan, explore and iv. Prepare for true globalisation genuinely curious about the world andassess the implications of key future Although many firms have embraced a open to new ideas from outside thefactors across the short, medium and truly global operating model, others are organisation. Such cultures must alsolonger term. Clear responsibilities need still in the process of learning what this foster and reward a willingness to enterto be allocated for identifying and entails. Becoming truly global implies into new working relationships acrossacting on future insights. Companies moving beyond the export of home the entire network of customers,must be capable of wide-range ‘horizon country paradigms and operating suppliers, partners and competitorsscanning’ to capture diverse future models. Long-term success across that define the modern businessfactors such as driving forces, persistent multiple geographies and cultures ‘ecosystem’.factors and emerging trends. demands the development of genuinelyConsideration must also be given to global management approaches. Theseweak signals, wild cards and the ideas, must encompass everything from 100 DRIVERS OF CHANGE FOR THE GLOBAL 5. STRATEGIC ACTION IMPERATIVES 35 ACCOUNTANCY PROFESSION
    • FIVE IMPERATIVES FOR THE iii. Focus on a holistic view of v. Reinvent the talent poolACCOUNTANCY PROFESSION complexity, risk and performance The range of driving forces identified in A very clear message is emerging on this study suggests a diverse andi. Embrace an enlarged strategic and the need for company reporting to growing set of demands and impactscommercial role provide a firm-wide view of on the accountant’s role in the future.As businesses evolve their strategies, organisational health, performance and This has a direct bearing onstructures and business models to prospects. Such a holistic perspective recruitment, professional training andsurvive and thrive in a turbulent needs to take account of the complexity development. The speed of change andenvironment, there is a clear opening of modern business and highlight the the rate of emergence of newfor accountants to assume a far greater efforts to address it. Such an integrated requirements place an emphasis on theorganisational remit. The need to view must also report on non-financial need for ‘on demand’ acceleratedensure responsible practices in the measures such as innovation. Equally learning-based solutions. Increasinglypursuit of growth opens the door for important will be the assessment of the these will be delivered via the internetaccountants to participate in broader strength of core business relationships, and mobile devices. At the same time,business decision making. This broader the overall vibrancy of a firm’s culture an increasingly broad, complex androle will require accountants to apply and employee health and happiness. demanding remit will influence the typefinancial expertise in combination with Taking the holistic view goes well of people that the profession seeks toanalytical, creative and risk- beyond the current remit of the CFO’s attract. Alongside the traditionalmanagement skills. These capabilities organisation and has major implications characteristics typically associated withwill prove equally valuable in everything for training and the development of the the profession, traits such asfrom assessing country risk to accountancy function. entrepreneurship, curiosity, creativitydeveloping and testing innovative new and strategic thinking skills will becomerevenue models. iv. Develop a global orientation of increasing importance for tomorrow’s The pursuit of global opportunities is accountant.ii. Establish trust and ethical now a clear priority for large, mediumleadership and small enterprises from developed FROM IMPERATIVES TO OUTCOMESThe profession needs to be seen to be and developing markets alike. The – SHAPING THE FUTURE OF THEaddressing the clear ethical concerns of implications for the accountancy PROFESSIONdiverse stakeholders. There is an function are immense. The first priorityexpectation that it could do more to is gaining rapid mastery of relatively The choice of imperatives flows in ahighlight and prevent everything from straightforward matters such as relatively natural manner from thesmall-scale financial irregularities understanding local accounting rules, prioritisation of the drivers and theirthrough to the major systemic failures taxation laws and procedures for profit impacts. However, the steps tothat helped cause the global financial repatriation, all of which may influence implement them will vary quitecrisis and current economic uncertainty. market entry decisions. Then come the dramatically between firms, sectors,The focus needs to shift from rule more complex challenges of getting a countries and regions. For businessesconformance to genuine compliance thorough understanding of local and accountancy professionals alike,with the spirit of regulation. The shift business customs and practices, cultural different levels of commitment to, andwill be challenging, given the scale of norms and language differences. Key action on, these imperatives couldimpending regulation that many of our here is developing the mindset within result in a very diverse range ofcontributors have identified. The ethical accountancy that is respectful of outcomes. At the strategic level, theseremit has clear implications for both the different practices and cultures and outcomes will have a direct effect ontraining and continuing professional open to ideas, wherever they originate. how the standing of the accountancydevelopment of accountants and for profession might evolve over the nextthe design of core internal audit and decade. Four such scenarios areaccounting processes. presented in the following chapter.36
