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Business | Associations & Practice

Addressing Changing Dynamics in the Value Proposition of the Nigerian Chartered Accountant

Feb 13, 2022   •   by   •   Source: Proshare   •   eye-icon 156 views

Sunday, February 13, 2022 / 06:50 AM / Q&A with Olufemi AWOYEMI / Image Credit: Akin Fatunke

 

Being the abridged text of the session between Akin FATUNKE, FCA, host of ICAN-On-Air and y Olufemi AWOYEMI, mni, Chairman of Proshare Limited during the ICAN-On-Air program held on Thursday, February 10th, 2022.

 

 

Proshare Nigeria Pvt. Ltd.

 

 

QUE 1: When you hear of a Chartered Accountant or that a Chartered Accountant is involved in an activity, project, or endeavour, what comes to your mind?

 

ANS: I assume the Chartered Accountant (CA) is highly skilled in implementing accounting systems and processes, preparing financial reports, reviewing the company's systems and analyzing risks, controlling the principal data of the general ledger, and ensuring compliance with government revenue and regulatory services. I often assume a project that involves a CA would be highly ethical and professionally handled. Therefore, such a project must be carried out following necessary corporate governance and void of inaccuracies.

 

QUE 2: International Federation of Accountants (IFAC), the global body that regulates the Accountancy Profession, strongly believes that a Chartered Accountant must defend the public interest.

 

a. What does this mean?

ANS: An accountant defending the public interest implies that a professional accountant, be it Chartered Accountant or not, is expected to provide sound financial and non-financial reporting and analysis to all stakeholders, including investors, consumers, suppliers, and all other parties affected by the accounting information. Financial statements, audit reports, tax returns, etc. must be prepared and presented faithfully showing the true and fair view of businesses, since such accounts may help to realize certain interests of the broader society, such as efficient management of scarce resources.

 

b. What qualifies him for this role?

ANS: An accountant that will defend the public interest must be mindful of the wider economic, political, and cultural implications of his accounting practices. Chartered Accountants' qualifications demand that the accountants must show sound knowledge of accounting processes, financial accounting and reporting, audit and assurance, business law, economics, tax, ICT, basic corporate governance principle, and management accounting. With such knowledge, he/she is relatively qualified to defend the public interest.

 

c. Who is a Chartered Accountant and what does it take to be a Chartered Accountant?

ANS: A Chartered Accountant is a professional accountant who has had three years of audit and/or tax training and has passed the qualifying examinations. In most countries, it is the most qualified accountancy professionals where the holders have the authority to carry out specific activities (such as financial consultation and advisory) in the accountancy ecosystem.

 

To be a Chartered Accountant is country-specific, as each country has its requirement for certification. It takes approximately five years of education followed by 1-2 years of work experience, then 18 months of exams to be a Chartered Accountant (Certified Public Accountant in the US). To be a Chartered Accountant in Nigeria requires a tertiary education degree and completing a series of professional examinations.

 

However, I believe it should take tertiary training and a few years of experience in the following area to be a Chartered Accountant:

1.      Financial accounting and reporting

2.     Auditing and attestation

3.     Corporate governance principles

4.     Regulation and

5.     Business strategy

 

d. What value does he/she add to the business of wealth creation process?

ANS: First, there is an emergence of wealth creation accountants that help clients to accumulate wealth to meet personal needs and businesses to implement strategies for wealth creation and wealth protection.

 

Then, accountants can be a critical entity in the business of wealth creation by providing business budgeting and cash flow planning, preparing asset protection plans, estate planning, coordinating risk management, and preparing business succession plans. The accountant can leverage his/her wealth of insights and experiences to provide proactive and strategic financial planning and management to support business top and bottom-line growth. 

 

 

QUE 3: Peter Bakker in 2013, as CEO of the World Business Council on Sustainable Development, opined that "professional accountants will save the world".

 

a. Do you share this perspective?

ANS: I share Peter Bakker's perspective in that accountants have a range of approaches, including measuring, accounting, reporting, and assurance services to provide quantitative and qualitative measures for business and societal social sustainability.

 

b. How might this be?

ANS: Peter Bakker was most likely speaking about the need to save the world from the adverse effect of climate change. In that instance, I share his perspective that professional accountants would save the world through internalizing the cost/externality of climate change in the costs and benefits analysis, but I wish to extend it to government and corporate policymakers. Public and private policymakers, such as ICAN, ANAN, and CIMA, might need to develop strong and unified environmental, social, and governance (ESG) reporting frameworks. Such moves harmonize accounting standards and create an alignment between the business operations and the ESG impact. IFAC might also need to strengthen its environmental sustainability clause in the public interest concept as it relates to the accounting profession.


