Recently, a blog got me thinking about the identity of double-entry bookkeeping in the society that prevails. Accountants, by large are really good with numbers, at least they are expected to be so. But there is a change in pulse where the biggest markets, where traditionally numbers have played a crucial part in shaping society, the demand for something more than just the shareholder return is huge. What can also be said is that the spotlight and focus on financial has far outrun positive influences and is hence dragging us towards a major global disaster.
There has been a growth of business scandals which can be attributed to businesses stressing on meeting numerical targets. Take for instance, the Volkswagen scandal regarding the emission levels of their diesel engine or the accounting issues at Toshiba. Both the issues may seem poles apart but in reality are very similar to each other. To start with, both issues started with the kind of approach where apparently impossible targets were set. To make the cut, individuals in involved in the business are motivated to bend the rules to justify or reveal a set of figures periodically albeit resulting in a superficial affair. In either case, in pushing hard to reach such make-believe goals, they have been blinded and have lost their perspective of what the society considers as their actual objective.
The holographic law of patterns follows here too. There is a sense of repetition of the same pattern on macro levels too. Each country has its own GDP, and on a global scale each country is ranked according to GDP, which stirs up a level of competition similar to the business world. But the factor that involves strong focus on GDP is nothing but perpetual exponential growth. This shall or will destroy the planet. Hence, in a world in which financial statistics are powerless, what will take its place as ‘the target’?
Now that businesses aren’t just being measured on the profits made, a growing importance is that of how much tax each business is paying back to the society. Hence, the route they take to make profits, and the way they disperse what they have not paid in tax is of great interest. In the developing markets, most investors still focus on the value of numbers that are audited. On the other hand, global MNC’s who push industries that are extractive with global supply chain networks, are being pushed to state if their profits are being derived from the efforts of slave labour. Even the European Union is introducing a host of disclosures that are non-financial in nature like respect for human rights as well as board diversity. The evolution of such integrated report mirrors the interest of the stakeholders to recognise the motivation driving the numbers and where it might be leading us.
In such a situation, what kind of responses is expected from the accountants?
The truth is that societies cannot exist devoid of business. The fact that monitoring methodologies that check the behaviours of business owners and managerial staff by creditors and other business owners are extremely important to maintain the well-beings of corporations. Corporations can hence sanction the flow of investor’s capital, which throws open opportunities for laurels and returns, which would otherwise be not possible to attain.
What we cannot ignore is that society wouldn’t exist without business. From the very first time someone realised that if you measure and record the grain going into the granary then you can identify, allocate and trade the productive surplus of society we became reliant on numbers. Fast forward a couple of thousand years to the development of the corporate entities which underpin the fabric of the modern world, and methodologies for monitoring the behaviour of owners and managers by other owners and by cri are essential to the health of the Corporations which allow for the use of investors’ capital, opening up opportunities for achievements and returns that would otherwise be unattainable.
Society, in fact is built upon business. Business in turn is built upon relationships. These relationships and business avatars embody the trust which numbers and narratives summarise. Society is made up of humans. Among humans, you have a few that can be trusted, a few that do trust, and few that fall in neither categories. Hence, society still seeks the assurance or a guarantee that the individual managers that influence or control the flow of production capacity are doing it not just to help self-interests but for a collective, broader good. It is accountants that are crucial for providing investors with that trust, which they seek.
It is accountants who sign off or attest company reports, be it in the narratives in the front half of the accounts or in the numbers, or values in the front end of the accounts. Therefore the greatest concern for stakeholders now is real time operation of a business. In such a scenario, who is better poised to analyze data, analyze and balance the effects of external environments, and to critically identify and steady the pressures of competition, which overwhelms modern business models? No matter how ethically virtuous an organizations intent, it will not be able to get through the grind without a quantised and real perspective of the numbers and its position and influence in the supply chain. To achieve this, there is a need for the perspective to come from a trained and skilled mind. Good motive alone will not help balance any financial statements. The world hence needs professional accountants who are ethical, so that they look at business with a wider perspective, that which society expects and demands. That is when the ability of the accountant to work numbers will never lose its place. Hence all that accountants need to master is the ability to showcase their talent and preparation moulded into the modern economy, in a manner that no other expertise can imitate