Future of Accounting: Breaking the Chains..

"Accountants are just bean counters.."

"Finance people lack business acumen.."

"Finance does not understand our business.."

We hear such statements every day and often do not have a good counter argument because this is pretty much the truth in most cases.

Despite rapid change and faster innovation cycles, finance professionals generally keep a historical mindset and lack proactiveness, foresightedness, future orientation and a thrust to innovate. We are happy in our comfort zone enjoying our legacy.

But why is this so? We are not dumb people and there is no shortage of brilliant minds and smart people within the profession.

If we look at our background, the finance professionals are required to take a heavy dose of Accounting education during early part of their career. The Accounting curriculum built on the principles of conservatism, historical cost, objectivity, and tangibility is perfect to build perfect accountants. But do we really need perfect accountants in today's business environment?

True. We are still required to prepare financial statements in compliance with IFRS that are built on Accounting principles. But how relevant the IFRS are in today’s fast changing world?

Modern technology is fast realizing the dream of having real-time info into a reality. Business decision makers are hungry for this real-time info to use in their predictive and prescriptive analysis. Once this becomes mainstream, few people will have time to look into historical information.

Historical reporting may survive for some time due to regulatory requirement. Because regulators are still sleeping. While the world is moving at lightening speed, regulators even cannot decide whether Uber is a taxi or private car.

We cannot survive the Accounting profession based on regulatory requirements only. The critical resources in the profession today are predominantly invested in compliance and controls.

There has been lots of talks within the profession about supporting the business and becoming strategic partner, but reality remains that we still have an inherent mindset of compliance and controls.

Modern technologies like Blockchain, RPA and AI will soon take care of the bulk of the compliance and controls requirement. This would relieve substantial amount of resources currently tied up in Accounting and Auditing as obsolete.

Most of the CEOs and CFOs would take pride in relieving such resources in the name of cost savings and ROI on technology spend. But with this scenario where will Finance lead in future?

The full implementation of advanced technologies will lead to prevail a culture of self-servicing among our non-finance business partners. They will not need help from finance professionals to press the button on their devices to access any financial numbers.

The need of Finance professionals will only be appreciated if they are able to provide high value services that our business partners cannot serve themselves.

Are we prepared to provide service at that level of expectation?

If not, then the Finance function will confine to a small bunch of specialists taking care of matters like tax, IFRS, treasury and M&A. The rest will be taken care by the combined forces of blockchain, AI and RPA.

Isn’t it the time to do something now before we become endangered species?

Let’s get back to basics…

No technology can hurt us if we have the right caliber of talent. The Accounting curriculum we use today to develop finance professionals for future is outdated. It is still heavily concentrated on Accounting principles and framework.

Other topics related to Leadership and Technologies that are more relevant to today’s business model are taught lightly as supplementary coverage. No wonder, more and more companies are hiring MBAs as CFOs who even do not possess any Accounting qualifications. 

Feeding the young minds with heavy doses of principles like conservatism, historical cost, objectivity, and tangibility is doing more harm than any good. We are living today in a world characterized by uncertainty, subjectivity, intangibility and futurism. We need to be innovative enough to bring such realities into a practical framework to create value for the businesses we serve.

We need to fundamentally shift our focus from Accounting, controls and compliance to decision support and business partnering. Simply talking about supporting business and having ambition to become strategic partner will not yield any tangible results. We need to build a solid structure and framework at the profession level to develop the talent of future finance leaders.

No doubt, with the complex global structure of Accounting standards setting bodies, regulatory authorities and certification institutions, it is not easy and highly complicated to implement even a small scale change.

But a thousand-mile journey starts with the first step. At lease, we need to start talking about it. With the presence of brilliant minds and strategic thinkers within the profession, I am sure, we can not only save our profession from getting obsolete but take it to a level where we could proudly serve our business leaders as their true strategic partners. ++

ABOUT THE AUTHOR:

Saleem Sufi is a CFO Leadership Coach and Strategy Expert with more than 20 years CFO level experience working for top world class Fortune 500 and Private Equity owned companies in Asia Pacific, Middle East, Europe and United States. He is the Founder and President of MECA CFO Academy where he leads the Senior Finance Community with an entire focus on leadership development and career growth.