By Owen Mavengere
NO one can say with certainty what the future will hold in a world often described as a VUCA world — Volatile, Uncertain, Complex and Ambiguous. Some definitions include an “H” for Hostile to spell out VUCAH.
Since accountants are mainly concerned with the relevance and faithful representation of financial information that they produce, this is more than a little unsettling.
Add to these, technological advances and factors such as climate change, social justice and many other complex issues that accountants are required to deal with head-on, it becomes evident that accountants are no longer just the “number-crunchers” or “bean-counters” of yesteryear, but their role now encompasses other duties. These duties include contributing to the development of business risk plans and the strategic direction of the organisation. This is especially true for all accountants that have leadership responsibilities in practice, industry and commerce.
In addition, financial information and reports being produced by accountants nowadays no longer contain only historical information, but also include forward-looking information.
As sensitivity towards Economic, Environmental, Sustainability and Governance (ESG) issues has become more prominent and significant to the primary users of general purpose financial statements (i.e. existing and potential investors, lenders and other creditors), the responsibility on accountants as preparers of reports, which relay this information has correspondingly gained more significance.
International financial institutions (IFIs), governments, regulatory authorities, suppliers, clients and other stakeholders are also becoming more interested in reports, which contain ESG issues and consider these reports before making strategic and operational decisions on any engagement.
Although the main change agent is technology, there are other disrupters such as ESG issues, rising geopolitical volatility, institutional changes and changing societal values.
The impact of other disrupters means that accountants have to be aware of these issues in order for them to understand, sift through and analyse this information so that they can be able to prepare meaningful reports, which provide relevant and material information on these issues.
In recognition of the significance of these issues to the users of financial information, initiatives have been implemented by the accountancy profession globally and refinement and additions to these initiatives are ongoing as new issues are identified and arise.
These initiatives include the establishment of the Value Reporting Foundation. More popular in Zimbabwe is the Global Reporting Initiative (GRI) framework, which has been referenced in laws pertaining reporting requirements applicable to the listed entities and public sector organisations. The bodies focus on integrated thinking and sustainability reporting, including tools to assess, manage and communicate value.
An integrated report aims to provide concise communication about how an organisation’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long-term.
The emphasis has, therefore, shifted from focusing on only historical information to the creation of value. If accountants are to remain relevant, there is a need for adaptation so that they become value creation focused.
This is the objective of the numerous projects by various professional accountancy organisations (PAOs) meant to create an accountant ready to meet the challenges of the future, which go beyond just technological changes. International examples include the projects by Cima and Acca or CA2025 in South Africa. Locally, we have the Future Fit Accountant project by the Institute of Chartered Accountants of Zimbabwe (Icaz).
Going forward technical skills will now be used in the context of a value creation process. As a responsible leader, the accountant will assist the value creation process using financial and non-financial information in the public interest.
The focus of the accountant will, therefore, no longer be the bottom line and performance ratios only but also how these are attained as the accountant recognises that he is also a social citizen who has a responsibility to fulfil his social mandate. This will require the accountant to be an integrated thinker. The accountant’s integrated thinking will culminate into integrated reporting showing how the entity has created value over time and related communications regarding aspects of value creation.
For prospective accountants, this will be achieved by reviewing the two elements of the qualification process; education and training. Skills to be included in the reviewed programme will be critical thinking and business acumen. In addition, ethics will also be a key factor just as they are in all spheres.
For qualified accountants, the focus will be on offering lifelong learning interventions. PAOs are offering technical lifelong learning interventions in areas such as ethics and financial reporting, whilst identifying and collaborating with experts in specialist fields such as governance, integrated and sustainability reporting.
Professor Mervyn King has mentioned that the chief finance officer must immediately progress into becoming a chief value officer, and this will require integrated thinking skill sets.
This has resulted in Icaz entering into a partnership with the University of the Witwatersrand in Johannesburg, South Africa to offer programmes designed for C-Suite finance professionals to inculcate, amongst other skills, integrated thinking. Other PAOs have similar initiatives meant to achieve the same.
This will ensure that as changes occur in the accountant’s operating environment, he/she is equipped with adequate skills and agility to continue being relevant.
In order to stay relevant, every finance professional must ensure that they upskill and the PAOs are monitoring their members to ensure this happens through their continuous professional development policies and programmes.
- Mavengere is the technical manager at Icaz, which is the largest and longest standing PAO in Zimbabwe, having been established on January 11, 1918, and is a body corporate incorporated under the Chartered Accountants Act [Chapter 27:02]. Icaz provides leadership on the development, promotion and improvement of the accountancy profession focusing in the areas of accounting education, assurance, good governance practices and leadership and organisational excellence. — firstname.lastname@example.org or Twitter: @OwenMavengere.