The Accounting Profession has been rendering
excellent services in the past. Primarily the focus was on attest
function, services in the area of taxation and management consulting.
Accounting cycle has been taken over by Computers.
The world is becoming very competitive. Diversified services are being
rendered by Accountants at various levels namely, global, regional,
macro, micro and enterprise.
However, this piece looks at emerging new avenues and
opportunities which our accounting profession should accept as
challenges in comprehensive terms. Suggested ones are as under:
Process Outsourcing (BPO)
Turned on Organization
Role in Reengineering
These are now briefly explained below.
Based on Oxford Advanced Learner's Dictionary (6th
Edition — 8th Impression 2002), concepts underlining the following are
"A choice or way of making progress".
"A time when a particular situation makes it
possible to do or achieve".
"A type of job that needs special training or
skill, specially one that needs a high level of education".
BUSINESS PROCESS OUTSOURCING
So far there have been five generations of Computers.
Table 1 captures these generations.
TABLE NO. 1
FIVE GENERATIONS OF COMPUTER
APPLICATIONS & SCOPE
1953 - 1958
Applications - Simple, well defined for formal systems.
Scope - Payroll, Billing and Accounting.
1958 - 1966
Related to well understood tasks and procedures and control
of batch processing.
On-line inquiring systems.
1966 - 1974
Development of remote control terminals to connect
geographically separated units with Central Computers.
Time sharing developed.
1974 - 2000
Evolution of application of dependent data basis.
An organization has a single computerized data based system
accessible to a variety of users for a wide range of purposes.
2001 . . .
This generation is known as Blue Tooth
technology and through experimentation it is developing in its
scope and applications.
The real emerging opportunities for accounting
profession are to extend services in the area of Business Process
Outsourcing (BPO). The Institute of Chartered Accountants of India, New
Delhi deserves special congratulations and appreciation for popularizing
and advocating BPO as a new emerging opportunity for the profession.
They are regularly printing an excellent journal entitled "IT
Harmony". In this journal special focus has been given to Finance
and Accounting (F&A) Process Outsourcing. Based on extensive
material available, the scribe has developed the enclosed PowerPoint
Presentation on the following topics:
1) Trends in
Finance and Accounting Outsourcing
Finance and Accounting Job
Business Process Management
Creating a Successful Outsourcing Relationships
Combination of Finance and Accounting Outsourcing Relationships
Perceived Potential Risks
Barriers to Outsourcing
It is hoped that the accounting professionals will
take cue from the enclosed presentation and extend their services to the
At present "business as usual" is
continuing. Accordingly there is a crying need to develop economy,
efficiency and effectiveness. The real challenge is that our Accounting
Profession should get into innovation, become business consultants and
help the business and industry to become innovative. In this respect,
while there is a need to thoroughly study books written on 100 great
innovators and 100 great innovations, the following checklist will be
helpful in initiating and translating new avenues of emerging services:
1. How do you
innovate? What part of the business contributes a flow of ideas? Should
new technologies be brought in from outside the organization?
2. Are your
innovative efforts sufficient to retain and expand your customer base
given changes in their needs and competitors moves?
innovated development planned as part of the business's strategy?
4. Do you have
a series of innovative developments in the pipeline? Will the results
need legal protection?
5. What is the
margin of error associated with each project? In which specific factor
is the project most sensitive?
6. What is the
impact on the cash flow of the whole business as a result of taking on
7. Should the
project fail do you have the ability to carry on? Has a contingency plan
8. How do you
attempt to manage innovation and how effective is that?
9. Are there
adequate systems within the organization for monitoring and controlling
the project effectively?
10. Does the
business have the capabilities to exploit a successful project, for
production and marketing skills?
knowledge of the final market for the product?
resources (which may include government grants or other external
If resources are not available in-house should you
buy in skills, collaborate with other producers, license out the final
product, or arrange for another organization to manufacture the product?
TURNED ON ORGANIZATION
Another managerial role which the accounting
profession concentrate is to develop turned on organizations. The
following figure lists the constituents of the roles and a checklist of
eight points in this respect is suggested below:
1) Building a
Make every customer feel special
Have the courage to set bold goals
Simplify, Simplify, Simplify
Make technology your servant
Measure well, Act fast
Unleash the power of people
Lead with care
Time has come that Accounting Profession should also
extend its services to Management Audit. In this respect while available
literature is very extensive, two models are suggested for guidance.
