Future of Professional Accountants Presented by: Rashied Small SAIPA Northern Region Mini-convention - July 2016

Endangered Species – Professional Accountants Future of Accounting

Accounting Profession – Future???? Will your job be stolen by a Robot? 93.8% to 97.6% of the work of accountants will be automated Future of Accounting

Technology & Professional Accountants Future of Accounting

The primary responsibility of the Professional Accountant is to protect and serve the public interest: Vibrant and competent professionals Highly trained & ethical Value of Professional accountants: Contribute to the economy and economic growth Ethical business behavior and reporting Confidence in the accounting profession Future of Accounting

Demanding Environment Business owners: require more than standardize financial statements (past performance) – business information and advice for decision-making (immediate response and information) Financial Reporting: standard financial statements (compliance with IFRS) has increasing compliance and cost implications - may not meet the requirement of the SME business owner (emphasis on the engagement and regulations) Ethical behaviour: balance between serving the interest of the client (business owner) and the public interest – responsibility for reportable irregularities and business risk (professional conduct) Regulations: compliance with regulations and standards (holistic business responsibility with respect to compliance issues) Future of Accounting

Important Role of the Accountant The success and sustainability of a business is underpinned by the reliability and accuracy of the accounting records maintained: Measure of the business activities carried out Measure of the performance of the business Basis for decision-making and planning Major requirements of SMEs: Planning and control – budgets and forecasts Compliance with financial reporting requirements – SARS and debt providers Utilisation of technology for monitoring performance Future of Accounting

Journey of the Professional Accountant Future of Accounting

Analysis & Review 60% of accounting services costs are tracked to labour Accountants work an average of 2,172 hours annually 25% of accountants work part time Future of Accounting

7 Sins of the Accounting Profession Emphasis on transactional versus value add No single “source of authenticity or truth” for data No strategy to manage talent Lack of focus on staff development Staff’s expectation gap - disconnect between concept of responsibilities & expectations Mismatch of skills alignment with allocated roles & responsibilities No plan for future growth & expansion Future of Accounting

Market Expectations of Professional Accountants Future of Accounting

Changing Expectations More than financial reports: it is not sufficient to just provide accounts, statutory and backward focused compliance related support Value added service: approach that support the business growth and not just dealing with numbers in isolation Proactive: be a trusted business advisor/consultant and partner Trusted business advisor Beyond financial statements: do not presents numbers; present insight about the numbers Value added service: understanding of the client’s business and the available levers that generate value Advisor: make recommendations that are practical and actionable Strategic partner: conceptualise the vision of the business and the impact recommendations have on its success Future of Accounting

What does the future hold? 1. Compliance reporting is commotitised – static and standised Future of Accounting

Survival of the Professional Accountant Future of Accounting

Future Trends 1. Increased focus on client service: Providing enhanced customer service, leveraging technology to automate processes and free up staff, while providing more personalized and strategic advice and counsel to clients - connections have shifted to deep to ever-present and open-ended. 2. Technology integration challenges: Making strategic investments in technology while providing a smooth migration and integration to emerging technologies - technology will have a major impact on their ability to provide service, support, and added value to clients. 3. Digital mobility opportunities: Reducing capital costs; increasing service and employee productivity by leveraging mobile devices and digital platforms; and consolidating and integrating cloud-based information repositories - . 4. Talent management and succession planning: Identifying and managing talent, developing new and different skill sets, and managing the retirement of senior leaders – human resource planning through training and development, succession and exit planning. 5. Social media as a business tool: Becoming more sophisticated in the use of Twitter and other social media to market their business, finding and engaging clients online, and monitoring the competitive landscape. Future of Accounting

Evolution of the accounting environment Pre-electronic: Manual process with high risk on accuracy & costly Electronic: Use of computerized packages with low accuracy risk & improve efficiency Post-electronic: Use of cloud & multi-media & improve accessibility Pre-electronic: Manual process with high risk on accuracy & costly Electronic: Compliance report – financial reporting in compliance with legislation Post-electronic: Business advisor – value added services with a focus on sustainability Future of Accounting

Future of Accounting

Relevance of Professional Accountant Making a difference Feedback value Predictive value Timeliness Business owners: require more than standardize financial statements (past performance) – business information and advice for decision-making (immediate response and information) Financial Reporting: standard financial statements (compliance with IFRS) has increasing compliance and cost implications - may not meet the requirement of the SME business owner (emphasis on the engagement and regulations) Ethical behaviour: balance between serving the interest of the client (business owner) and the public interest – responsibility for reportable irregularities and business risk (professional conduct) Regulations: compliance with regulations and standards (holistic business responsibility with respect to compliance issues) Future of Accounting

Future of Accounting

Transformation of Professional Accountants Provider of financial information – compliance function Provider of qualitative information – sustainability & integrated reporting Trusted business advisor – consultant for business decision-making Report on the value creation capacity of the business – reporting beyond financial statements Future of Accounting

Future of Accounting

Evolution of report Financial reporting: reporting in compliance with accounting standards (facilitated by the use of accounting packages) Sustainability reporting: reporting on the going concern and sustainability of the business (corporate governance and business risk) Integrated reporting: reporting of the utilization of resources/capitals to achieve the strategic objectives of the business through its business model. Value reporting: reporting on the activities which generate value to the business and stakeholders Future of Accounting

Value Added Services Future of Accounting

Value Reporting Prioritise business objectives Business performance measures Operating performance Business value reporting Future of Accounting

Eliminate barriers to change Technology integration Client Centricity Eliminate barriers to change Value employees Diversify skills Technology integration Evolve Accounting firms must embrace a more client-centric approach to doing business if they are to prosper, grow and remain relevant into the future. Future of Accounting

Evolution of Accounting Services Virtual CFO Strategy, Financial planning & decisions Stewardship Services Management Report, Financial statements & Cash flow analysis Transactional Services Bookkeeping, Payroll & Tax Future of Accounting

Future of Accounting

Future of Accounting

Need to enhance Business Reporting Historical financial statements Enhanced business reporting PAST PRESENT FUTURE Lagging Indicators Leading Indicators IFRS for SMEs (one size fits all) Tied to mission, vision and values Ignore non-financial information Tied to critical success factors Report results of past decisions Moves decision criteria to the forefront Backward looking (feedback reporting) Forward looking (predictive reporting) Historical (usually cost basis) Real-time (usually value-basis) Financial and quantitative reports Comprehensive and customized reports Future of Accounting

Future of Accounting

Big Data and the Professional Accountant Future of Accounting

Illustrating the Use of Big Data Future of Accounting

Virtual Accounting Future of Accounting

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Value Added Service Future of Accounting

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Professional Accountant – Your Choice Future of Accounting

Professional Accountant – Your Choice Future of Accounting

Future of Accounting