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The WORLD is changing…
...including Finance and Accounting
BUNGET Ovidiu Constantin PhD
Head of Accounting and Audit Department
West University of Timisoara
Bucharest, september 13, 2014
Globalisation
IT Revolution
Traditional
Values
Politics
Demographics
... ...
Climate
And we all have to adapt our strategy…
Erosion of tradional values in Western democracy …
But also non-profit cooperations
Institutions matter
Traditional organizations
lose members
Debt increase in most of the
Western countries
State owned companies
collapsed
• China changes the economic and political hierarchy in the world
• Interdepence of financial markets (securizations)
• Production/labour sharing between Western World and Asia
• Cross-boarder capital flow
• International alliances, cooperation and mergers
Demographic changes – From „Christmas tree to Döner“
• will have an impact on all areas of life, infrastructure and pension
systems
• best agers (50 +) will become most important consumer group for
industries
Climat changes – Changes in energy politics
• Fukushima
Globalisation, China, Climate, Demographic changes are new challenges for the Western System
„Unsinkable tankers“ do not exist…
Political crisis in several parts of the world
Newspapers
Banks
Retail
Transport
Logistic
Real Estate
... ...
Internet revolution has an impact on many industries
- Price leadership image
- Strict cost discipline
- Using Government grants
- No trade unions
- Lowest possible salaries
- No mature organizational structure
(e.g. pension obligations, etc.)
New competitors enter industries, following strict cost strategy and use all government grants without accepting local rules of industry (e.g. no trade unions)
Traditional
Channels Reduced Margin
Focus on cost structure important
Delivery costs
Payment transaction costs
Cash collection costs
Costs for return of goods
„Second market for
goods”
D Operational costs
- 5
F Net Profit
3
E Taxes, Financing
- 10
D Operational costs
- 15
B Cost of goods
- 70
A Sales
100
C Margin
30
F Net Profit
5
E Taxes, Financing
- 7
B Cost of goods
- 70
A Sales
85
C Margin
15
How does the internet transparency changes business model e.g. retail
Internet Channels
Pea keeper
Silo thinking
Sales killer
Vision for Finance & Accounting (1/3)
Accounting Invoice
Control
Treasury
Point of sales
Accounting
Controlling
Tax
Vision for Finance & Accounting (2/3)
From „Pea keeping in a silo“
To a cross functional partner
and innovative
Business ENABLER
Vision for Finance & Accounting (4/3)
But, how about you, the „generation Facebook“?
Will globalization and IT revolution have an impact on our career in
Finance & Accounting?
Y Generation?
Luca Pacioli (1445 – 1514)
„The Father of Accounting“
Balance sheet – Double accounting started after crisis
1529 when Luca Pacioli set up the rules for Accounting
The Italian Franciscan monk Luca Pacioli wrote in 1494
the first book on double-entry accounting
Pacioli‘s accounting recommendations:
• Completeness of all accounting transactions
• Accounting transactions should be entered
currently and immediately
• A person should not go to sleep at night until the books
are balanced
• Accounting transactions should be specified
• Accounting transactions should be well-protected
against evil
Let‘s have a look back.....
6th rule....
Today‘s IT revolution changes Finance & Accounting
The IT revolution leads to two major strategic trends in F&A
Industrialization and
automatization of
transactional F&A
duties
Transparency leads to
increasing demands
from stakeholders
for comprehensive
reporting
Traditional Finance
Workforce split in US/Europe
with automatization/industrialization
Transactional duties
Tax
Local GAAP
Treasury
Workforce split in US/Europe
without automatization/industrialization
Transactional
duties
Tax/Local
GAAP/Treasury
Reporting
requirements
Compliance / Risk
Management / ICF
Future Global Player Finance
Automatization/Industrialization will change the workforce in Europe/USA of F&A in the future …..
Salary factor
1 : 4
The globalization into Finance & Accounting World
Mail Paper invoice :
• opening
• reading
• match with ordering
• allocation to right
department
Forward:
• to department
Allocation:
• employee
• supplier
• importance
Pre data entry:
• data entry
• ordering no.
Invoice Control:
• Matching with ordering
• Matching with goods entry
Confirmation/Clarifications
• with purchase department
• with goods entry dept.
• with supplier
Approval:
• following company rules
Posting:
• Supplier
• Account, Cost center
• VAT
Payment
instruction
Average costs
per invoice 5 €
Example of Automation: Traditional invoice process
E-Invoicing....
Shared Decentralized Centralized
No Business Unit
Control
of Central Overhead
Inflexible to
Business Unit
Needs
Remote from
Business
Unresponsive
Higher Costs
Different Control
Environments
Duplication
of Effort
Variable
Standards Independent of
Business
Synergies
Lean, Flat Organization
Dissemination of
Best Practices
Economies
of Scale
Consistent
Standards &
Controls
Common
Systems &
Support
Business
Unit
Maintains
Control of
Decisions
Responsive to
Client Needs
Greater Visibility
Development of industrialization of F&A (SSC and BPO)
F&A compliance became a very serious topic!
The relationship between politics and corporate sector has changed
Nicolas Sarkozy, former president of France had a serious „I‘Oréal
Donation problem“…
… 12 months later
Christian Wulff, former president of Germany had to step down…
Compliance in tax/HR - to be a good Corporate Citizen should mean also paying income taxes…
Sustainability report
Conclusions
Contact:
Dr. Bunget Ovidiu-Constantin
Mobil: +40 (740) 250 934
Tel: +40 (256) 592.501
Fax: +40 (256) 592.500
