After four days of outstanding presentations and discussions, and the opportunity to meet many of you, it is a great honor—as the newly elected President of IFAC—to speak with you as we conclude this World Congress.
Before I begin, let me express my deep appreciation to Warren Allen, the 16th President of IFAC, for his leadership and tireless work over the past two years. We could not have asked for any greater dedication or commitment. You accomplished much—and we thank you
You leave big shoes to fill … thankfully, I wear high heels.
I also want to thank all of you: almost 4,000 delegates from 140 countries who travelled so far to be with us. Your input, exchange of ideas, and thoughts about the future opportunities for the accountancy profession are what make a World Congress.
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I hope you’ve learned a lot, been inspired with new ideas, networked professionally and made new friends from across the globe. And for those of you headed to the Vatican tomorrow for the audience with His Holiness, Pope Francis, you undoubtedly will have yet another unforgettable moment here in Rome—as will I, especially since I need to make my remarks in Italian!
We, in the accountancy profession, have long understood that thriving economies, prosperity, good governance and peace are found in societies and structures that are transparent and accountable.
Accountants play an essential role in society: we support civil societies, and we enable strong and sustainable nations.
The graciousness of His Holiness to invite us for an audience symbolizes the importance of our profession in the advancement and support of civil societies.
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One thing that this Congress has reinforced for me is that the years ahead for our profession, like the years in the past, will be about how we navigate through our choices, challenges, and opportunities.
I recently read Hillary Clinton’s new book, “Hard Choices”, where she described how she thought of her choices and challenges, as the US Secretary of State, in three ways —and I was reflecting that we could consider our way forward in much the same way.
- Issues We Have inherited—like recent regulatory activity and its potential unintended consequences.
- New (and often unexpected) Events and Emerging Threats—which could be the next corporate failure or financial crisis.
- Opportunities—like those presented by embracing technology and integrated thinking to create possibilities for innovation, leadership and relevance.
This Congress shined a light on the many, many choices, challenges, and opportunities that we face—individually, for our national bodies, as well as for IFAC and the global profession.
So as we prepare to return to our home countries from this World Congress, there is much to consider—and quite valuable information and many different perspectives to influence our actions as we move forward.
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The first plenary of this Congress, Businesses Thriving in Disruptive Times, featured an impressive group of CFOs from British Telecom, EY, Royal Dutch Shell, and Yahoo. They discussed the choices, challenges and opportunities that businesses will likely face, particularly the increasing pace of change.
They came from a wide variety of backgrounds, and brought different perspectives, but highlighted some common themes. The big trends noted included:
- How the world is becoming more and more global.
- The increasing shift from the west to emerging markets.
- The proliferation of huge amounts of data and the speed of technological changes—which brings huge opportunities and risks.
- That growth and investments going forward will no longer be just a financial issue, but must equally consider the societal impact—and how results are moving from the business page to the front page.
- The need for robust training programs and learning infrastructure—and how critical continuous learning and sharing of best practices will be.
- They emphasized the importance of the finance team being IT literate—but they also underscored that technology tools are an enabler - not an end, but a means.
- In a similar vein, they highlighted that data is not knowledge. Rather, we need to help develop insights from the data, to help decision makers identify the problems, and the solutions.
- And they talked about the fact that CFOs—and professional accountants—need to listen, understand the external environment in which they work, and be the voice of reason.
One of my key takeaways from the session—and something very true in my own personal experience—is the importance of being inclusive of different backgrounds and cultures, and creating value together. They pointed out that diversity, in and of itself, is useless. Inclusiveness is the key—embracing the variety of opinions, views, and perspectives that inclusiveness brings—and how it will enable better decisions.
One phrase I heard in this session that I will certainly use going forward is “future proof.” This has to do with not taking anything for granted, and being prepared for and anticipating what’s next. Talking about “what’s next”—I was given this globe, created here this week—I believe it is the first 3D printed prop ever for a World Congress.
But I have to say that the most important thing I took away from this session was that the finance function—and the accountancy profession—is transitioning from the passenger or navigating seat… to the driver’s seat. To do this effectively, we must build our careers on deep foundations. We must engage in continuous learning by constantly reading—seeking new approaches and solutions that keep pace with the ever-changing business landscape.
