Finance function needs five-year vision, says ACCA

By David McCann for CFODive.com

The corporate finance function has been in a state of nearly constant evolution for decades, but if anything, the pace of change is now picking up dramatically.

The increasingly staccato nature of the economy, the dramatically widening impact of AI and machine learning, demographic shifts, the climate emergency and new geopolitical and operational realities present a blitz of challenges for finance leaders.

Failure to adapt will marginalize finance functions within five years, predicts the Association of Chartered Certified Accountants (ACCA) in a new report, “Finance Evolution: Thriving in the Next Decade.”

Not the least of the challenges is formulating a vision for what the function will look like as the next several years unfold. Indeed, in ACCA’s survey of 2,300 global finance and accounting professionals, conducted in March, only three in 10 (29%) said their organization has a full vision of the function’s three-to-five-year future.

For its part, ACCA contended in the report that the vision should be about achieving a critical level of trust.

“The future vision for the function must center on the establishment of trust, among a variety of stakeholders, both internal and external, in the function’s analysis and interpretation of performance data, and the advice then given,” the accountancy association wrote.

While that’s not a new requirement, “in a world where trust is increasingly being questioned and … disseminating untrustworthy information becomes ever easier, the role of the finance function in acting ethically in the reporting and insights that it provides is essential,” the report said.

The survey asked which factors act as barriers to enhancing the role of the finance function. The top responses, which ACCA called “worrying,” were a lack of understanding of the areas where finance can add business value, and finance being treated as a cost center.

“So, for many, there is still a need to establish how the function adds value to the organization,” the report noted.

In that vein, survey respondents also were asked about the extent to which they incorporated the concept of value (or purpose) in developing a strategy for the finance function. Only about a third (31%) said “significantly,” while almost half (46%) said “moderately,” and 12% said “not at all.”

“The inclusion of these concepts must be a strong initial step toward the development of a finance function fit for 2030,” ACCA stressed.

According to the report, corporate finance in 2030 will need to be “autonomous,” rather than its tradition of being reactive and focused on historical data. Being autonomous, it explained, means focusing on taking pre-emptive action against current opportunities or threats, rather than on curing past errors.

The pre-emptive capability would result from the autonomous function being free of burden and fully enabled, together with automation, ACCA posited.