    • 6. Scenarios for the futureThe analysis presented in previous PUBLIC PERCEPTION OF THE SCOPE OF THE ACCOUNTANT’Schapters suggests that, taken PROFESSION ROLEcollectively, the 100 drivers listed in theAppendix have the potential to bring At one of end of the spectrum, At one end of the spectrum,about transformational changes in the accountants could be viewed as ‘part of accountants focus solely on compliance.accountant’s role and the positioning of the problem’ that caused the financial This approach obviously stresses thethe profession. Depending on how crisis and continued economic importance of meeting the coreaccountants respond to the imperatives uncertainty, by failing to provide accounting and regulatory reportingdefined in chapter 5, there are great sufficient early warnings and risk alerts. requirements without driving a largerdifferences in how the profession could At the other extreme is the possibility sphere of activity. At the other end ofbe perceived over the next decade. that accountants could be viewed and the spectrum, the finance functionEqually, the future of the profession valued by society as true ‘guardians of moves well beyond the realm ofcould also play out differently around integrity’. Such a positioning implies compliance and adopts a broaderthe world. operating to the highest ethical remit. Hence, accountants play a far standards and ensuring that their firms greater role in everything from strategyTo help explore the range of possible comply with both the letter and the formulation through to new productoutcomes, four generic scenarios for spirit of regulatory requirements. development and defining newthe future of the profession over the business models.next decade have been developed. Theanalysis of the drivers and their impacts By focusing on these two key factorssuggests that the two most important and the range of possible outcomes, ainfluencing factors will be, firstly, the number of different possible ‘generic’public perception of the profession and, scenarios emerge. The four selectedsecondly, the scope of the accountant’s here are based on the extremes of eachrole in medium to large firms. For each key influencing factor (Figure 4). Theseof these factors, a spectrum of possible are summarised below and describedoutcomes exists. looking back from a point 10 years into the future. Table 6 (see page 38) examines how the choices made for each of the 10 imperatives help shape each of the scenarios. 100 DRIVERS OF CHANGE FOR THE GLOBAL 6. SCENARIOS FOR THE FUTURE 37 ACCOUNTANCY PROFESSION
    • ChangemakerFigure 4: Scenarios for the future of the accountant’s role (Perceived as ‘guardians of integrity’, broad organisational remit) Guardians In this scenario, many in the profession of integrity have succeeded in balancing public expectations for responsible financial management with a more entrepreneurial stance within the firm. The need to ensure sound and ethical practice has been a key factor in the gradual assumption of a wider remit by Safehands Changemaker the CFO and accountancy function, in seeking to encourage performance withNarrow Broad accountability. There is widespreadcompliance organisational acknowledgement among stakeholders Scope of the accountant’s rolefocus remit that the profession has succeeded in Public perception of the profession providing rigorous checks and balances while enabling the entrepreneurial spirit Survivor Buccaneer to flourish. They are able, therefore, to build on their reputation as a trusted pair of hands to develop greater influence across their organisations. The transition to an enlarged role was driven by the downsizing of many companies in the face of uncertainty Part of the problem and the handing of greater responsibility to the accountancy function. While there were initial concerns that accountants might hold back progress at a time when revenue was paramount, perceptions changed as the accountants developed into their new role and the business saw the value of performance with probity. The prospect of ‘having it all’ has proved a major fillip in attracting recruits to the profession and encouraging people to make mid-career changes to retrain as accountants. The key challenge here in sustaining this strategic positioning is maintaining the balance between encouraging entrepreneurial behaviour and ensuring the highest standards of financial stewardship.38
