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THE FUTURE OF THE ACCOUNTANT

by Sarah Perrin
18 Dec 2006

Li Jinhua, Auditor-General of the People’s Republic of China, believes that accountants can play a constructive role in the future, assisting both with
risk management and sustainable development. He urges the accountancy profession to move beyond the traditional concept of internal control, and
to develop sensitive and comprehensive risk-detection capacity. He adds: ‘Accountants and auditors should open up their horizons and take state
governance, corporate governance, resource utilisation, environment protection, and corporate social responsibility into consideration in order to
help enterprises to realise real, sustainable development.’

Accountants need to be trained effectively if they are to play such a role. First and foremost, this means supporting the development of innovation.
Li Jinhua says: ‘They [accountants] are trained to be good at both identifying the problem and solving the problem. Sometimes they need to learn
how to challenge the rules while creating new ones. Creativity, however, is not enough. Professional ethics must be re-established and integrity and
responsibility must lie embedded in the soul of every accountant. Only this way does their creativity bring progress instead of foul play and
catastrophe to public life.’ He adds that given the fast pace of change, accountants need to have a ‘super learning capacity’. He says: ‘They need an
international perspective, strategic thinking, professional quality, and communication skills. They must be able to learn more and faster than their
managers so that they will be in a position to play a constructive role.’

Integrity is a feature also highlighted by Glyn Barker, UK managing partner at PricewaterhouseCoopers with responsibility for the firm’s service lines.
‘To add value to society, a good accountant has to have a number of characteristics,’ he says. ‘He or she has to have integrity.’ The more that
accountants with integrity have influence, whether they work in the auditing profession or in business, the better the capitalist society. ‘The thing that
makes capitalism effective is the drive to make money,’ Barker explains, but what prevents short-term gain being followed by catastrophe is ‘the
accountant with integrity’.

Barker also highlights the ongoing benefits to business arising from the traditional flow of accountants into industry after being trained in the auditing
profession. ‘The average accountant who spends five or 10 years in the profession may see a wider variety of businesses than a chief executive will
see in a career,’ he says. ‘The accountant will understand how they make or lose money, and sees good and bad management. So the accountant
ends up being an extremely good business analyst and, if able to make decisions, ends up a very good business leader.’

‘In the past 20 years accountants have become respected players in the senior management team,’ confirms ACCA’s chief executive Allen Blewitt.
‘They have to be commercially savvy in terms of supporting the business – taking their skills and applying them in the most commercial way
possible.’ However, Blewitt accepts that not every accountant can step up into a highly strategic role. ‘There will be some who are quite happy to
play more of a backroom role – traditional finance and accounting, risk management, and compliance,’ he says. ‘There is scope for both types of
career aspiration.’

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The future of the accountant | Student Accountant magazine | Students | ACCA http://www.accaglobal.com/students/student_accountant/archive/2007/72/2851017

Blewitt notes that much recent demand for accountants has been driven by enhanced compliance requirements, such as Sarbanes–Oxley. ‘That may
be a bubble,’ he says. ‘Accountants can’t assume a permanent upward curve [in demand for their services] for the next decade. That’s why they
need to be investing in their careers. Ambitious accountants need to demonstrate they have added value to their career by gaining additional
qualifications, through on-the-job learning and mentorship. And they have to demonstrate that added value can be translated into the business.’

Robert Herz, chairman of the Financial Accounting Standards Board (FASB) in the US, also highlights the recent impact of Sarbanes–Oxley on the
accountant’s role. ‘Here in the US there’s been a lot of emphasis and effort in the past few years on internal controls and making sure that financial
statement numbers are correct, and that all systems and controls around them are in place and operating properly,’ he says. ‘Everyone up to the
chief finance officer (CFO) has been very much engaged in that process. Some people would say that has diverted the attention of the CFO from
more strategic things. I think it will come back into balance.’

Herz hopes that developments in accounting standards will result in accountants playing a more meaningful role in business. ‘We are pretty
committed, along with the International Accounting Standards Board (IASB), to make accounting more relevant,’ he says. ‘We both think it needs to
get closer to the economics of what’s going on in the business, and to reflect the more complicated transactions that companies get into. We are,
gently over time, forcing accountants to better understand the underlying economics.’

IASB chairman Sir David Tweedie agrees that accounting needs to become more relevant. ‘Accounting has got to be made simple,’ he says. ‘If you
have a pension deficit, why aren’t you showing it? Accounting has not done business a service in certain areas.’ He refers, for example, to liabilities
such as lease commitments or post-retirement healthcare benefits that are not shown as liabilities on the balance sheet. ‘People are making
promises that are not costed,’ Tweedie says. ‘It’s not the fault of individual accountants, but the profession. It is letting business down.’

Tweedie adds that while many accountants say they prefer standards based on principles rather than detailed rules, they do not act consistently with
that idea. Rather than taking a judgement on how to apply a standard, they too often run to standard setters for detailed interpretations. ‘People are
desperate for answers on everything,’ Tweedie says. Because of fear of falling foul of regulators, accountants ‘dive for cover’ and demand
interpretations. ‘Have they turned into invertebrates?’ he asks. In terms of the training accountants receive, Tweedie suggests they should be
encouraged to make judgements. FASB’s Herz also has views on skills accountants need to develop to be effective in the future. ‘The in-house
accountants are going to have to be better skilled in internal business analysis,’ he says, ‘in order to be able to explain things or spot problems with
the internal numbers, or even where there might be fraud going on. Third parties expect more and more accountability. So accountants will need to
really understand the underlying business and how it gets translated, whether in internal reporting or external reporting.’

ACCA’s Blewitt adds that soft skills, for example in presentation and negotiation, will become increasingly important for accountants. ‘In finance and
accounting we are looking for people in the future who can sell new ideas and processes to their clients, so they will need to have advocacy skills,’
he says. Accountants will need to be versed in change management and strategic planning. ‘If they are just seen as the number cruncher, they will
never be seen as part of the top team,’ he concludes.

Sarah Perrin is an accountant and writer

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