These are briefly listed below:
1) GENERAL ELECTRIC (GE) MODEL:
General Electric Corporation (GEC) has highlighted
the following eight areas for evaluation as part of overall performance
Balance between short and long terms goals
2) JAKSON MARTINDELL MODEL:
Jackson Martindell, founder of the American Institute
of Management in 1948, developed the concept of Management Audit. His
model consists of 10,000 points. Point weightage is as under:
Maximum Points: 10,000
Excellent Rating: 7,500
Service to Owners700
Health of Earnings600
ROLE IN REENGINEERING
During several past decades, several buzzwords were
in currency. During 1980s TQM (Total Quality Management) was the
buzzword. Reengineering was the buzzword for 1990s. Moreover, in
Management literature a new chapter has been added namely, Inventing and
Reinventing organizations. This chapter specially focuses its attention
on Reengineering. Every person studying a basic course on management
stands inspired and motivated towards introducing reengineering in
business, commerce, manufacturing, agriculture and even in day to day
The first book appeared in the world was entitled
"Reengineering the Corporation: A Manifesto for Business
Revolution". This was jointly authored by Michael Hammer and James
Champy and was published in 1993. Later in 1996, Michael Hammer and
Steven A. Stanton authored another book entitled. The Reengineering
Revolution Handbook. This contain experiences shared in implementing
Reengineering. Problems faced were identified. Share of failures was
also stated. The role of consultants in respect of the above management
tool was reviewed. Indeed this presents an interesting reading.
BIG ACCOUNTING FIRMS
The book entitled "Reengineering the
Corporation: A Manifesto for Business Revolution" was a hot seller
and 1.7 million copies of the book were sold out. Three quarter of a
million were sold in United States and one quarter of a million were
sold in Japan. The remaining copies were sold out in Europe, Asia,
Africa and Oceania. The popularity of the book can be gauged from the
fact that it was translated in nineteen languages including Thai, Hebrew
The "Big Six" Accounting firms of the world
also addressed the issues raised in reengineering and found the same as
workable and they separately conducted studies in 1994 and confirmed the
Motivated by the foregoing, 75% to 80% of US largest
companies began reengineering. During 1994, a sum of US $ 7 billion was
spent by United States Corporations. This investment represented only
personnel and consulting services. If technology cost is reduced, the
investment represented $ 30 billion. During 1995 to 1999, twenty percent
growth per annum was registered.
Based on the above two books, various driving forces
relating to reengineering are now listed below. Page numbers indicated
related to the first book written in 1993 by Michael Hammer and James
Reengineering involves a significant reassessment of what a particular
organization is all about. (P.67)
2) The Manager
must ask a very basic question about what they do:
"If I were re-creating this company today, given
what I know and given current technology, what would it look like".
Organizations tend to stagnate when organizational members focus on
their immediate neighborhoods e.g. jobs and departments rather than on
the larger patterns of relationships in which they work and influence
the lives of others.
Reengineering thus involves redefining processes as patterns of
relationships connecting organizational members with people outside the
Processing a customers order (weeks, months ....Now
Reengineering means radically rethinking and redesigning those processes
by which we create value (for customers) and do work.
7) Issues to
•Quality of Service
permanently winning formula
9) Hallmark of
value for the customers
AROUND PROCESS RATHER THAN FUNCTION
Managers should imagine that they are starting with a
"clean piece of paper". [Thomas A. Stewart,
"Reengineering: The Hot new Managing Tool", Fortune, (August
23, 1993), P.41].
SELECTED SUCCESS STORIES
Nothing succeeds like success. The users of a
management tool are convinced if they learn of success stories. For
selected success stories see table 2.
Table No. 2
SELECTED SUCCESS STORIES
Reduction in annual cost by over $ 1 billion.
AT&T Global Business Communications
Nine-figures loss into nine-figure profit areas:
Semiconductor Group of Texas Instruments
Reduced Cycle time of its order fulfillment process for
integrated circuits by more than half. Achieved record results.
Reduced Cycle Time of its claims process from weeks to days.i)
Improved Customer Satisfaction
Costs, reduced fraud and litigation
Revenue per employees increased by 70%
REENGINEERING AND ACCOUNTANTS
While Accountants have been doing excellent work in
the past, it is high time that they should develop expertise in
reengineering and use it as a niche for their innovative and creative
role in the 21st Century. All sectors of our economy needs tangible
steps to be taken to operationalize reengineering to achieve productive
results. Given the expertise, the Accountants are well positioned to
deliver the goods.
For emergence of new avenues and opportunities to
profession, sky is the limit. It is high time that we in SAARC region
should ornament ourselves with the glorious work which is being done in
IFAC, CAPA and by various professional Institutes of Chartered
Accountants, Certified Public Accountants, Certified General Accountants
and Cost and Management Accountants throughout the world. Indeed our
interface with these Institutes, with literature produced by these
Institutes and the enlightened and modern role played by professional
accountants can equip us to identify new heights and meet the challenge
of the topic "Emergence of new avenues and opportunities to
*Principal, Hailey College of Banking & Finance,
Constituent College of University of the Punjab, Lahore. Member
Governing Council, International Federation of Accountants (IFAC)
(1997-2000). President, South Asian Federation of Accountants (SAFA)
(1997). President, Institute of Cost and Management Accountants of
Pakistan (1997-2000). President, Association of Management Development
Institutions of South Asia (AMDISA) (1993-96). Pro Vice-Chancellor,
University of the Punjab, Lahore (1994-1996). Founder Director,
Institute of Business Administration (IBA), University of the Punjab,