ACCOUNTING FOR EXCELLENCE
Melanie Kanaka – who was recently elected to serve as Vice-President of the Chartered Institute of Management Accountants (CIMA) – considers it a privilege to be both a member representative to the CIMA Council and the first Asian female to be elected by members to serve as an Honorary Officer for the institute set up under the Royal Charter.
This role enables her to act as an adviser and ambassador, both personally and professionally. But what’s special about this milestone perhaps is not so much that Kanaka is CIMA Council’s first Asian woman but more so the fact that she has been co-opted for a second term on the Council from outside of the UK – a moment of pride for Sri Lanka.
Kanaka is also the Head of Finance & Administration (Sri Lanka and Maldives) of the World Bank.
Yamini Sequeira poses a multitude of questions to her about how management accountants are faring in the emerging business order and the challenges they face amid the COVID-19 crisis.
Q: Sri Lanka has a long history of producing excellent management accountants. Are there any areas you’d like to see strengthened further?
A: The recent pandemic that struck the world underscores the need to think beyond where we are today by adopting technology and expanding our skillset. A report by CIMA and Oracle found that only 10 percent of finance teams have the skills they need to support the digital ambitions of their organisations.
Living in a rapidly changing business and technological environment, we all need to keep pace with the management accounting community’s needs in a digital world and prepare the profession for the future.
Armed with the right skills, management accountants can guide organisations through this extraordinary time of change and go beyond the needs of the modern business world successfully.
The human side is also as important if we are to achieve successful change to effectively support the sustainability of all businesses.
Q: How can we enhance the quality of graduating accountants, in your view?
A: Accounting students need a strong foundation and support to stay employable, ethical and competent, in this era of accelerating technological disruption and changing business models.
The accounting qualifications they pursue should meet the competencies required by employers; they should upgrade professional qualifications, network and follow new research to remain up-to-date.
Q: With plans of making Sri Lanka a financial services hub, how do you feel the management accountant cohort could add value to this positioning?
A: The COVID-19 pandemic has disrupted and changed the business world instantly but this is what strong management accountants should be trained to deal with. The crisis has provided a situation to show how they bring value to organisations and build resilience.
Management accountants, and their ability to connect the dots across these areas, linking strategy with operations and utilising insights to help business leaders make good decisions will be crucial.
Their core skills in areas such as cash management, scenario planning and evolving business models will help organisations survive, seize new opportunities and rebuild the Sri Lankan economy. This can be a value added advantage if Sri Lanka becomes a financial services hub.
Q: Have management accountants gone far beyond number crunching in Sri Lanka and become true partners in business?
A: Management accountants are financially literate, commercially savvy business leaders who can look beyond the numbers – making sense of the past, understanding the present and helping to model the future.
They can be strategic partners across business and financial teams, providing decision based financial and operational data required to manage and then optimise the performance of an organisation, create value for the future and drive it forward.
Q: In the era of COVID-19 – with various professions making their contributions to fight the pandemic – what can management accountants do to help their companies and the wider world?
A: This crisis showcased how management accountants can bring value to organisations and build resilience.
The gradual opening of world economies is critical, and we must look at the 4Cs – i.e. cash, courage, conviction and change – to move forward. Business decisions are crucial at this point in time and because management accountants have the overall picture of the business and numbers, they can help business leaders to make good decisions.
Q: How do you view the economic outlook as Sri Lanka’s lockdown eases? And what is your recipe for economic recovery?
A: We need to persevere. We’re slowly experiencing an uptick in the economy. We know accounting and finance professionals will play a critical role in rebuilding economies and driving recovery.
Q: Corruption still rears its head in both the public and private sectors, and in other facets of life in Sri Lanka… What can be done to eliminate this scourge?
A: Good and sustainable business is built on trust and is well proven. Strong ethics and a code of ethics and professional conduct should guide all management accountants.
Q: GRI and Integrated Reporting is catching on in Sri Lanka. What value would you attribute to these reporting standards and what does it mean when a company produces a strong integrated annual report?
A: Corporate reporting is essential in the effective functioning of the market economy, enabling shareholders and investors to assess the performance of a business across all aspects of activity, establish its value and exercise effective oversight.
For capitalism to succeed, our corporate reporting system must be as dynamic as the financial markets themselves; and it can be if those preparing reports recognise their true potential.
However, traditional financial reporting fails to fully recognise the value of intangible assets, which are a vital component of long-term value creation. It’s critical for companies to focus on a broad range of resources and relationships when making decisions, and it’s this multi-capital reporting that investors need.
The answer is integrated reporting, which takes a broad view of the interests of the company’s stakeholders and its value creation potential. Short-term value creation indicators are not always tangible or financial in nature but can be manifest in non-financial or intangible ways such as customer satisfaction, reputation, and brand loyalty and awareness.