Accounting for a Better World: Insights from IFAC’s Professional Accountants in Business Advisory Group

Earlier this year, IFAC’s Professional Accountants in Business (PAIB) Advisory Group held its first meeting under my term as chair on the African continent in Cape Town, South Africa, hosted by the South African Institute of Chartered Accountants (SAICA). Recognizing that in an increasingly interconnected and rapidly changing global economy, the role of accountants is evolving, the theme for the meeting was ‘Accounting for A Better World.’ This theme underscores the pivotal position accountants occupy in driving sustainable business practices, fostering transparency, and contributing to the economic and social well-being of communities worldwide. The agenda focused on several key areas, including enhancing the accountancy profession's role in Africa's transformation and development, strengthening the talent pipeline, and innovative approaches to expanding access into the profession. Discussions also highlighted the importance of integrated performance management, integrated thinking at the board level, and the impact of AI on business transformation.

Key highlights from the discussions are summarized below.

The Accountancy Profession Enabling Africa’s Transformation

Recognizing that Africa is vital in a regional and global context, with 12 of the world’s 20 fastest-growing economies, IFAC, in collaboration with the Pan African Federation of Accountants (PAFA), convened a panel of distinguished leaders to explore how accountants can better enable the Africa Union's 2063 vision and agenda, empower intra-continental trade (AfCFTA), support Africa’s transformation, and prepare organizations to optimize the continent's vast potential. Additionally, the group discussed valuable perspectives from transformative banks and financial institutions on enabling climate transition and bridging the sustainable finance gap.

IFAC-PAFA-Africa-Transformation-Report-FR.pdf

The discussions underscored the critical role of accountancy and finance professionals in driving economic growth and sustainability across the continent, identifying five areas the profession can influence:

Building capital market efficiency and transparency through high-quality information and reporting
Unleashing sustainable financing
Greater regional integration
Enabling business and entrepreneurial growth, and
Transforming public sector decision making.

Diversifying Entry into the Accountancy Profession in South Africa

South Africa's unique history and its associated challenges have resulted in certain demographic groups previously having limited opportunities to enter the accountancy profession. Addressing this requires a sustained, long-term effort spanning many years, to which SAICA is fully committed. Attractiveness and transformation of the profession are integral to SAICA’s 2024 – 2028 strategy as it strives to increase access, diversity, and inclusivity to ensure the profession is more representative of the country. Robert Zwane, SAICA’s Executive Director: Learning, Development and National Imperatives, shared insights into how SAICA is making progress through specific targeted initiatives, examples of which include:

SAICA’s Thuthuka Education Upliftment Fund, which provides bursaries and support to under-represented groups.
Initiatives targeting school and university levels to promote accounting careers and focus on subjects like mathematics.
Strategic partnerships with the education sector to enhance awareness, driving long-term, systemic change in the profession.

The CFO's Role in Ensuring Sustainability and Excellence

SAICA’s Board Chairman, Vincent Motholo presented to the group, sharing insights into his professional journey, including his current role as Chief Financial Officer (CFO) at the University of Cape Town (UCT). Emphasizing how instrumental the finance function is in contributing to UCT’s strategy, he outlined his priorities as CFO, which include:

Achieving financial sustainability, including identifying alternative revenue streams in response to reduced government funding in the sector.
Transforming workflows with automation to improve efficiency and allow the finance function to focus on more meaningful value-adding activities.
Results-orientated productivity focused on delivering outcomes quickly.
Transition from chief financial officer to chief value officer, as a strategic partner and enabler - not a blocker.
Changing team compositions and focusing on people.

Driving Integrated Thinking through Strong Corporate Governance

The group explored integrated thinking at the board level during a captivating session led by Professor Mervyn E. King, renowned for his pioneering work on corporate governance and integrated reporting. Prof. King highlighted key areas that boards practicing integrated thinking are discussing on their agendas today. This included IT governance and security, supply chain considerations, enterprise value and embedding the SDGs into the business model, and climate change. He also gave a brief history of the advances in corporate reporting that led to the development of the International Integrated Reporting (IR) Framework and emphasized the importance of integrated thinking and reporting in modern business operations. He concluded with his thoughts on the ‘end game’ – a global comprehensive corporate reporting system.

Ansie Ramahlo, current chairperson of the King Committee on Corporate Governance also presented, highlighting the importance of an integrated thinking mindset for organizations, for functioning of board structures, as well as for CFOs and finance teams. She also shared updates on the King Committee’s current priorities.

