With an evolving business environment bringing a range of new challenges, a major ACCA initiative highlights the seven key qualities that professional accountants need.
This article was first published in the June 2016 international edition of Accounting and Business magazine.
The world is changing – and faster than ever. Innovations in technology, ongoing globalisation and the evolution of governance models are moulding the expectations that employers, clients, regulators and other stakeholders have of professional accountants.
Against this backdrop, ACCA has launched a major initiative looking at how the main drivers of change will shape the practice of accounting over the next decade and beyond. This is the culmination of two years of extensive global research, including workshops in 21 cities across 19 countries, interviews and a major survey of members of the C-suite, carried out by ACCA’s professional insights team. The results are shown in a new report, Professional accountants –the future, which draws together the findings and identifies seven key technical, interpersonal and broader qualities that professional accountants will need to have in order to continue adding value to businesses, other organisations and economies in the years to come.
‘As the global business landscape evolves, so will the practice of accounting and what is expected and required of professional accountants,’ says Faye Chua, head of futures research in ACCA’s professional insights team. ‘They need to be on the front foot, highly skilled in technical areas but with a vision and a strategic mindset – an ability to see the bigger picture.’
Technical knowledge, skills and abilities and ethical competencies – the professional accountant’s technical and ethical quotient (TEQ) – will remain the core quality underpinning their success. It is technical expertise and the integrity with which it is applied that makes a professional accountant unique. This knowledge will encompass not only accounting, tax and other specialisms, but also knowledge about governance and risk.
Workshop participants had no doubts about the importance of ethical and governance strength for the future success of professional accounting. ‘Things change, people change, values change and a lot of external factors affect a person. But when it comes to ethics, the profession needs a gold standard,’ said Wayne Soo FCCA, managing partner of accountancy practice Fiducia in Singapore. ‘If your corporate reporting has a strong ethical framework, everything else will fall into place by itself.’
Similarly, a participant from South Africa, said: ‘The world is changing and our profession is changing. Technical ability is important but so is character. Trust is going to be the commodity of the future.’
Given the changing environment, however, technical knowledge and sound ethics will not be enough to add real value. Professional accountants of the future will instinctively need to complement their technical and ethical competencies (TEQ) and experience (their experience quotient, or XQ) with intelligence (IQ) and digital awareness (DQ).
The awareness and application of new technologies on working practices and business expectations was a regular theme in ACCA’s workshop discussions. ‘By 2020 everything will be about technology,’ said a survey participant from Ghana. ‘As finance professionals, we will need to have a broader range of IT skills.’
In addition, professional accountants will need to demonstrate interpersonal behaviours, skills and qualities. ‘Accountants for the future need to develop more networking skills,’ said a participant from Zambia. ‘We need to understand the global village in which we operate.’
Similarly, a participant in Singapore commented: ‘People in financial management need to learn more about working in teams, collaborating, communicating, influencing, persuading, presenting and dealing with adversity. These are very important characteristics.’
These types of skill and ability are reflected in ACCA’s model in the quotients for creativity (CQ), emotional intelligence (EQ) and vision (VQ). Professional accountants’ VQ, for example, represents their ability to predict future trends accurately by extrapolating from existing information and filling in any gaps through innovative thinking.
‘Finance people will more and more be focused on the future,’ said Marek Krejcí FCCA, finance director at Rautaruukki Oyj in the Czech Republic.
‘We need to be able to give reliable forecasts based on understanding the business, not statistics.’
Similarly, a participant from the UK said: ‘Accountants need to be less focused on what happened last year or last month and more focused on the strategic position of the company, where it is now, where it wants to be in the future – and not just the end of the year.’
Drivers for change
ACCA also examined how the technical and interpersonal competencies expected of professional accountants could be affected in six technical areas: audit and assurance; corporate reporting; financial management; strategic planning and performance management; tax; and governance, risk and ethics. We will look at the expectations for each of these technical areas in a series of articles to be published in AB over the coming months.
Survey participants were asked to select six factors (out of a list of 21) that might have the largest impact on the profession in the medium term (over three to 10 years) and the longer term (over 10 years). The findings indicate that developments in four broad areas are likely to have a significant impact on professional accountants in future. These areas are regulation and governance, technology, the expectations of multiple stakeholders, and globalisation.