One of the ways that IFAC hopes to contribute to this challenge of continuous learning and sharing of ideas is through the new Global Knowledge Gateway, which was launched on the IFAC website earlier this year.
The Gateway is an exciting platform for your use—and for member bodies to also share and learn. It has a wealth of success stories, lessons learned, resources and information.
It was originally conceived for accountants in Small and Medium Practices and Professional Accountants in Business—to provide greater support in these disruptive times. But we quickly found the application and benefit of the Gateway to be much broader. Its benefit extends to the entire profession, and even beyond.
This initiative is a great example of how we can address challenges, capitalize on opportunities and make good choices in deploying our resources in the most effective and productive way.
When you return home from this Congress, please take time to join the 81,000 unique visitors who have already explored the Gateway. Submit a suggestion. Comment on a discussion. Read about a different perspective. Contribute to the content or share a best practice from your part of the world. We will all be better working together.
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The second plenary was Enhancing Government Transparency and Accountability. It focused on the need for enhanced public sector reporting and financial management.
We heard that some countries have learned lessons from the sovereign debt crisis—even if they weren’t directly affected. China, for example, is working toward a more open and transparent system. For them, the crisis showed the importance of high quality information and the need to promote accrual-based government accounting standards. And, with 14 million accountants already, China has introduced policy measures to strengthen the profession.
Other countries—such as New Zealand and Canada—have long been role models in the area of government accounting. It’s no coincidence that both performed well during the financial crisis.
But, as the Assistant Minister of Finance of China so aptly put it, Rome was not built in a day. Many countries have a long journey to achieve transparency and accountability in the public sector.
This is evidenced by the fact that the world is still drowning in debt. Debt to GDP in the G7 has increased from 60% to 120% since 1991. Many governments still don’t understand what they owe now and what they will owe later, so they aren’t considering the long-term impact of political decisions. Corruption and fraud are still too easy to conceal.
The bottom line is that it all comes down to the numbers and disclosures that are complete, comprehensive, reliable, and up to date. Governments must be held accountable, the same way companies are. And politicians need rules that incentivize good behavior.
Good accounting by itself will not solve any problems. But it will enable good decision making. And good decision making is essential for economic stability and growth. As one speaker so aptly put it, “Accrual accounting is about telling the truth.”
As I said earlier, Rome wasn’t built in a day. But we must be relentlessly committed to building a more accountable and transparent world over the long term.
For a long time now, IFAC has led the charge of calling for governments to ‘get their numbers right’. We believe this is the #1 public interest issue for the profession.
Under Fayez’s leadership, IFAC has launched an initiative called Accountability Now. This is a campaign, not a project. Along with a wide range of stakeholders, we will intensify our efforts to promote awareness at the global and regional levels and help governments to move beyond commitment to implementation.
Of course, in order to successfully implement, governments must have adequate technical skills. IFAC has long been involved in PAO development and the development of the profession to benefit both the public sector AND the private sector.
Let me pause here and tell you a story—a true story and an inspiring story.
At the end of Rwanda’s civil war, in which vast numbers of educated middle-class people were simply wiped out, the World Bank estimates that in 2008 there were only 45 accountants left in the country.
This tiny number of accountants had no professional accountancy organization to support them. It was a non-existent profession in a country that was itself barely surviving itself.
And with no accountants to provide assurance on the financials of any organization, it was almost impossible for Rwanda to attract much needed foreign direct investment.
Fast forward just 8 years.
This year, the 45 has become 285 registered accountants, supported by the Institute of Certified Public Accountants of Rwanda—ICPAR. As this professional body has grown, in Rwanda today there is a government committed to the development of the profession, there is rule of law, there is peace and there is growing prosperity fuelled by growth rates that are among the best in Africa and far ahead of the developed world.
I’m particularly proud of IFAC’s work and that of our friends at the Institute of Certified Public Accountants of Kenya, the sponsoring body of ICPAR. Ladies and gentlemen, Rwanda’s profession has only really just gotten back on its feet; it’s making great progress but of course it still has a journey ahead of it.
I was delighted when ICPAR was admitted as an IFAC Associate Member in 2012. Is there anyone here from Rwanda? Could you please stand? And recognize that I have highlighted just one of the success stories in the capacity building area.
