South Asian Federation of Accountants (SAFA) 

South Asian Federation of Accountants (SAFA), an IFAC Network Partner, comprises eleven professional accountancy bodies from the South-Asian Region, namely: India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives, and Afghanistan. Bhutan, where no accountancy body exists, is an observer. SAFA has undertaken the leadership role in providing a new direction to the accountancy profession within the region and SAFA has over 475,000 members affiliated with its member bodies. The Institute of Chartered Accountants of India (ICAI) hosts SAFA’s Permanent Secretariat at New Delhi. More information on SAFA can be found by visiting the SAFA website.  

Cost and Management Accounting 

This topic-focused series partners IFAC with the four Cost and Management Accounting-related IFAC members from the South Asia region—Institute of Cost Accountants of India (ICMAI), Institute of Cost and Management Accountants of Bangladesh (ICMAB), Institute of Cost and Management Accountants of Pakistan (ICMAP), and the Institute of Certified Management Accountants Sri Lanka (CMA Sri Lanka)—to produce a series of monthly articles to highlight the importance and impact of these PAOs not only in their jurisdictions but the region they serve. The South Asia region is expanding fast in terms of economic growth and the respective professional bodies have existed for decades to serve the needs of their constituents and growth.   

Starting July 2024 until October 2024, each of the professional accounting organizations (PAOs) will prepare an article sharing best practices of their experiences.

The final article below is produced by CMA Sri Lanka.

The Institute of Certified Management Accountants of Sri Lanka (CMA Sri Lanka) has now completed 25 years of dedicated service in the field of Management Accounting. Designated with the mandate of developing, promoting, and disseminating Management Accounting, CMA Sri Lanka was initially formed as the Society of Certified Management Accountants (1999) to be subsequently incorporated by an Act of Parliament, No. 23 of 2009.  CMA Sri Lanka has played the sheet anchor role in several frontiers of Management Accounting including education, professional development, research and consultancy. While being the national professional Management Accounting Institution it has been recognized for membership by global professional accounting bodies such as the International Federation of Accountants (IFAC), South Asian Federation of Accountants (SAFA), and Confederation of Asian and Pacific Accountants (CAPA).

CMA Sri Lanka operates from its own compact and well-appointed premises located in the metropolis (Colombo 4). In addition to the conduct of its professional programme, the Institute conducts a range of continuing professional development programmes on themes of topical interest for the benefit of its members and those from the corporate and public sectors.  At present, it has a total student base of 18,000 and a member population (Associates and Fellows) of nearly 2,300, with certificate holders from other programmes exceeding 10,000. In this context, it is appropriate that the Institute ventures into offering a post professional diploma level study programme for the benefit of its past finalists, members of the Institute and other professional accounting bodies, as well graduates from management and related spheres.        

Introduction

Information Technology (IT) has shifted the role of management accountants the world over including in Sri Lanka, from descriptive to prescriptive, providing data, analytics, insights and consultancy tailored to the unique needs of local businesses. This shift has prompted the Institute of Certified Management Accountants of Sri Lanka (CMA Sri Lanka)[1] to actively prepare its members for success in this changing environment, balancing traditional practices with cutting-edge technology. This article spells out a brief account of this transformation which keeps unfolding in its numerous forms.  

Evolution of the Management Accountant's Role

Traditionally, management accountants focused on costs, budgets, and financial reporting. However, with the development of IT systems in Sri Lanka, their work shifted to strategic planning, data analysis, and consultancy in various industries. This change is evidenced in an increase in the implementation of enterprise resource planning (ERP) systems, big data analytics, and artificial intelligence in accounting practices in Sri Lanka. For instance, a leading telecommunications company has integrated its processes with the help of the ‘Analytics at the Edge’ program to provide data analytics to hundreds of workers across the company. Likewise, a major fabric supplier has embraced the SAP ERP system to enhance management control and service delivery.

Enhancing Value through Information Technology

There are several ways management accountants are enhancing value:

1. Data Analytics and Decision Support: Management accountants use analytics to make profound analyses and offer tactical plans for improved decisions. They also process large amounts of data, identify patterns, and provide managers with models of possible financial outcomes and plans for the company's further development. For instance, adopting big data enables the prediction of future revenue and the discovery of new ways to reduce costs.
2. Automation of Routine Tasks: AI and machine learning help increase efficiency by reducing the hours that would otherwise be spent performing administrative work like data entry, analysis, and report preparation. This frees managerial time for activities such as focusing on strategic planning and risk management by the management accountants. Manual, repetitive work is best replaced by computers within the organization because it saves time and errors are very low, creating credible financial information.
3. Real-Time Reporting: Sophisticated applications in computers bring efficiency in fast and immediate reporting of the company's financial position to the stakeholders. This flexibility in reporting outweighs the need for better, faster responses to market shifts and improves strategy development. Real-time reporting functionalities allow for deliveries of management accountants' reports as and when needed, which is important for business decision-making processes.
4. Enhanced Financial Controls: IT solutions enhance the reliability of financial information and provide sound financial risk management and compliance with the legislation. This minimizes risks and improves the overall worth of organizations financially. Some of the IT solutions and mechanisms of advanced financial controls are using checks and balances in the form of automated systems, real-time monitoring of financial transactions, and enhanced fraud detection mechanisms.

