Attracting new entrants to the accountancy profession

ATTRACTING NEW ENTRANTS TO THE ACCOUNTANCY PROFESSION

An address made by Impetus Europe Consulting Group Ltd. Charmain and MISCO Managing Director, Joseph FX Zahra, during a Malta Institute of Accountants biennial conference titled  The Accountant  Past, Present, Future, on the 6th and 7th November 2008.

November 2008

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Introduction

It is indeed a great pleasure for me to be invited by the Malta Institute of Accountants to address this biennial conference and exchange some ideas on the relevance and challenges of the accountancy profession today and highlight some points how the institute can attract new entrants to the profession. Perhaps my credentials within this conference take back a number of years, first to my job 33 years ago as an Internal Auditor with Lufthansa AG at their Head Office in Cologne and followed by a number of chairmanships of listed companies, where I have taken a very active personal interest in the accountancy, the audit and risk management profession, the opportunities and the challenges which these face.

Perceptions and challenges ahead

Accountancy is unique among the professions. It does not heal, advocate or counsel. Rather, it applies a coherent system for communicating financial status and certifies to its presentation. It seeks to assure users of financial statements that the disclosed statements are meaningful, credible and can be relied on. The professions value added is tagged to the ability to maintain a high degree of public trust and confidence.
During the past decade, however, much has occurred with several stories hitting the international headlines and questioned the relevance of the traditional accounting principles, the effectiveness of corporate governance and subsequently doubts were raised on the efficacy of standards and regulation. The 2001-2002 Enron, the cases of Worldcom and Parmalat debacles, just to mention a few, together with the current international financial turmoil can be considered as historical milestones which will definitely find place in modern economic and financial literature. The developments that occurred at the turn of this century marked a growing concern and interest in proper governance and challenged the credibility and trust that the profession has always cultivated and enjoyed. Subsequently, the fair value accounting is today under fire and has been blamed for exacerbating the credit crisis  mainly for its contribution to billions worth of dollars write-downs. A priori these developments may certainly pose threats to the reputation of the profession and could scare young people away from the profession.

According to a perception survey on the accountancy profession undertaken in the US, there are a number of students who perceive this function as a backroom type of profession, which only records and summarises financial transactions. The findings of this survey pose other potential threats to attract the best and brightest students to the profession, and it would be interesting to assess if these outcomes are relevant to the local context. The results of the survey show that accountancy is not perceived as exciting and challenging amongst students. It is closely tied to mathematics and it lacks the elite status accorded to lawyers, doctors and consultants. Accountancy is perceived to provide little opportunity for interaction and high-level strategic thinking and decision-making. It is task oriented and since accounting technician courses are offered at vocational institutes, accountancy is perceived to have a strong vocational flavour rather than a professional career connotation.

Clearly, if market intelligence proves that Maltese students share these perceptions, an urgent call for a holistic strategy is needed to address these wrong impressions. Accountants role today is very different to their functions relevant 10  15 years ago. Vigorous regulations and increasingly complex business environment are changing accountants roles and skills, making their work much more technically demanding but also strategically important to the performance of businesses. A strong message should be highlighted that accountants today are moving from the backroom to the boardroom. This message should be effectively communicated to potential students. Although there is no one solution to address this challenge, the institute must be aggressive in the techniques and strategies that it employs.

A Changing Accountancy Profession Offers Great Opportunities

Although the accounting scandals and latest financial developments can pose threats to the reputation of the profession, experience shows that if properly managed these developments increased awareness and accountancy has been shifted from a cost centre to strategic level within organisations. Bad news could be a catalyst for making more students interested in finance professions and following these accounting scandals and financial distress one should await more stringent and rigorous regulations. These factors will definitely lead companies to hire more finance consultants to meet the new regulatory requirements and to accommodate the drive for more ethical awareness and behaviour.

During the past years, globalisation yielded changes in the external environment in which organisations operate. The internal evolution of roles and skills within organisations where synchronised to respond to these external factors. Finance roles are becoming increasingly in demand, growing in importance and driving the need for technical skills. The accountants role will be increasingly focused to transform information into knowledge and share their business outlook with the senior management. The profession is becoming increasingly specialised, more strategic and central to business performance. Risk management, financial analysis, corporate governance, assurance and taxation are key areas that are offering great career opportunities today and in the near future.