While we’re talking about the region, it’s worth also noting the Mutual Recognition Agreement between the national PAOs of the East African Community. Tanzania, Kenya, Uganda and Rwanda have created a regional platform for professional knowledge exchange and support.
To advance our capacity-building success, IFAC signed a historic memorandum of understanding with key groups in the international donor community. This agreement is referred to as “MOSAIC”—an acronym for Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration.
Out of this agreement, we built (and just launched at this World Congress) the MOSAIC website, which will provide a “marketplace” to match the developmental needs identified by national professional accountancy organizations with the funding interests of potential donors.
Also out of this agreement, IFAC was granted almost 5 million pounds by the United Kingdom’s Department for International Development to support the establishment of professional accountancy organizations in 10 developing and fragile states over 7 years.
I want to thank Her Majesty’s Government and Secretary of State for International Development, Justine Greening—herself a professional accountant—for supporting this ground-breaking work. And I want to acknowledge IFAC’s Member Bodies in the UK for making DFID aware of the importance of the profession in developing countries.
And now, I am delighted to announce the first three countries to be supported by DFID’s grant. They are: Ghana. Rwanda. And Uganda!
Ladies and gentlemen, Accountability Now and PAO development are exciting initiatives. My challenge to you is to join us. Encourage YOUR governments to embark on the journey toward accrual-based accounting and budgeting. Start a proper debate. Call on your finance minister. Raise awareness. Build a coalition. Help strengthen your PAO or regional organization by volunteering. Encourage your PAO to help develop another PAO through mentoring, twinning, or other capacity building programs.
Together, we can advance the cause of good accounting… transparency and accountability… good decision marking… and economic growth and stability.
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The final plenary focused on Integrated Thinking. We heard exciting developments from companies that are implementing integrated thinking and reporting to create sustainable value and drive performance. This is very much a strategic issue going forward.
We heard how society’s expectations of corporations and their actions have changed. This has led to organizations needing to respond to a wider set of risks—such as water scarcity and climate change. In addition, intangibles—such as relationships, intellectual and human capital—make up an increasing proportion of a company’s value. And they also determine their ability to create value in the future.
In response, organizations need to become more transparent and rethink their approach to reporting so that it’s more useful to stakeholders and the companies themselves. They need to present a picture of total value creation. And they need to provide a more accurate reflection of the impact they are having on society—including communities, suppliers, governments and employees. But they also need to change their thinking… and their behavior. They need consider their resources… their relationships… their risks… and their opportunities-- in strategy and daily management. An example that really brought this home was given by Gold Fields’ CEO, Nick Holland, where we saw that 6 of the top 10 risks on their risk register were non-financial, or “soft issues.”
Intergrated thinking and integrated reporting are a prerequisite for good corporate governance. And connecting financial and non-financial information leads to more effective performance management.
As the panel told us, to be successful and sustainable, integrated thinking has to become part of a company´s DNA to help reshape thinking and relationships.
IFAC has long supported the International Integrated Reporting Council and, in September, we signed a Memorandum of Understanding to support the adoption of the IR Framework—which was launched last year.
This is the future of corporate management and reporting, and the accounting profession has a primary role to play. Your leadership in this area is going to be vital in taking that message to your countries.
I challenge you to be an active participant in advancing the IR Framework, explaining how business strategy, governance, performance management, sustainability are linked. The groundswell for IR and integrated thinking is rising quickly. It’s time to get on the train.
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Ladies and gentlemen, as we move forward over the coming years, some things we do may make headlines. But most of the things we do will be more about shaping trend lines that will impact our world for future generations.
As Goethe once said:
“Knowing is not enough; we must apply.
Willing is not enough; we must do.”
We must not only consider what we have learned here this week and have good intentions. We must also be intentional and take action.
Over the past several days, there were 34 sessions and over 200 speakers. We heard valuable information. Different perspectives.
There is much to consider. I urge you to carry this experience home with you. To participate. Get involved. Take action.
Our choices and challenges, and how we handle them, will help shape the people we become—and the profession we lead.
Individually we may be ordinary people, but together we can accomplish extraordinary things.
Thank you.
