The Accountants role in value creation

In many senses, the economic boom prior to 2008 was driven by sheer momentum. Easy credit sowed the seeds for double-digit growth figures, asset price rises and record corporate profits and returns.

The global economic outlook now looks a little more uncertain; we may well see much slower economic growth, with less available credit likely and substantially weaker asset prices. A catalyst is required - and finance professionals have an important role to play.

Increasingly, the global economy sees accountants at the heart of value creation for organizations. The onset of the global economic crisis consolidated this position as business turned to their finance professionals for support in charting a pathway to recovery.

The accountant has a critical role to play in supporting businesses

Accountants' role in value creation is the theme of a new ACCA report. The Value Creation Model for Business: 2010 and Beyond examines how accountants support the value cycle in three key areas: through 'people - skills and capabilities; through 'performance' - the rolls they execute; and through 'professionalism' - the broader role they play and the ethos they bring to an organization.

First, 'people'. Finance professionals bring an array of financial understanding and bedrock techniques to businesses, but they also provide the broader skills that organizations require. They are obliged to perform with due care and expertise, to uphold the public interest above their own and to make sound professional judgments.

The challenge for organizations is to understand how and where the skills of finance professionals can best be leveraged. Different organizations have different value chains, so the role of accountants and their contribution varies from business to business.

Minding the gaps

Organizations are, increasingly, using a multiplicity of interventions to ensure that their finance people have the right skills and talents. A top - down approach that aligns the needs of the organizations to the skills and knowledge required across finance is essential; this can be achieved using competency frameworks and maps outlining the finance skills and capabilities required across the business.

These may exist as part of broader integrated performance management systems bringing together recruitment, development, deployment and retention processes.

By adopting such systems, organizations can locate critical missing finance roles or knowledge gaps, as well as managing talent, strategic workforce planning and development and retention.

The second component of the value cycle, 'performance', describes the actual roles that finance professionals play. Beyond 2010, the report says, there will be a growing need for some organizations to recruit for deeper, highly specialized finance roles because of further regulation, increased compliance demands and greater business complexity. At the same time there will be a need for much broader - based finance roles, too.

These will provide the necessary oversight and leadership across organizations operating in complex, fragmented and increasingly regulated environments. We see five key holes that the finance professional can play in driving value creation: the strategist, the analyst, the operator, the custodian and the regulator.

Beyond 2010, there are likely to be defining issues and trends impacting on the role of professional accountants across different sectors. In the public sector, severe spending cuts will pose new challenges and require new skills and much greater scrutiny. In the private sector, value creation in a more competitive environment will also be at the heart of the finance professional's agenda as CFOs and finance leaders seek to reshape models.

Expanding and rebalancing

ACCA research points to a continuing expansion of the remit and responsibilities of the finance function, playing a pivotal role in driving organization strategy but rebalancing this with their more traditional responsibilities; there will also be a growing role for finance directors and CFOs as the guardians of the business brand. In public practice we can expect to see increasing specialization of client- facing roles and a reconfirmation of the value that audit brings to the wider stakeholder community.

We also see finance professionals playing a key role in supporting smaller businesses to improve performance and create value. In many jurisdictions there have been removals or increases in the audit threshold, and as a consequence many smaller and medium - sized practices will continue to diversify in the services they provide.

The final component of the value cycle is 'professionalism'. This involves maintaining value creation and considers the critical role that finance professionals play in ensuring sustainable, responsible business. Accountants' high professional standards underpin investor confidence in the world's financial markets, while across the broader sustainability agenda we see them identifying the obligations and shaping the policies of organizations.

Finance professionals will be key to developing and implementing frameworks to collect measure and report on the wider range of information required by stakeholders.

As auditors they will increasingly be required to gain assurance over policies and processes in relation to sustainability issues, and environmental implications, and helping determine the right business strategies to rebalance the pursuit of short- term profit with longer-term value creation objectives.

In all of these areas, the accountant has a critical role to play in supporting businesses to meet the challenges of the sustainability agenda, while fulfilling their obligations to stakeholders to bring greater transparency and meaningfulness. (ACCA)