Contributions to the Local and Regional Economy

Balancing the development of economic growth and the digital landscape in Sri Lanka changes the management accounting position, which is influenced by national peculiarities, the strategies of a state, and global trends. The" Digital Sri Lanka 2030" vision[2] to transform the country into a digitally enabled nation offers new opportunities and threats for management accountants who will be required to work with digital platforms and offer analysis on digital business models. It has become imperative because Sri Lanka is halting from being a rural economy-driven country to an urbanized economy with manufacturing and service sectors. Applying IT and data analytics to management accounting has enhanced the growth and competition of the various sectors. SMEs, which create 52% of the GDP and 20% of exports[3], receive significant advantages in terms of efficiency and costs. Management accountants contribute to meeting the IT-BPM[4] sector target with exports of $5 billion and employment of as many as 200,000 people. In agriculture, which contributes 7.9% to GDP and employs over 30% of the population, data analytics improve productivity and reduce post-harvest losses. The tourism industry, which contributes over 4% to GDP and employs 450,000 people, relies on management accountants to optimize operations and pricing, aiding recovery and competitiveness. Thus, the contribution of Management Accounting to the local and regional economy is immense.

Educational Imperatives

As the profession of management accountants changes, so does the professional development requirement. CMA Sri Lanka has pledged to offer relevant and current educational programs to enable those seeking the CMA qualification to get the necessary skills and knowledge. The curriculum of the CMA is reviewed from time to time to capture any modifications in technology, accounting regulations, and business environment.

Key Educational Initiatives by CMA Sri Lanka:

CMA has initiated strategy to  confront the advancing IT anvironment in Sri Lanka. This includes:

• Updated Syllabus: CMA's 2023-2027 curriculum introduces a stream focusing on technology and integrates course components with contemporary technologies[5]. It ensures students have sufficient IT skills for leveraging any technological developments.
• Practical Training: CMA has affiliations with many Sri Lankan organizations covering the country's major industries for training, which will expose students to actual functioning IT accounting systems used in real life and actual business situations in Sri Lanka.
• Continuous Professional Development (CPD): CMA provides CPD programs tailored to align with business trends unique to Sri Lanka, such as currency fluctuation and ever-changing tax and government policies. The institute emphasizes IT-focused CPD, equipping members with vital skills to adapt to technological advancements and digital transformation.

CMA also attaches great value to ethics in IT-driven management accounting. CMA educational programs aim to develop individuals' ethical sensitivity to digital challenges, ensuring adherence to professional integrity in the digital age.

The Future of Management Accounting

Management accountants will be crucial in adopting technological innovation in Sri Lanka as the country implements initiatives such as ‘Digital Sri Lanka 2030’. Management accountants will transform into strategic partners by mastering emerging technologies. AI, blockchain, and data analytics will revolutionize their roles, requiring continuous upskilling. AI and machine learning will enhance management accountants' capabilities in developing sophisticated forecasting models and automating complex financial analyses. Blockchain will transform transaction verification and enable smart contract implementation in areas like supply chain finance. With the growing employment of analytics in Sri Lankan corporations, management accountants will expand their role in big data analysis, uncovering valuable insights across various sectors. Management accountants will be more consultative, engaging in close partnerships with IT, marketing, and operational teams, focusing on predictive analysis and risk management in an increasingly volatile global economy. This collaboration will be crucial in apparel manufacturing, where they will integrate environmental and social factors into financial reporting. With these advanced skills, management accountants will be crucial in steering Sri Lankan organizations through economic diversification, digital transformation, sustainable development, and global competition, positioning themselves as key drivers of innovation and growth.

Conclusion

In an advancing IT environment, increasing the responsibilities of management accountants becomes central to business success and the economy. Technology will, therefore, assist in changing the profession and thereby enhance the roles of management accountants in the sustainable development of Sri Lanka and the creation of value within the economy. Delivering continuous management accountancy education and professional development is important because it offers the practitioner the skills to survive such conditions. CMA Sri Lanka assists those in the field of accountancy in having a good foundation on which they can depend through education, training, and skill development. Through a culture of training and development, CMA achieves its goal of making its members ready to operate in the new world order.

References

Central Bank of Sri Lanka. (2023). Annual Economic Review 2023.

CMA Sri Lanka. (2023). CMA History Book 1999-2022 'In the Interest of Our Nation'. CMA-Sri Lanka.

Kulasinghe, S., Han, L., Hoshino, T., Rathi, A., & Lambert, D. (2018). Catalyzing small and medium-sized enterprise venture capital in Sri Lanka. Asian Development Bank.

Ministry of Technology. (2024). Digital Sri Lanka 2030, A National Digital Strategy for Sri Lanka.

Presidential Secretariat. (2023). DigiGo.lk Aims to Enable Over 1 Million SMEs to Go Digital and Drive a USD 15 Billion Digital Economy by 2030.