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Professional Accountants in Business Committee (PAIBC) – Stephen L. Muscat

10 Dec 2019 12:00 | Deleted user
The Accountant – The Future Professional Accountant in Business. Autumn 2019 (MIA Publication)
Introduction
Kevin Dancey, CEO of IFAC, welcomed all the participants and started by thanking Charles Tilley, the outgoing chair for his valid contribution since he took over the chair in 2014, outlining what was achieved since then.

Kevin said that the emphasis was on the future of accountants and the need to invest in education and devise the correct skill set for future accountants. The future will create a huge demand for value added services for accountants to take a lead on, such as technology.
Leveraging and Assessing the value of Data

Presentation by Herman Heyns, CEO of Anmut Datactivism:
Mr Heyns explained the importance and value of data to a business. He quoted Peter Ducker who said, “you can’t manage what you cannot measure”. He also spoke about the increase in intangible assets that the value of data was creating for businesses, as well as the non-accountability of such data. Companies were not doing enough on data management, even going as far as spending huge amounts with little success. Data has become an increasingly valuable asset: it powers the new economy.
Mr Heyns explained that over the last 10 years Anmut have surveyed large organisations and found that 97% acknowledged that the measurement of their business data was a problem. It is important to not just delegate this to the IT Department, but to take a strategic point of view at it. Businesses need to look at their data and create a value and portfolio for their different data types, such as that which can be shared, that which needs protection, and so on. It is crucial to apply management discipline where data is concerned. Furthermore, data needs to be treated as a strategic asset.
Valuing data will result in informed and better investment decisions. The value or cost of such data is not normally seen on balance sheets, but it is important for the valuation of businesses, for instance, when Microsoft bought LinkedIn, the data LinkedIn had was considered an important element in the amount Microsoft paid for its acquisition.
Mr Heyns elaborated that the CFO has the responsibility to take on the role for data management since s/he is seen as the custodian, increasing the importance and relevance of the accountant’s function. The CFO has the critical role to point out the value of this data asset to the business, how to improve on it, and how to invest in it. This is not a technology investment but a business investment.
During the discussion, a point was raised regarding investment in the finance team for the the necessary skills to step into this role, and the importance of analytical skills.
Integrated Value Creation

Presentation by Simon Theeuwes, Senior Manager, Corporate Treasury, Schiphol Group
Mr Theeuwes introduced his organisation which has the management of Schiphol airport as one of its main businesses. He highlighted the key figures for the group (destinations, number of travellers, tonnes of cargo, revenue, etc.) as well as the sustainability of the group (sustainable aviation, circular economy, energy positive and well-being).
Mr Theeuwes said that Schiphol Group’s vision for Integrated Thinking for 2050 is holistic and centres around creating long-term value with clear objectives for improved quality of life, quality of network and quality of service. This resulted in the implementation of KPIs with Top Performance indicators, including employee promoter score, on-time airline performance, safety index, CO2 emissions, and reputation score from residents.
The Integrated Reporting Must Haves that Schiphol identified include:
  •  Stakeholder dialogue
  • Materiality Analysis
  • Value Creation Model
  • Multidisciplinary teams and integration across departments
  • Clear reporting processes
  • Commitment from CEO/CFO and Management Board
This, Mr Theeuwes explained, will result in balanced reporting, transparency, and reliability.
Stathis Gould, Deputy Director of IFAC then presented IFAC’s Integrated Value Creation mode, highlighting the different elements of defining, creating, delivering, and sustaining this value.
A debate arose when one of the members quoted an intervention during a round table with top USA CEOs that “profit was not the ultimate objective”. The majority of participants endorsed the statement. This underlines integrated value creation that encompasses other areas of importance and relevance, apart from profit.
A workshop on the roles of board and management for value creation followed, discussing the information needed to fulfil their roles. Members spoke about strategies that management needs to recommend and discuss with the board, including any resources required. The board needs to define what value creation is for the organisation, and in terms of information this typically includes industry data, company data, bench marking analysis, any and tailored information required, as well as risks to the value. This information would be common to both board and management, with just the level of detail being different between the two.
Metrics and Methodologies for Long-Term Investor Decision-Making

Presentation by Sarah Williamson from FCLT Global (Focusing Capital on the Long Term, a non-profit organisation).
FCLT have come up with a document, identifying 17 pre-financial metrics (traditionally known as non-financial indicators) targeted at investors, using quantitative methods. These metrics must be material (to investors), assurable (by auditors), uniformly defined, consistently calculated, and universally applicable (across countries, sectors and contexts).
These criteria have been grouped into:
  • Talent
  • Governance
  • Innovation
  • Capital allocation
  • Environmental footprint
A selection of pre-financial dashboard metrics was shown as an example, including:


Three Lines of Defence Model

Institute of Internal Auditors
This session was held by the PAIBC to give feedback to the Institute of Internal Auditors (IAA) on the Three Lines of Defence Model that had been discussed in the previous meeting. This model was created to assist the internal audit function in their line of duty, highlighting the different steps, and tools needed for an effective internal audit.

