Tensions
Author:
Brian Walsh
[Fulltext] There are a lot of tensions about, forces pulling against each other. For instance, there is tension between the school of economists who say we should not talk ourselves into a recession and those who say we should deal with the harsh reality. This has led to various eminent economists in the past month coming up with estimates of GDP growth for 2002 which varied from 0% to 7%.
Which is right? The reality is that nobody knows. This, in turn, leads to uncertainty and accountants, above all, hate uncertainty. This uncertainty will affect all of us, and the companies, firms and bodies we work for, in different ways.
Some will see it as an opportunity to get rid of "fat" in their organisations, which would have been politically difficult to do when times were good. Others will see it as a time for retrenchment, put everything on hold until markets return to normal, and still others will see it as a time of opportunity to move ahead of those competitors who take the retrenchment route. Others, unfortunately, will not have the reserves to sit out a recession and will either be taken over or go into liquidation.
Undoubtedly, Chartered Accountants will play a large part in ironing out the tensions which will exist in boardrooms when these decisions are being made. 3,700 of our members work in Plcs, multinationals or multinational subsidiaries, many in very senior positions. A further 2,300 work in indigenous Irish industry, again, in very senior positions, not just in finance but in general management. If there was ever a time when a broad based business qualification, backed by a combination of cross-functional training and tough examinations was necessary, it is now, as tough decisions, with long term implications, are being made.
The globalisation of business is also creating tensions. The accountancy profession, through the International Federation of Accountants (IFAC) is attempting to respond to globalisation by facilitating the development of international accounting, auditing, ethical and educational standards. It also plans to introduce a self-regulatory regime which will introduce a programme for monitoring the compliance of IFAC Member Bodies with the obligations of membership of IFAC. However, there are 153 Member Bodies in IFAC in 113 countries, representing more than 2.4 million accountants. The membership includes bodies from all of the so-called developed countries, but also many of the so-called developing countries. So whose standards should be used, who should decide on the answer to that question, and who should pay for the ambitious standards development and monitoring programme which is being planned? In a previous Comment Page (April 2001*), I outlined how a common sense compromise had been reached in respect of international accounting standards. Hopefully, a similar compromise can be reached by IFAC in obtaining approval for the policy and strategic initiatives necessary to enable the accountancy profession to keep up with, and remain relevant to, globalised business.
Lots of tensions.
Accountancy Ireland Vol 33 No 6 December 2001