Accounting must look to the future

Once it was easy to identify an accountant. They sat at sloped desks with green eyeshades and painstakingly posted ledgers in columns of debits and credits.

Everyone knew what an accountant did and the profession was well-defined.

As we enter a new millennium, how has that role changed and what of the future?

The reality is that many Australian companies will die out if they are slow to change and unable to harness their resources.

Likewise, professions that don’t adapt will go the way of the dodo.

The speed at which business can predict and adapt to change will be critical in a market where timing is everything.

There will be three factors which will determine the winners from the losers in business:

• innovation – business must be able to innovate or risk becoming obsolete

• creation – business must have the ability to take their innovations and package them into a marketable product

• distribution – business must have the ability to capture and deliver their product to a market in an efficient way

The same point can be made for professionals such as accountants.

Those who rely simply on analysing numbers will have no future.

Numbers are sterile. They tell you nothing of the internal processes that a company employs, nothing of the competition a company faces and nothing of the vital intangible assets of companies – people or intellectual capital.

To survive, finance professionals must ensure that the information they provide is relevant and understandable.

It is their job to ensure decision makers see the relevance behind the figures.

The bulk of the information accountants prepare is historical. What companies and other consumers of financial information want to know is the future.

So, as a result, we have seen the proliferation of other professions who claim they can see the future – business advisors, financial planners and industry analysts who take the information provided by accountants and auditors and try to predict the future.

Accountants are the people with the information about a company's health. We have our fingers on the pulse. So why does the bulk of the profession continue to look at what has been rather than what will be?

For accountants in commerce and industry, there has already been a fundamental shift towards a wide-ranging advisor role, reaching across conventional boundaries and skills. We are no longer just ‘scorekeepers’ of past performance.

I believe that, most importantly of all, accounting is a leadership role.

We should not mourn the decline of traditional compliance work when change presents so many opportunities.

The American Institute of CPAs believes that, in ten to fifteen years’ time, CPA firms as we know them will disappear – replaced by consulting firms that employ CPAs.

This trend is already reflected in Australia. Information provided by Results Accounting suggests that consulting service revenue generated by Australian accounting firms is increasing by about 20% per annum (coming off a low base) compared to traditional services which generate 6% per annum.

Much of this change is because the traditional compliance services are either being overtaken by technology or they are coming under strong pressure from external bodies such as banks, insurance providers and financial planning organisations.

The shift to an information economy will place greater value on workers skilled at identifying and solving complex problems and acquiring marketable knowledge.

In this environment, the concept of lifelong learning becomes a key.

The most successful knowledge workers will be those committed to lifelong learning. Employees will be looking for organisations that are committed to a learning culture.

Employers will, increasingly, offer less long term job security and companies will tend to become hub organisations with many employees moving to contracted status and working for a variety of clients.

This will become easier as technology develops and makes access to information and communications networks much easier.

So what’s the bottom line?

I believe we must stop looking at accountancy as a narrow field and meet the market demand for real time, accessible and understandable information.

We can no longer afford to tell our employers or clients simply what the numerical answer is – we have to tell them why.

The accountant or finance professional of the future will be a person who can:

• market themselves effectively, whether to employers or to clients

• deliver strong communications skills

• understand IT and its application to business decision making

• shift their emphasis from the tasks they have traditionally done to those that the market is willing to pay for. For an accountant, these include business analysis, strategic planning, decision support, and information management

• combine their technical skills and strategic vision to be able to contribute effectively to the new range of performance measures that stakeholders will demand in the 21st century

• and, finally, add value by focusing on means to improve the performance of their clients, customers and employers.