Emerging role of accountants amidst global uncertainty

We are aware of the uncertain situation in the world caused by major disruptions in global supply chains, war, economic volatility, cyber threats, very high inflation and climate change. Such matters have already been discussed extensively. We have seen the perspective and opinions of economists, finance professionals, regulators, policy makers and various others. 

My primary focus here will be on the perspective and role of Accountants. Modern day Accountants are often viewed as mitigators, fixers, crisis managers, stability creators and shock absorbers. 

In other words, where there are crises, it is usually incumbent upon the accountants to step in, provide balance and suggest austerity, and thereby becoming a powerful force for reconciliation, adaptation, adjustment and corrections to practically deal with the situation at hand. Accountants are the true "Reality Check" - the executors and implementers of what policy makers wish to attain. 

In the age of Volatility, Uncertainty, Complexity and Ambiguity (VUCA), accountants are expected to stabilise, clarify and simplify. However, in order to effectively accomplish this, the accountants themselves must also evolve, adapt and acclimatise in such a way that their own foundation, core systems and procedures are very strong and capable of providing competent solutions. 

So, the question arises as to how do accountants become best prepared to best handle crises?

Aggressive adoption of effective technology and automation 

In many instances the accounting function remains to be manual and that creates room for errors, discrepancies and non-compliances. As a result, the fundamental data and information chain becomes corrupted, which negatively impacts potential mitigating policy changes and fixes. 

Hence, it is critical that, especially for developing economies (which are rapidly becoming connected to the global financial and economic framework) and business enterprises which still rely on manual procedures - to quickly automate. 

This would provide much better control and access to those leaders who are in remote locations and can no longer keep travelling to accounting hubs for the necessary information. Accounting data needs to be available globally and constantly. 

Utilising a cloud-based approach towards the maintenance and executing of accounting functions is one way to achieve this. 

Additionally, adopting a more automated and cloud-based functionality would lead to the accounting sector becoming much better capable of absorbing shock and adapting to constantly changing and negative occurrences around the globe. Data storage would be safe and secure and immune from disruptions. 

Unify and align global accounting and tax principles

A very significant component of the accounting function is taxation. An overall accounting system can never be optimal without its compatibility and alignment with the taxation framework. Thus, tax policy makers and accountants must immediately work with each other to ensure that the transition of accounting information to tax information becomes fluid and compatible. 

In order words, there cannot be instances whereby there are drastic differences between accounting rules and taxation policy. Proper alignment between the accounting function and tax policy would help accountants become an even greater stabilising force during crises. 

Furthermore, the IFRS framework of various countries need to become more aligned with each other or at the least not too far off from each other. The greater the uniformity in accounting standards the better the chance for stability and this would make accountants more capable of battling crises. 

Cost Optimisation and austerity

Accountants are known to naturally be strict and conservative when it comes to resource management. While finance managers wish to maximise investments and profitability from funds, accountants generally want to reserve and save for a rainy day. 

Well, rainy days are upon us now and therefore it is time to listen, and act based on guidance and natural inclinations of the accountants. For this to happen, conflicting philosophies and policies between accountants and other professions need to be reduced and accountants should be given greater flexibility and power to intervene and fix, which they are very good at. It is time for the CFO to listen to the Corporate Controller and work together. 

Expand knowledge and skills beyond accounting

In order to be prepared and capable of responding to and managing global level crises which have wide ranging implications on multiple professions and disciplines, the accountants themselves must increase and enhance their own knowledge, expertise and skills well beyond core accounting and taxation. 

In order to be effective risk managers and crisis mitigators, accountants must also possess high degree of knowledge and expertise in various areas such as technology, finance, economics, etc.

Empower beyond an ancillary function

Accountants have been side-tracked or coined as being a secondary function by many organisations. However, it is this group of vigilantes who help to foresee and apprehend possible risks and enforce necessary controls to mitigate and safeguard the organisations. Hence in order to future-proof the business it is imperative that we empower our vigilantes.

Mamun Rashid is an economic analyst working for an accounting firm. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.