Trying to predict the future has left many eminent thinkers with varying amounts of egg on their face. Noted economist Irving Fisher spent a long time living down his prediction that “stocks have reached what looks like a permanently high plateau” three days before the Wall St Crash of 1929.

However, there are some trends that are emerging in the aftermath of the financial crisis that will affect not just the fortunes of the global economy, but how business is done, and, within that, the role of the management accountant.

Technology as liberator
Technological advancements show no sign of slowing. Indeed, faster, smarter, more responsive and more intuitive systems are being unveiled every month. Business intelligence software, in particular, has developed to form a central tool in the accountant’s arsenal.

The amount of data, and in particular the increased granularity of business information, will only go in one direction. The increasing sophistication of shared services will see many processes removed from the finance function.

“Those systems produce a lot of interesting and useful data, so instead of just the standard reports we have now it will be the ‘data centre’, generating constant, real-time management information,” says Peter Simons, who heads up CIMA’s education team.

“The reports will be more informative, going beyond the standard stuff into operational data, helping accountants to be more forward-looking.”

But that could have two potential consequences: one, it could overwhelm the accountant, drowning finance professionals in data; or it could be a liberating force. Resolving that could be the most pressing issue for finance in 2022.

“Without doubt, because of the opportunities that the removal of back-office processes from the accountant’s job set offers, we have the potential to become more influential,” believes Simons.

“We have to figure out what to do with that, and it’s not just in the decision-making, since I think many accountants are already engaged in a lot of that already. I think it’s in performance management that we can become more influential.”

Ensuring technology frees accountants and doesn’t enslave them isn’t a challenge that can be ignored.

Insight replaces information
“The key thing for the finance function is to be forward-looking,” says Adam Bates, global head of innovation at KPMG.

“And to do that, it has to stay relevant.” Bates believes that if the processes that used to be the domain of the finance function are all being automated, “then you’ve got to move and adapt to that”.

He adds: “What the accountants will be valued for in 2022 will be giving insight into the future, what the business is doing now, what that means for the future and what impact those different things are having on your business.”

According to Kai Peters of Ashridge Business School, by 2022 there will need to be a shift from accountants simply providing management information to a more insight-based approach.

“Some financial accountants may want to stay in their little boxes, but there will be a greater need for more strategic accounting expertise,” he says.

“And if you talk to a board member and the question becomes whether a certain business practice or approach is acceptable, or whether they’ll get nailed, well that’s not an accounting question; it’s one of judgement and risk. In that context, the accountancy profession is going to have to get off the fence.”

Clearly, with greater influence comes greater accountability, a paradigm shift that the best accountants will have to accept quickly, believes Peters.

“You talk to a lot of accountants and a lot of them simply say, ‘well, on the one hand…’ That’s no good. As a director I have to act, and I’m looking for professional advice to help me to do that in the best way and to make decisions.”

Reporting is no longer enough; accountants must grasp the nettle and become insight providers.

Beyond the BRICS
By 2022, it’s widely believed that China will be the world’s biggest economy, narrowly ahead of the US. And with that ascension will come all the attendant problems of a superpower – how to parlay that into increased prosperity at home, maintain healthy levels of growth and oversee the liberalisation of the trade in its currency.

In fact, it’s a fair guess that China’s biggest challenges are only beginning. The same is true of its BRIC counterparts in Russia (social unrest), India (outdated infrastructure) and Brazil (outdated economic structure). In that context, then, the hunt will be on for the next fast-growing economies to stimulate global growth.

The hottest prospects are the CIVETS, the group of countries that appear to have sustainable GDP growth, commitment to free markets, improving legal structures and a growing middle class to drive domestic consumption.

Colombia, Indonesia, Vietnam, Egypt (political unrest permitting), Turkey (ditto) and South Africa may step up to the challenge, and accountants will need to assess the opportunities – and risks – in these and other emerging markets.

“We will be living in a more multi-polar world, and what’s considered normal business practice in Turkey or Mexico is bound to be different,” says Ashridge’s Kai Peters.

“China and the Middle East are very different: committing to anti-bribery in theory is all very well, but is paying a five per cent commission to a helpful contact something different? In some countries yes, some no.”

In addition, the growing influence of Chinese business will start to be truly felt beyond the financial markets. There will be an increased need among accountants in developed economies to understand the way in which companies in China – many of which will remain state-owned – run their operations and accounting practices.

And despite the continuing efforts to drive a convergence agenda, accounting standards and practices in countries such as China won’t change overnight.

It’s with that in mind that the accountancy profession must take its place at the heart of business to fully capitalise on the expanding opportunities these new markets represent.

Reporting comes of age
Company reporting is an ever-evolving issue. Narrative reporting and the growth of the sustainability agenda have both meant that company reports are already moving beyond simple statements of financial facts to a more holistic approach.

According to Nick Topazio, CIMA’s technical specialist on reporting, the management accountant of 2022 will need to be fluent in the new language of reporting.

And the biggest change will be the relationship between market value and net asset value.

“In the 70s, less than 20 per cent of reporting was represented by intangibles; that is now running above 80 per cent and that will continue in terms of the recognition within market value of reputation and brand and market relationships and supply chains,” Topazio says.

“And because of that whole issue of the value of intangibles and the recognition of intangible value, new forms of capitalism will emerge.

Shared value models, sustainable capitalism, and others where there is far more recognition of a wider set of parameters that affect wealth and value creation, will become more mainstream. And that is a new area that management accountants are going to have to grapple with.

They’ll have to move away from strict credits and debits and more into valuation and looking beyond the current narrow focus.”

This trend will be accelerated by the process of greater shareholder activism. Stakeholders now demand to know how the business is run, investors want to know what the risks are and how they are managed, while staff, customers and suppliers will no longer tolerate being kept in the dark.

Adding to that challenge is the fact that activism is often a single issue. “Those stakeholders aren’t too interested in taking a rounded view on how you’re managing risk, or what trade-offs you make; kids sewing footballs in Bangladesh are all they see,” says Kai Peters.

“And for accountants who are used to systems and processes that can be followed clearly, that is going to be a major challenge. They don’t like uncertainty and chaos and they want to know what the rules are in a world where the rules aren’t clear any more.”

Life expectancy to drop
The recent news of Kodak passing into bankruptcy was a salutary reminder that nothing lasts forever.

“There’s no doubt that a key challenge for the next ten years will involve the lifespan of companies,” says KPMG’s Bates.

“Thirty or 40 years ago the average FTSE100 company would live for 50 years. Today, that’s more likely to be 15-20 years. And by 2025 it might be five years. The reality is that a lot more companies will be emerging from obscurity to be successful, or will be declining.”

And it’s not just Kodak. Look at Nokia, which saw its value plummet once the market decided it had fallen terminally behind the competition.

“The markets today are a lot less forgiving than they were and that will only accelerate,” says Bates.

“As we see more global challengers, companies from countries such as China, India, Indonesia and South Korea will decimate less efficient and less fit companies that used to have a comfortable existence.”

In that context, the management accountant will need to become more comfortable with change.

“I don’t subscribe to the view that all accountants will have to be a jack of all trades, but adaptability will become an increasingly important quality to show,” says Bates.

“That has to be the top priority to stay relevant. In the same way, companies have to do the same.”

This trend will also herald the end of the straight and clear career path for accountants. Where previously the route was straightforward – university, training either in practice or at work, progression up the ranks to FD – the accountant of the future will need to address any skills shortage as they go along, equipping themselves for a varied career.

And that may involve a few sideways steps in order to build a solid CV.

Christian Doherty is a regular writer on business and the environment for Fast Company, Financial Management and a range of other publications.