    • Buccaneer Safehands Survivor(Perceived as ‘part of the problem’, (Perceived as ‘guardians of integrity’, (Perceived as ‘part of the problem’,broad organisational remit) narrow compliance focus) narrow compliance focus)Here, many in the profession are seen The profession has succeeded in In this scenario, survival seems theto have succeeded in stepping up to re-establishing public faith in its role priority for many in the profession, whoassume a far more strategic stance, over the last decade. For many this has are seen to have chosen to focus on aplaying an increasingly central role in been achieved by deliberately relatively strict technical and regulatoryvalue creation activities. Over the last maintaining a strict focus – seeking to remit. Problems in the economy aredecade, the CFO and accountancy ensure compliance with both the spirit escalating and financial markets appearfunction have assumed a more and the technical regulatory to lurch from one crisis to the next.significant role in every major business requirements of the law. Early warning Stakeholders in society are increasinglydecision from choice of target markets systems based on robust risk critical of the profession’s failure toto the pricing of products and services. assessments lead to regular examples provide sufficient early warnings ofThe downside is that the perceived of companies that are forced to face up impending issues – both for thefocus on short-term profit maximisation to and address potential financial issues macroeconomy and at the level of thetakes centre stage at the expense of that might previously have been buried individual firm.wider issues such as effective risk in the accounts. CFOs regularly resignmanagement, public value and longer- over conflicts regarding the Accountancy professionals areterm growth and is seen by the public compromising of their firms’ ethical perceived by the public to have failed into have compromised the ethical standards and financial good practice. their duty of care and to have beenfinancial stewardship role. Auditors are increasingly at odds with either complicit in the crisis or their clients over their willingness to ineffectual in their efforts to preventWith problems still rife in the economy, qualify accounts or refuse to sign them and address it. The profession’sthe concern is that, instead of standing off. defence against these arguments is thatfirm to prevent financial irregularities, it fulfilled its legal responsibilities andthe accountants become very much The profession is seen to have become that the problems are caused by factorspart of the problem. Perception of more proactive in anticipating outside its regulatory remit.accountants has become mixed; stakeholder concerns and driving the Accountancy becomes a far lessrecruitment initiatives for finance development of rigorous technical attractive career option for manyprofessionals attract chiefly those standards and practical safeguards. potential recruits and within the firm itsexcited by a wider-ranging Accountants in the short term became role is largely perceived as a specialisedentrepreneurial brief but deter unpopular within many firms because of technical support function. Again, thiscandidates who have become their tough stance on ensuring sound might be considered an unstableconcerned about the public image of a financial practices and robust risk scenario due to the perceived lack ofchanging profession. Within the firm, management. Nonetheless, the long- integrity. Hence a goal for those in thisthe increasing ‘profit first’ focus elevates term benefits are clear in terms of the scenario may be to evolve to thethe standing of the accountancy enhanced standing of the profession, positioning of those in the Safehandsfunction. This scenario may be the ratings given to firms seen to have scenario.considered too unstable by many robust accounting practices and thebecause a short-term, profit-driven impact on attracting recruits to thefocus is not tempered by ethical profession. This is perceived as a stablefinancial stewardship, or scenario – particularly in turbulent timesentrepreneurship for long-term where firms want to demonstrateperformance. The role of the exemplary financial stewardship.accountants in this scenario may evolveinto the Changemaker scenario where abalance is found betweenentrepreneurism and ethical financialstewardship. 100 DRIVERS OF CHANGE FOR THE GLOBAL 6. SCENARIOS FOR THE FUTURE 39 ACCOUNTANCY PROFESSION
    • Table 7: Potential responses to strategic action imperatives under each scenario Changemaker Buccaneer Safehands SurvivorPublic perception Guardians of integrity Part of the problem Guardians of integrity Part of the problemScope of the Broad organisational remit Broad organisational remit Narrow compliance focus Narrow compliance focusaccountant’s roleAssume and plan for Ensures that business plans and Constantly looking for Regularly alerts management to Acts on external changes thatvolatility risk management strategies opportunities arising out of financial and regulatory could affect the firm’s regulatory cover a range of scenarios volatility and reviewing the firm’s compliance risks resulting from responsibilities and reporting including new opportunities and exposure to economic risk. external change. Alerts the requirements. the potential for economic Focuses on minimising business authorities quickly if serious collapse. Considers external impact of external change. issues emerge. impact of mitigation actions.Build the radar Scans the environment for Focuses on seeking out trends Stays abreast of regulatory Responds to new compliance trends, developments and ‘weak that could create growth developments and changes in