 

Proshare Nigeria Pvt. Ltd.


 

 

QUE 4: Without accounting, there cannot be accountability? Sir, how thought-provoking is this statement?

ANS: Indeed, the accountancy profession is a critical bridging gap for recording and reporting different operations in any organization. This makes it possible for business executives to achieve internal and external accountability. We predicate the argument for accounting to achieve accountability on the notion that organizations have well-defined responsibilities and ethical practices that describe the tasks and values of different aspects of the organization. Such tasks and value propositions need specific mechanisms for holding people responsible. In that context, accountants assume a distinct position in demanding fair and accurate feedback- both financial and non-financial from different components of the organization. Essentially, given that accountants handle the integrity and accuracy of the company's financial statements, regardless of the source of the errors, they can hold everyone accountable.

 

On the flip side, emerging technologies with features such as automation, blockchain ledgers, and cloud computing have made it possible to enforce accuracy and accountability in any profession with little effort of the accountants.

 

 

QUE 5: As a seasoned Chartered Accountant, will it be too burdening or too demanding to say that Chartered Accountants have fiduciary roles to play in the lives of individual and corporate citizens and even nations?

ANS: The growth of businesses and the emergence of disruptive technologies have caused the need for accountants to play fiduciary roles in all segments of the society-individual, corporate entities, and public enterprises. Considering the operating standards and the evolution of the profession, it would not be too burdensome to place such demand on Chartered Accountants to act within the purview of the general interests. Playing fiduciary roles is not an additional demand on Chartered Accountants but a by-product of defending the public interests as quoted by the IFAC.


By merely ensuring that financial statements/documents are accurate and offering advisory/guidance services on cost reduction, revenue and profit maximization, risk management, and opportunity areas, they are essentially playing the roles. More so, ensuring that financial and tax records comply with relevant laws and regulations would also imply that Chartered Accountants are performing their fiduciary roles to the corporation and the nation. Meanwhile, by developing skills and expertise in forensic accounting, Chartered Accountants can assist the legal proceeding, fulfilling their fiduciary roles to the nation. 

 

 

QUE 6: Because of the global dynamics of economies and the speed at which technologies are developing and changing.

 

a. Are Chartered Accountants living up to the dynamics/changes?

ANS: Several technological changes have impacted the accountancy profession and financial services. The evolution of technological changes in the accountancy profession is in two forms. On one hand, there are adaptive changes to the essential day-to-day operation of accountants in form of automation and leveraging some accounting software and platforms. Much of what Chartered Accountants are doing today is in this form. On the other hand, there is the real disruptive change that has the potential to radically transform the profession. Chartered Accountants are yet to live up to this dynamic.

 

b. Should they not be the drivers of this change rather than being reactors to it?

ANS: While we can say that the accountancy profession is currently in the transition period towards a system that runs on digitalized platforms and emerging technologies such as machine learning and artificial intelligence, Chartered Accountants being the most qualified accounting professionals ought to lead the transition towards the digital tools. Indeed, Chartered Accountants should not be mere recipients/end-users of the emerging technology but initiators of the accounting technology and providers of data-driven insights that organizations can adopt to improve operational efficiency and accountability.

 

 

QUE 7: By their training, Chartered Accountants are positioned to instill financial sanity and add value to the lives of individual and corporate entities.

 

a. But with their changing roles, is there a minimum post-qualification skill-set that every Chartered Accountant must have had?

ANS: Undeniably, a forward-looking accountant will need to be a technologically savvy accountant that grows with the changing industry demand. Chartered Accountants must shift their focus on skills that align with the emerging technologies and the future of the accounting profession. As a personal post-qualification skill set, Chartered Accountants will need to develop skills in emerging areas of business interest, such as data analytics, cloud-based systems, problem-solving, effective communication, ICT, blockchain technology, and systematic thinking. These skills create additional opportunities as trusted advisors and business strategists for accountants. Professional accounting institutions may also need to set a higher standard of qualifying requirements to match the emerging technologies.

 

b. How can they enhance these skill sets to remain relevant in the scheme of things?

ANS: Accounting is undergoing undeniable changes due to emerging technologies, including cloud computing, machine learning, AI, and blockchain, among others. Accountants that want to remain relevant will need to be professional, dynamic, and be dedicated to developing with the industry trends. 

 

Naturally, Chartered Accountants are equipped to identify where organizations can improve and the weak links. However, that cannot be enough again. Each accountant must strengthen his/her competency by deploying skills in blockchain and Big Data technology to create value and to incorporate environmental, social, and governance (ESG) framework into the corporate performance system. This helps businesses to stay relevant and in tune with the global sustainable transition.

