During her two years as the first female president of the International Federation of Accountants (IFAC), Olivia Kirtley, CPA, CGMA, had a chance to assess the state of the accounting profession firsthand in about 40 of the countries represented by IFAC. Kirtley, a business consultant on strategic and corporate governance issues who in 1998 served as the first female chair of the AICPA board of directors, completed her IFAC presidency in November 2016 and shared some of her thoughts on the state of the profession globally in an interview with the JofA:
What challenges does the profession face in some of the places you visited, and how can these challenges be managed?
Kirtley: In my view, the top three challenges for the profession would be the lack of professional accountancy capacity in many countries, particularly in Africa. Secondly, the absence of complete and transparent government accounting and qualified accountants working within the public sector. And thirdly, growing global regulatory fragmentation.
IFAC has given high priority to each of these issues in coordination with IFAC member organizations, international firms, along with many international organizations that place great reliance on the accounting profession, like the World Bank and the OECD [Organisation for Economic Co-operation and Development]. In advancing public-sector accounting, much time has been devoted to communicating the need for and benefits of accrual accounting and having qualified professional accountants working within government to implement improved and transparent reporting systems.
Progress is slow but is being made. A recent OECD/IFAC study reported that almost 75% of OECD countries have now adopted accrual accounting for reporting (fewer for budgeting and planning), but achieving full implementation will be critical. Regulatory fragmentation has accelerated since the financial crisis and will continue to be a huge challenge for the profession and international companies. Legislation and regulation take time to change, so this will be something the profession will deal with for years to come.
Are there more similarities or more differences between accounting professionals in the different countries you visited?
Kirtley: Our profession is a global profession bound together by our commitment to professional standards and ethics. This is consistent in the accounting profession throughout the world. However, the opportunity to gain deep practical experience varies, so the profession has naturally been able to contribute in a more meaningful way in some countries and regions than others.
Also, differences exist in the environment in which the profession operates, such as throughout the entire financial reporting supply chain. For instance, there are different corporate governance rules, reporting requirements, securities laws, and legal environments in many countries. As an example, Japan recently enacted a new corporate governance code that is moving closer to the requirements in the U.S. and Europe with regard to independent directors and board committees, but many of the requirements we have come to take for granted are not included there or in many other countries, such as having a majority of independent directors. This means the profession must do its work in different governance structures and environments around the world.
From a global perspective, what are the biggest challenges the accounting profession faces in the next 10 years?
Kirtley: Leveraging technology to improve information and relevance will be a huge challenge and a tremendous opportunity. The availability of information grows every day, but finding ways to provide insightful, reliable, real-time information will be critical to remaining relevant and impactful as a profession.
Another big challenge will be to have truly global accounting standards and regulation to maximize financial transparency and support for organizations around the world.
And since the future of any profession is dependent on human capital, we must offer the next-generation talent work that is exciting with a work environment that is appealing. They want a career that allows them to make meaningful contributions to society and have quality time apart from work. I think our approach to technology and digitization will be critical in offering both the work and flexibility they are seeking.
How does the technological sophistication differ between accountants in different markets?
Kirtley: Mature economies have more resources, but it can require years to replace outdated legacy systems and allocate the capital necessary to develop new and innovative applications. Late adopters often leapfrog legacy technology in a less capital-intense way and are able to swiftly adopt newer technology platforms and solutions.
How much has professional development progressed or changed during your two years as IFAC president?
Kirtley: Professional development has broadened in exciting and rewarding ways. I believe professional accountants have much greater understanding of their need to broaden their skill sets and professional development beyond technical accounting. It is something I call being "deep and wide"—deep in financial areas and wide in other areas that are critical for any organization to have sustainable success, such as governance, risk assessment, leadership skills, communication.
Senior leaders of the profession appreciate the migration of the overall profession from just reporting on financial outcomes to providing information and insights for strategy, business models, and risk management in meaningful ways.
What should accountants do to succeed in global business?
Kirtley: There is no substitute for competence, so we all need to be devoted to being the best we can be every day. Competence, of course, is enhanced by experiences and a determination to never stop learning. Read, read, read—it expands horizons and provides valuable insights.
Today, competence in a globally connected world requires awareness of international issues, so reading is a key way to achieve this. It also provides new ideas, new approaches, new perspectives—and, potentially, new solutions for current challenges.
Having conversations with others about their experiences, challenges, and issues is also invaluable. And if you will move out of your comfort zone and seek to engage with people with different backgrounds, cultures, and points of view, I think you will be amazed at what you will learn and how this can impact your ability to succeed in ways you might never have thought possible. And you don't have to travel the world to do this. Every company and every community has a wealth of people with different heritages and perspectives.
You must also be willing to take some risks, accepting challenges and opportunities even when you are not completely prepared. Years ago, I remember speaking at a professional seminar alongside the CEO of a Fortune 100 company, and someone in the audience asked him, "How did you get prepared to be CEO of the company?" He said, "If I had waited to be prepared, I'd still be a staff accountant."
About the author
Sabine Vollmer is a JofA senior editor and oversees the Global CPA Report. To comment on this article or to suggest an idea for another article, contact her at Sabine.Vollmer@aicpa-cima.com or 919-402-2304.