Professional Ethics 

IFAC PAIBC Discussion re IESBA Draft
A discussion of the IESBA Exposure Draft on the Role and Mindset Expected of Professional Accountants took place. Laura Leka (IFAC PAIBC Technical Manager) outlined the exchange between IESBA and IFAC where the former confirmed that, while the draft is actually reserved for auditors, it still needed to describe the mindset and behavioural characteristics of all professional accountants.
The key proposed changes that were up for consultation were:
  • Highlight the wide-ranging role of Professional Accountants because of their skills and values;
  •  Highlight the relationship between compliance with the Code and Professional Accountants’ responsibility to act in the public interest.
  • Increase the robustness of the Fundamental Principles, of integrity objectivity, and professional behaviour.
  • Introduce the concept of determination to act appropriately in difficult situations.
  • Require all Professional Accountants to have an inquiring mind when applying the Conceptual Framework.
  • Emphasise the importance of being aware of bias and having the right organisational structure.
Small and Medium Sized Entities

A Presentation by Jonathan Shaw, FD of Deltex Medical Group , Mark Farrar, CEO of the Association of Accounting Technicians (AAT), and Iftikhar Taj from the Pakistan association of accountants (and IFAC PAIBC Member)
Mr Shaw gave an introduction of the company and overview of the finance function. He spoke about the issues regarding the finance function in a small business, the accounting and business software, and the small team of finance people in the business. Mr Shaw discussed the challenges of working for a small business, mainly around costs reduction, consultancy fees, and the reality of being “alone” since the company is small and there no other senior accountant with whom to discuss issues.
Mr Farrar explained what his role at AAT was and the function of the association. He gave an overview of the AAT members who are evenly employed in large as well as SME organisations, as well as mix of commercial, public practice and public service entities. Mr Farrar explained the importance of accounting technicians within the accountancy profession as a major support to Professional Accountants in Business.
Mr Taj then spoke about the role of PAIBs working in SME and family-owned businesses in Pakistan, which make up about 5 million businesses. The Pakistan Accountants Association was involved in a push to introduce Corporate Governance in Family Owned Businesses (FOBs), including training for family business owners in the role of Directors.
Accountants’ and Businesses’ Contribution to the Sustainable Development Goals

Presentation by Paul Druckman, Chair of the World Benchmarking Alliance

Mr Druckman spoke about sustainability and the issues facing the world today, from a business and accountancy point of view. He also mentioned the initiatives being taken by companies to make a better profit as against just making a profit, as well as the future of corporate reporting, promoting brevity, comprehensibility and usefulness in corporate reporting.
Mr Druckman quoted the famous English broadcaster and natural historian, who said “Anyone who believes in indefinite growth on a physically finite plant is either mad, or an economist”, suggesting that accountants should be included along with economists.
The World Benchmarking Alliance came up with seven Transformation and development goals (benchmarks), namely:
  • Social
  • Agriculture and Food System
  • Decarbonisation and Energy
  • Circular
  • Digital
  • Urban
  • Financial System

On a final note Mr Druckman urged Accountants to take the lead and transform into Creation of Chief Value Officers (CVO), stating that a good CFO has to be a good CVO.

Stephen L. Muscat is a Fellow of the Malta Institute of Accountants (MIA), and a Certified Public Accountant (CPA). He is also the Chairman of the Professional Accountants in Business (PAIB) Committee of the MIA, as well as a member of the PAIB Committee of IFAC, the International Federation of Accountants. Mr Muscat is the Chief Financial Officer and Company Secretary of Liquigas Malta Limited, operating in the energy market in Malta, a company he joined in 2009 after fourteen years working within the Manufacturing Industry in Malta. Mr Muscat is currently also the Deputy President of the Malta Employers’ Association, a position he has held for the last six years, following that of Honorary Secretary and Honorary Treasurer.



               
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