requirements as they arise. signals’ of change that could opportunities. broader stakeholder have an impact across the expectations. business and its ecosystem.Pursue technology Stays abreast of developments. Technology investments Regular review of accounting Seeks to control costs of ICT –leadership Seeks innovative ICT focused on applications that systems to ensure that they can upgrading only to address applications that could bring could drive competitive address current and impending issues of system failure, poor both hard and soft benefits advantage or have a clear return regulatory requirements. performance or changing throughout the enterprise. on investment. compliance requirements.Prepare for true Ensures that the firm is Aims for a rapid globalisation Seeks to understand and Fulfils regulatory and reportingglobalisation developing a robust model that seeks out profitable comply with legal requirements obligations in compliance with globalisation model that opportunities wherever they and key stakeholder minimum legal requirements for encompasses, people, culture, arise. expectations for each location. each country. processes, systems and contribution to the community.Develop a curious, Pursues asset-light philosophy. Champions innovations that Involved in business change Responds to businessexperimental and Encourages staff to seek new generate business efficiency from an early stage to ensure innovation when changes inadaptable mindset ideas and experiment with and create new growth what’s proposed can be accounting systems and business models. Explores new potential. supported from an accounting processes are required. partnership opportunities. and compliance perspective.Embrace an enlarged Develops an entrepreneurial Highly entrepreneurial. Broad Seen as a potential barrier to Positions the accountant’s rolestrategic and outlook. Actively seeks out engagement with market-facing innovation by opposing as an internal technical supportcommercial role opportunities to participate in activities in particular. proposed changes that could and compliance function. wider business decision making. Encourages use of the compromise the firm’s financial Positions accountancy as an accountancy function to integrity. internal innovation partner. participate in and validate Plays a leading role in M&A, business initiatives. globalisation and business model development.40
    • Changemaker Buccaneer Safehands SurvivorEstablish trust and Plays an active role in the Business decisions evaluated Reviews accounting systems and Ensures all core financial andethical leadership debate about professional from a mainly financial and reporting processes on a reporting processes are ethics. Considers broader regulatory perspective. regular basis to ensure they compliant with regulatory impacts of all key strategic comply with the letter and spirit requirements, standards and decisions. Enforces rigid of accounting standards and the guidelines. compliance with ethical and law of each country. compliance best practice.Focus on a holistic Adopts a proactive approach to Champions continuous Aims for transparency in Reworks accounting processesview of complexity, reducing firm-wide complexity. simplification of business reporting on the firm’s financial in the event of demonstrablerisk and performance Seeks to establish a total processes. Broadens affairs that is consistent with failures or new requirements. enterprise perspective in performance reporting to best demonstrated practice and Produces accurate management reporting on both financial and encompass all key enablers of meets key stakeholder and regulatory reporting to broader indicators of business future growth. expectations. agreed standards. performance, organisational health, environmental impacts and future prospects.Develop a global Seeks to ensure the Emphasises the need to develop Ensures employees understand Implements staff training asorientation accountancy function can a rapid and rigorous both the technical requirements required to fulfil the legal and support international operations understanding of all the key and relevant accounting-related operational requirements of by encouraging staff to develop legal commitments and business customs and practices running a multinational firm. a thorough understanding of operational processes required for each market served. regulatory requirements, to enable international offices to business practices and cultural operate effectively. norms for each market.Reinvent the talent Displays a strong commitment Supports training on a Invests in training to ensure that Training provided when newpool to learning. Encourages needs-driven basis. Focuses staff are up to date with requirements emerge. Staff continuous staff development recruitment on high achievers compliance requirements and recruited on basis of technical and seeks out new approaches, with an entrepreneurial spirit. wider stakeholder expectations. proficiency alone. eg accelerated learning. Technical capability and ethical Recruits candidates interested integrity are key factors in in a wider organisational and recruitment. entrepreneurial remit. 100 DRIVERS OF CHANGE FOR THE GLOBAL 6. SCENARIOS FOR THE FUTURE 41 ACCOUNTANCY PROFESSION
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