 

They can also develop competency in data analytics and problem-solving skills to use their experience in non-financial information to promote and measure transformative progress in line with the changing paradigm in accounting technology.

 

Meanwhile, accountants need to also harness emerging skills such as cloud accounting systems, robotic process automation, and AI/ML to handle financial data, understand data source linkage, decipher the model, interpret the results, and make informed decisions.

 

They may also need to enhance their capacity in advisory services through sector or industry-specific training and robust data analysis.



QUE 8:  Given the economic and financial challenges facing the nation, what roles can Chartered Accountants play to assist the government in overcoming them and resetting the nation on the path of prosperity?

ANS: Unlike economists, bankers, medical professionals, and lawyers, accountants are mostly invisible to the public domain despite their significant contributions to national growth. In the current context of economic and financial challenges, Chartered Accountants can function in three fundamental capacities to aid the national prosperity effort. They can promote sound financial management, facilitate the growth of MSMEs, and facilitate access to capital resources in the nation.

 

A study by IFAC found that professional ethics, educational requirements, as well as monitoring and oversight mechanisms, help to tackle corruption. A well-established Code of Ethics governs chartered accountants by default. Any act of financial mismanagement must engage a professional accountant. When Chartered Accountants act sincerely within the established Code of Ethics, they will be professional and patriotic, acting in the public interest. Chartered Accountants have a unique role to play in ensuring that they conducted all transactions and operations of businesses and government with standard financial management and in the nation's interest.

 

We consider MSMEs the backbone of any economy, contributing significantly to employment and GDP. Chartered Accountants can facilitate the growth of this sector in some ways. They can create specific services tailored to meet the needs of the MSMEs. They can provide tax and other financial advisory services at a competitive cost to this sector. Alternatively, they can aid the growth of small accounting firms by outsourcing lower-level activities to them.

 

Accountants are considered the masters of credits and debits sometimes in the back office. This knowledge and skills can facilitate access to funds. Chartered Accountants can play the role of identifying viable options to raise capital for private and public sector enterprises. Meanwhile, they can help to deliver insights on how climate change risks can impact the financial statements of businesses and governments across all levels

 

 

QUE 9: Sir, whenever there are financial failures in corporate entities and even national economies, Chartered Accountants are quickly/mostly blamed (or fingered). On a blame scale of zero per cent (0%) to 100%.

 

a. where will you place or situate the Chartered Accountants?

ANS: Most likely 80%, given that a proficient Chartered Accountant would have seen the signal of the imminent failure and should have provided early warning signals.

 

b. where will you place or situate persons with governance responsibilities?

ANS: Most likely 90%, given that organizations with strong corporate governance structures and responsibilities show better performance in organizational functions, including finance, operations, and compliance than those with weak corporate governance responsibilities. 

 

c. Where will you place or situate the societal value system?

ANS: Most likely 70%. The societal value system has significant implications for business models and corporate social responsibility, which further influences achieving strategic business objectives.  

 

 

QUE 10: In closing, Sir, what is your advice to Chartered Accountants on how to enhance their leading-edge in corporate governance in the face of the fundamental change in how values are created?

ANS: Indeed, there is a significant change in value creation. To create value now is to establish and prioritize the needs of all stakeholders, understand their relevance to the purpose and strategy of the organization, and examine the best approach to balance all their needs and aspirations. Emerging technology has made it easy to leverage data to identify and understand how and factors that drive value creation. Essentially, value offering by professional accountants has shifted to account for all resources, capital, and relationships of all stakeholders in integrated reporting. The core value is now to go beyond financial and tax returns processing to internal and external stakeholders' effects. 

 

To enhance their leading-edge in corporate governance for value creation as technology progresses and more organizations tend towards cloud-based information systems, accountants must become proficient in leveraging the cloud accounting system to offer stakeholders up-to-date financial and non-financial analysis to stay competitive. Accounting professionals who wish to use blockchain must be familiar with relevant software programs, as well as how to set up information transfer for ledgers, contracts, and records.

 

With automation becoming a major aspect of the profession, it is essential to prepare for the future of accounting by developing skills to perform administrative and analytical tasks that technology cannot do. Many accountants may need to take on an advisory role with stakeholders, which demands upskilling to big data analytics to decipher patterns and trends. There will also be the need to be knowledgeable in data visualization strategies and programs, data mining, and other data science skills to better understand how to translate data into insights. As technology develops and the value creation process changes, Chartered Accountants may need to consider high-level analytic skills.

 


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