Changing Face of Business -Role of

Chartered Accountants in Industry

Hyderabad, August 3, 2012

By CA P R RAMESH

Mega Trends/Disruptions• Globalisation

• Changes in profile of business and business practices

• Technology

• Emergence of new services and extinction of traditional services

• User activism

• Regulatory activism

• Investor activism

• Social and other networks

• Standards and laws requiring compliance more complex

Globalisation

• World is flat• Geographical barriers still exist but being

dismantled• Shift of economic activity and power• Movement towards common global standards

and practices

Technology

• Mobile and handheld devices and their influences

• Information– speed– size– flexibility

• Information less private and more public• Impact on services, jobs, etc. – e filing, XBRL,

etc.

Emergence of New Requirements

• Non-financial audits• Non-financial certifications – carbon credit,

etc.• Forensic• Post Deal Integration• Background checks, credit checks, etc/• Litigation services and dispute resolution

Emergence of New Services and Extinction of Traditional Services

• Anti-money laundering• Risk Management• Data Analytics• Emergence of control assurance, revenue

assurance, fraud risk assessment, concurrent audit

Changes in Profile of Businesses and Business Practices

• Disapproval of Mom-n-Pop businesses• Technology driven• Networks, alliances, mergers• Emergence of brands• High customer attrition and low customer loyalty – seller

beware• Challenges of employee career management and motivation• Aggressive advertising and solicitation• Tendering and cost cutting• Availability of multiple options

User activism

• Class action suits

• Media – judge, jury and executioner

• Right to information

Investor activism

• Shareholders more aggressive• Analysts scrutiny• Role of Private Equity and Venture Capital

investors

Regulatory Activism

• New, stronger and tougher regulators – e.g. SEBI, NFRA

• Investigative agencies active – e.g. SFIO, CBI, etc.• Co-operation and exchange amongst regulators• Action – swift, fair and certain

Social and Other Networks

• Facebook, Twitter, Yammer, etc.• Using networks for marketing• Using networks for collaborative solutions and

service delivery

“Our tools for locating documents are confusing and it is unclear who to turn to if I have questions.

The world of today is a very different place in terms of creativity, self-expression, social belonging and sharing

Search

Collaboration

SocialNetworking

Mobility

Self-Promotion

Compliance

• Accounting Standards• Corruption, bribery, etc.• Insider trading and capital markets related

laws• Deposit of statutory dues• TDS and other related obligations

Successful CFOs balance their roles and tasks

The “Faces” are roles that CFOs play:

Steward: Protect and preserve the assets of the organisation

Operator: Balance capabilities, costs and service levels to fulfill the Finance organisation’s responsibilities

Strategist: Provide financial leadership in determining strategic business direction and align financial strategies

Catalyst: Stimulate behaviors across the organisation to achieve strategic and financial objectives

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CFO Functions

• Accounting• Financial Reporting• Treasury – funds management• Budgeting• Audit and Assurance• Taxation – Direct and Indirect• Compliance with laws

• Key input provider to strategy• Mergers and acquisitions• Risk Management

• Eyes and ears of CEO• Advisor to Board, Management• Representation to Government• Representation to Regulators

• Investor and analysts communication• Face of the entity to bankers• Face of the entity to capital markets• Face of the entity to regulators

Line Function Strategic

Advisory Communications

So where does this leave CFOs? The top 10 challenges

Control Challenges

Efficiency Challenges

Performance Challenges

Execution Challenges

Change and

Transition Challenges

1. How do I ensure that the data the company relies on is accurate and provides the most useful information?

2. How do I reduce the burden of maintaining my control environment without compromising its integrity?

3. How should I organize finance to serve the needs of the different stakeholders?

4. Given the heterogeneous nature of finance’s roles, how do I attract, develop, and retain the talent required to fulfill finance’s mission?

5. How do I create a common language that empowers management to see themselves the way investors do?

6. How do I ensure that our investments in innovation and growth yield the greatest returns?

7. How can I partner with other senior managers to drive strategy execution across the enterprise?

8. How do I reduce costs while continuing to add value?

9. How do we determine our key gaps?

10. Being “world class” in everything seems expensive and takes too long; where should we focus?

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What should Chartered Accountants in Industry do?

• Be technology proficient• Technical up-to-date• Nimble• Have strong analytical skills• Jack of all and master of none• Transition from a book keeper to a business accountant• Be control conscious • Develop strategic thinking• Develop general management skills• Focus on communication skills• Be mobile

What should Chartered Accountants in Industry do?

• Be relevant

• Maintain the highest level of INTEGRITY

Thank You