As the accountancy roles are becoming much more strategic, there is a perceived gap between the skills organisations need and the skills employees hold. Besides technical skills, soft skills are increasingly becoming important to fulfil todays roles such as; communication skills, analysis skills, leadership skills, team management skills, team building skill and presentation skills. Hence, the correct balance between technical and strategic emphasis should be sought in development programmes. The latter is a must to address the supply shortages of professional accountants, at least in alleviating one of the two reasons why this skills gap exists. The first being the resources that are available do not possess the right skills and secondly there is a general shortage of accountants, mainly explained by demographic shortages. The supply of young accountants was not enough to satisfy all the current demand driven by emerging regulations, global economic growth and the expansion of global banking and financial services. This scenario is expected to persist in the years to come, despite the recent crises in the global financial system and its associated projected economic slowdown in major economies, fuelled by organisations engaging into more compliance activities, risk management and adoption of new regulations.

Accountants are today much more mobile, with more enthusiasm and with greater aspirations. A changing accountancy profession encourages finance professionals moving sector, moving country or even explore opportunities outside the traditional finance function, such as in compliance, captive insurance, taxation, professional investment funds and hedge funds.

Organisations cant remain passive towards this dynamic environment within the profession. Supply shortages and increased demand for accountants are resulting in a retention crisis. In view of these market conditions, organisations must seriously reconsider their recruitment, development and retention strategies. Organisations claim that employees are making the move for higher salaries. On the contrary, exit interviews reveal that career development is the key to a successful retention strategy. Exchange of accountants or secondments is an important tool, widely used by local audit firms, set to accommodate the young accountants aspirations. At this point, however, I would like to pose a question to the floor; are these secondments merely seen by firms as an issue of competitiveness? Do firms really believe that these secondments should be primarily targeted as a personal development exercise to the Maltese youngster?

All these opportunities should be evaluated in light of Governments Vision 2015 for Malta. This vision highlights the countrys goal to establish itself as a centre of excellence by 2015 in a number of high value-added sectors, namely ICT, health services, financial intermediation, international education services, aeronautical engineering, renewable energy and tourism, just to mention a few. Meanwhile, emerging sectors with a marked successful performance during the past years, such as pharmaceuticals and information technology operations, remain at the heart of the countrys strategy. A shift is expected to persist from the manufacturing and primary sectors to business and professional services n the forthcoming years. Projections on future skills requirements in Malta show that circa 9,000 additional new jobs are to be created in Malta by 2015, excluding replacement jobs. 3/5 of the new jobs created would be in business and professional services, particularly in financial services and ICT. This vision and the projected economic outlook continue to amplify the opportunities for accountants, where youngsters attracted to the accountancy profession together with other leading professions should act as a catalyst for the countrys vision to materialise. The Maltese economy will therefore expect demand for accountants on the rise.

The Future Is In Our Hands

It is needless to say that these opportunities and the bright future ahead for the profession need to be effectively communicated to potential students. For prospective accountants to start studying accountancy at the age of 13 is not a viable option. The education system in Malta should provide a holistic background to students in order to produce open minded, creative individuals and holistic professionals, informed on different aspects including arts, history and sciences that are important to our identity as a nation. What keeps anyone with an arts or science first degree to pursue accountancy at a later stage in his development? The way forward for MIA is to develop a strategy to attract more students and graduates to the accounting profession. A network between professionals, guidance counsellors and HR practitioners should be set up to help the concerned parties realise that the profession today is enhanced and expanded. The institute should perhaps work with teachers and students to organise career days and participate in career fairs. Use the latest communication and recruitment tools to market the profession as a bold and exciting option. To use young staff to recruit students in the CPA profession, to give the role a fresh look that is appealing to the young generation and foster an image reflecting the reality that the accountancy profession today requires broader business skills, including technology, strategic and critical thinking and high level of business consulting. These are the desirable attributes for a challenging and interesting profession, which definitely feature in every graduates dream. All the required ingredients and the proper channels to convey this message are already in place. The next stage is to see MIA conducive to all the objectives we are here today.

Thank you.