Changing Face of Business -Role of Chartered Accountants in Industry Hyderabad, August 3, 2012 By CA P R RAMESH

Mega Trends/Disruptions Globalisation Changes in profile of business and business practices Technology Emergence of new services and extinction of traditional services User activism Regulatory activism Investor activism Social and other networks Standards and laws requiring compliance more complex

Globalisation World is flat Geographical barriers still exist but being dismantled Shift of economic activity and power Movement towards common global standards and practices

Technology Mobile and handheld devices and their influences Information – speed – size – flexibility Information less private and more public Impact on services, jobs, etc. – e filing, XBRL, etc.

Emergence of New Requirements Non-financial audits Non-financial certifications – carbon credit, etc. Forensic Post Deal Integration Background checks, credit checks, etc/ Litigation services and dispute resolution

Emergence of New Services and Extinction of Traditional Services Anti-money laundering Risk Management Data Analytics Emergence of control assurance, revenue assurance, fraud risk assessment, concurrent audit

Changes in Profile of Businesses and Business Practices Disapproval of Mom-n-Pop businesses Technology driven Networks, alliances, mergers Emergence of brands High customer attrition and low customer loyalty – seller beware Challenges of employee career management and motivation Aggressive advertising and solicitation Tendering and cost cutting Availability of multiple options

User activism Class action suits Media – judge, jury and executioner Right to information

Investor activism Shareholders more aggressive Analysts scrutiny Role of Private Equity and Venture Capital investors

Regulatory Activism New, stronger and tougher regulators – e.g. SEBI, NFRA Investigative agencies active – e.g. SFIO, CBI, etc. Co-operation and exchange amongst regulators Action – swift, fair and certain

Social and Other Networks Facebook, Twitter, Yammer, etc. Using networks for marketing Using networks for collaborative solutions and service delivery

“Our tools for locating documents are confusing and it is unclear who to turn to if I have questions. The world of today is a very different place in terms of creativity, self-expression, social belonging and sharing Search Collaboration Social Networking Mobility Self-Promotion

Compliance Accounting Standards Corruption, bribery, etc. Insider trading and capital markets related laws Deposit of statutory dues TDS and other related obligations

Successful CFOs balance their roles and tasks The “Faces” are roles that CFOs play: Steward: Protect and preserve the assets of the organisation Operator: Balance capabilities, costs and service levels to fulfill the Finance organisation’s responsibilities Strategist: Provide financial leadership in determining strategic business direction and align financial strategies Catalyst: Stimulate behaviors across the organisation to achieve strategic and financial objectives 7

CFO Functions Accounting Financial Reporting Treasury – funds management Budgeting Audit and Assurance Taxation – Direct and Indirect Compliance with laws Key input provider to strategy Mergers and acquisitions Risk Management Eyes and ears of CEO Advisor to Board, Management Representation to Government Representation to Regulators Investor and analysts communication Face of the entity to bankers Face of the entity to capital markets Face of the entity to regulators Investor and analysts communication Face of the entity to bankers Face of the entity to capital markets Face of the entity to regulators Line Function Strategic Advisory Communications

So where does this leave CFOs? The top 10 challenges Control Challenges Efficiency Challenges Performance Challenges Execution Challenges Change and Transition Challenges 1.How do I ensure that the data the company relies on is accurate and provides the most useful information? 2.How do I reduce the burden of maintaining my control environment without compromising its integrity? 3.How should I organize finance to serve the needs of the different stakeholders? 4.Given the heterogeneous nature of finance’s roles, how do I attract, develop, and retain the talent required to fulfill finance’s mission? 5.How do I create a common language that empowers management to see themselves the way investors do? 6.How do I ensure that our investments in innovation and growth yield the greatest returns? 7.How can I partner with other senior managers to drive strategy execution across the enterprise? 8.How do I reduce costs while continuing to add value? 9.How do we determine our key gaps? 10.Being “world class” in everything seems expensive and takes too long; where should we focus? 6

What should Chartered Accountants in Industry do? Be technology proficient Technical up-to-date Nimble Have strong analytical skills Jack of all and master of none Transition from a book keeper to a business accountant Be control conscious Develop strategic thinking Develop general management skills Focus on communication skills Be mobile

What should Chartered Accountants in Industry do? Be relevant Maintain the highest level of INTEGRITY

Thank You