Changes in regulation and governance are particularly likely to have an impact over the longer term. When asked to look beyond 10 years, the largest percentage of respondents focused on changes in the direction for global governance and roles, and the influence of emerging global powers and regional and global institutions. While governance structures are likely to become more complex, so their scope will expand to include more non-financial reporting. Similarly, most professional accountants will be affected by a greater emphasis on tax transparency and increased government action on tax and information-sharing.
New developments in information and digital technologies will also continue to change accountants’ roles and the way they work. In the medium term, a majority of survey respondents (55%) identified the development of intelligent automated accounting systems as the factor likely to have most impact, while 41% highlighted the impact of cloud computing. Smart software and systems will replace manual bookkeeping and automate complex processes such as the financial close. Technology will support more real-time reporting and analysis, as well as a transition from retrospective to predictive analysis. The spread of social media will also have an impact, improving collaboration, disclosure, presentation and stakeholder engagement.
Many respondents (42%) identified the broadening measurement and expectations of business value and the demands of external stakeholders as likely to have a major impact on professional accountants in the medium term. Similarly, in the longer term, a majority highlighted the impact of changing social attitudes to the profession. Many participants believe that professional accountants will increasingly need to present a holistic view of organisational performance, looking beyond pure numbers as well as providing forward-looking analysis.
The fourth core driver of change – globalisation – takes many forms. It is foreseen in the continuing harmonisation of accounting and business standards (an important medium-term factor, selected by 42% of survey participants) and in the increasing global mobility of professional accountants, who will require the necessary interpersonal skills to work successfully with people from different countries and cultures. Individuals will increasingly need to understand developments in global tax and governance systems as well as alternative forms of finance, such as Islamic finance.
'Lead the change'
The culmination of all this analysis is the clear understanding that, in order to add value to employers and clients, professional accountants of the future will need an optimal and changing combination of professional competencies: a collection of technical knowledge, skills and abilities, combined with interpersonal behaviours and qualities. Central to this are the seven key qualities identified. Together, these amount to a personal ‘professional quotient’ (PQ), tailored as appropriate to an individual’s particular role and stage of career.
For any individual, developing the range of quotients that will be expected of the professional accountants of the future may appear challenging. ACCA believes, however, that an individual’s performance level across all these quotients can be improved through appropriate teaching, training and development.
The ultimate vision for those who are able to develop the future skills and qualities most valued among professional accountants is an exciting one. ‘As businesses look to exploit new opportunities, respond to new markets and adjust to the changing dynamics of a global economy, the strategic planning role of finance executives will become more important,’ said a participant from Kenya. If so, the historical backroom image really will have become a relic of the past.
Accountants can be agents of change in the evolving future. In the words of Roman Fink FCCA, CFO of CSOB Penzijní společnost in the Czech Republic, ‘Accountants should not sit and wait. They should lead the change.’
'The professional accountant needs to be on the front foot – highly skilled in technical areas but able to see the bigger picture'
The external factors expected to have the most impact over three to 10 years are:
55% Development of intelligent automated accounting systems
42% Rate of change and economic volatility
42% Broadening expectations and scope of business value
42% Greater harmonisation of accounting and business
41% Adoption of cloud computing by business
39% Different aspirations and expectations of future generations
The external factors expected to have the most impact beyond 10 years are:
52% Changes in direction for governance, and influence of global powers and regional and global institutions
50% Changing social expectations and evolving scope of what is considered accounting and the role of the accountant
Seven key qualities for success
While technical and ethical competencies will remain at the core of the professional accountant’s expertise, these must be combined with additional quotients or qualities. It is the combination of these quotients that will enable professional accountants to succeed and add value to their employers and clients in the years to come.
Technical and ethical (TEQ)
The skills and abilities to perform activities to a defined standard while maintaining the highest standards of integrity, independence and scepticism.
The ability to acquire and use knowledge: thinking, reasoning, solving problems and the ability to understand and analyse situations that are complex and ambiguous.
The ability to use existing knowledge in a new situation, to make connections, explore potential outcomes and generate new ideas.
The awareness and application of existing and emerging digital technologies, capabilities, practices, strategies and culture.
Emotional intelligence (EQ)
The ability to identify your own emotions and those of others, harness and apply them to tasks, and regulate and manage them.
The ability to predict future trends accurately by extrapolating existing trends and facts, and filling the gaps by thinking innovatively.
The ability and skills to understand customer expectations, to meet desired outcomes and to create value.