Nature-related Accounting and Financial Disclosure: What it Means for CFOs

In a session focused on how the profession can enable a global corporate reporting system that incorporates nature, the group was joined by Thomas Viegas, Head of Capacity Building and Regulatory Engagement at the Taskforce on Nature-Related Financial Disclosures (TNFD). Thomas gave an overview of the work of the TNFD, which was launched in 2021 and funded by governments and philanthropic foundations and with G20 and G7 endorsement. The TNFD issued its recommendations and additional guidance to provide companies and financial institutions with a disclosure framework to identify, assess, manage and disclose nature-related dependencies, impacts, risks and opportunities. Its four disclosure pillars (Governance, Strategy, Risk and Impact Management, Metrics and Targets) are consistent with those in ISSB's IFRS Sustainability Disclosure Standards which are based on the TCFD Recommendations.

Cover page of Forico's report, which has green leaves

Rayne van den Berg, Former CFO of Forico Pty Limited, highlighted the CFO’s increasing sustainability responsibilities, particularly where sustainability is a defining element of strategy. Nature and climate change impacts and dependencies, and solutions are inextricably linked and over time may result in financial assets and liabilities. As the largest private landholder in Tasmania, Forico needs to maintain its social license to operate, and has been using an integrated approach with both TCFD and TNFD to provide context to its Natural Capital Report on environmental impacts and dependencies in the context of:

Stakeholder engagement
Governance
Strategic planning
Risks and opportunities assessments (based on the same approach used for other strategic areas)
Scenario analysis to explore financial impacts of nature and climate risks and opportunities on managed assets and implications for strategy and resilience

In October 2023, Forico published an illustrative nature- and climate-related disclosure report using TNFD and TCFD aligned recommendations.

As it embarks on its new two-year workplan, the IFRS Foundation’s ISSB will consider how it might build from relevant initiatives including the TNFD to meet the information needs of investors as it embarks on its research project on biodiversity, ecosystems and ecosystem services.

Harnessing Innovation: Exploring the Responsible Use of AI in Finance and Accounting

To explore the opportunities and challenges of AI utilization in finance and accounting functions, the group was joined by ACCA’s Head of Technology Research, Alistair Brisbourne, who shared insights on the evolving role of finance functions, and their increasing application of the different types of AI - machine learning, computer vision, natural language processing, and generative AI.

Focusing on generative (Gen) AI and large language models (LLMs) as the next evolution of AI, Alistair discussed the complexities and challenges of training and improving LLMs and the potential risks of GenAI, including that accuracy and reliability of these models cannot be assumed to be stable as they develop. Specific AI capabilities may even deteriorate as models continue to train on an increasing number of inputs. Using examples, he demonstrated the fundamental and technical limitations of models and emphasized the importance of asking these tools the right questions and having mechanisms to catch mistakes when, and not if, they are made.

The PAIB Advisory Group considered how finance and accounting functions are currently using AI, the implications of AI on roles and skills, and the support needed from the global accountancy profession and professional accountancy organizations (PAOs).

Strengthening the Talent Pipeline for Future Growth of the Profession

Exploring innovative approaches to talent acquisition, development, and retention, the group discussed how the accountancy profession must remain dynamic, inclusive, and adaptable to the evolving needs of the global business landscape. This discussion also underscored the importance of nurturing diverse talent and empowering the next generation of finance leaders to thrive in an ever-changing world.

Jamie Lyon, Head of Skills, Sectors and Technology at ACCA shared the results of ACCA’s research on Global Talent Trends 2024, which surveyed 9,889 finance professionals from 157 countries, covering 6 key themes:

Cover of ACCA Talent Trends 2024 report, which has a young woman on her phone

AI and technology
Cost of living
Working patterns
Equity, diversity and inclusivity
Mental health and wellbeing
Global mobility

The report found a correlation between mental health concerns and the rapid pace of technological change, including AI. Diversity and inclusion were major topics, with a strong focus on creating a culture that values all aspects of diversity, including neurodiversity.

The group also heard from Jo-Ann Pohl, senior advisor at Kearney who discussed the need for skill development for the future workplace and challenges of retention, highlighting:

The changing role of finance professionals, with the need for new skills such as strategic thinking, effective communication, and the ability to handle financial challenges. The importance of financial resilience, liquidity management, and cash flow optimization in the current market conditions was also underscored.
Digital transformation and innovation, and the increased use of technology and modernization in business operations.
Employee engagement and organizational culture as crucial for financial stability and overall organizational success.
Engaging younger generations through networking, mentoring, and addressing misperceptions about the profession.

The PAIB Advisory Group is at the forefront of the profession’s transformation. We believe that accountants have a vital role in championing and shaping a sustainable future, our commitment to accounting for a better world is rooted in our understanding that accounting is not merely about numbers—it’s about using those numbers to tell a story that influences positive change. To IFAC’s members worldwide, I urge you to seize the momentum generated by our discussions and embark on a journey of continuous learning, innovation, and collaboration. Our discussions were not merely exchanges of ideas but rather catalysts for action, igniting a sense of purpose and urgency. Professional accountants, now more than ever, have the opportunity to become impactful ‘Difference Makers’ and contribute to creating a better world.