VALUE CREATION THROUGH PROFESSIONAL ACCOUNTANTS IN
BUSINESS
By: Graham Ward, CBE, MA, FCA
Immediate past President, International Federation of Accountants
World Congress of Accountants:
Plenary Session 3
Istanbul, Turkey – November 16, 2006
Presidents, fellow professional accountants, ladies and gentlemen. Good
morning. It is a great pleasure to be here to chair and to introduce the third
and final plenary session of the 2006 World Congress of Accountants on
“value creation through professional accountants in business.” I am delighted
to be joined here this morning by three most distinguished individuals who will
lead our discussions:

Lady Barbara Thomas Judge, who is, inter-alia, Deputy Chair of the
Financial Reporting Council of the UK, Chairman of the United Kingdom
Atomic Energy Authority and Deputy Chairman of Friends Provident Plc as
well as being a former (and indeed the youngest ever) Commissioner of
the US Securities and Exchange Commission.

Mary Keegan, who is Managing Director, Government Financial
Management of HM Treasury in the United Kingdom, Head of the UK
Government Accountancy Service and Finance Director of HM Treasury.
Mary is also a former Chairman of the UK Accounting Standards Board.

David Hastings, who is Manager of Insurance, Shell Canada Ltd and a
former Chair of CMA Canada’s Board of Directors.
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I am very certain that professional accountants in business have a key role in
driving economic growth. This is a view shared by IFAC as a whole and, over
the last two years, we have more than doubled the resources which we apply
to the support of professional accountants in business.
Professional accountants in business create value and through many different
routes. For example, obtaining a good cost of capital through effective
reporting into financial markets, effective management of resources within
corporations, promoting and implementing sound systems of corporate
governance, providing high-quality, reliable management information to
enable business decisions to be taken with confidence and, indeed, playing a
key role in strategic decision making at board level.
IFAC’s Professional Accountants in Business Committee, excellently led by
Bill Connell since 2000, has made a number of major contributions to
supporting professional accountants in business in order to enable them to
carry out their roles to best effect. Recent achievements include:

Launching IFACnet – A KnowledgeNet for Accountants in Business. This
is a new global resource providing one-stop access to leading-edge
articles, good practice guidance and tools and techniques for accountants
employed in commerce, industry, the public sector, education and the not
for profit sector.

Publishing high-quality papers on a variety of topics, such as:
Sustainability and the Role of Professional Accountants in Business,
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Internal Controls – A Review of Current Development, and Business
Planning Guide: Practical Application for SMEs, together with a collection
of award-winning articles on finance and management accounting topics
including, “Performance Measures in Supply Chains.”
Value creation
When I think of professional accountants in business, I think of value creation.
Let me refer you to a vision statement that a major pharmaceutical company
developed for its finance function. This read: To create competitive advantage
by supplying management with forward-looking, timely, high-quality and
value-adding financial and controlling support, we will strive and prove to be
an invaluable partner in shaping the strategy and persistently challenging
operational excellence
To me, this conveys the role of finance in value creation in organizations. Yet
it is a challenge to translate this vision, so that the finance function and
professional accountants in business transform their modus operandi.
In this session
Like this pharmaceutical company, I challenge us in this session to think
beyond the management accounting function and consider how we work with
others in the organization to drive value creation.
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To be successful, to remain relevant and vital in the value creation of
organizations, professional accountants in business frequently challenge their
roles and their participation in their organizations and are prepared to review
and change structures, accountabilities and incentives. Above all, we try to dig
deeper, to understand what customers require from finance and controlling
functions and how we can be most effective in a variety of contexts. This is
true whether we work in a large organization or in a small or medium
enterprise.
Role of the CFO in 2010
In thinking about this session today, I looked again at the 2002 IFAC
publication, The Role of the CFO in 2010. In this publication, there are a
number of important themes that I am sure will feature prominently in our
discussions today. These include:

Delivering enhanced analysis, insight, and involvement in decision making;

Leading an effective approach to risk and internal control that integrates it
into management processes and focuses on key risk areas;

Preparedness to challenge conventional wisdom; and

Supporting and participating in strategy and advising on major
investments, product development, acquisitions and divestments.
Distinct advantages
Our steady progress into value creating roles is based on several distinct
advantages that accountants in business have. For instance, we often have
access to more information than many others in the organization, and often
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have the opportunity to apply critical skills, required in successful
organizations, such as measurement and analysis and managing for value
and growth. This is symbolized in new job titles for accountants in business,
such as in the case of Andrew Higginson of the successful UK retailer Tesco.
His title is Director of Finance and Strategy.
Barbara Thomas Judge will share with us her experiences, as a Company
Chair and Director, of the value of having professionally qualified accountants
as fellow directors and employees and the way in which they have added
value to businesses, including in the areas of ethics and governance. David
Hastings will discuss how an organization creates value and the particular
contribution he sees that professional accountants in business can make to
creating value for both shareholders and other stakeholders.
Bids and deals are always in the news but IFAC’s research on enterprise
governance, which gave rise to the publication in 2004 of the highly respected
report, Enterprise Governance: Getting the Balance Right, supported the view
that acquisitions are notoriously risky and often fail to deliver the additional
value envisaged when they are approved.
In the IFAC case study analysis, acquisitions were among the key strategic
contributors of what went wrong in many companies such as Ahold of The
Netherlands, Marconi in the UK, and France Telecom, to name but a few.
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Despite this, acquisitions can also be value creating and are often a feature of
successful companies. These organizations have also successfully taken into
consideration post-deal integration, such as blending systems and processes
and above all the organizational cultures that characterize organizations, how
they do business and how they make decisions. These considerations should
be positive contributions of the accountants in business involved.
Therefore, a prominent feature of the role of accountants in business,
considered in the 2004 IFAC enterprise governance report, is to ensure a
systematic approach to both the acquisition decision, as well as the post-deal
implementation integration, that rigorously evaluates synergies and includes
specific integration plans for people and culture as well as processes,
functions and technology.
Reporting of value
In addition to the creation of value, accountants in business need to move
beyond tradition to provide stakeholders with more transparency on the
organization’s sources of value creation – for example, to capture in their
external communication the non-financial measures and intangible assets that
now drive value. We are very happy to have Mary Keegan in our panel, who is
one of the authors of a book that continues to have a significant influence on
our thinking on the reporting of value, and who has insights on these issues
from both private sector and public sector perspectives.
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I, like you, look forward to the panelists’ presentations, and to the questions,
comments and discussion which will follow.
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