IMA Reports the State of the Finance Function in India
NEW DELHI, May 14, 2018 /PRNewswire/ --
Highlights gaps between effectiveness and priority in strategy and risk management
The role of the Finance function is evolving in India with new responsibilities coexisting with more traditional ones
The traditional, limited remit of the cost accountant is being replaced by the more expansive, value creation-oriented, strategic partnering role expected of today's global management accountant
In some areas (for example, statutory reporting), practices in India still more closely resemble those in emerging economies; in other areas (for example, strategy development), they more closely resemble those in developed economies
For this report, IMA engaged with firms across key Indian markets including those in Bengaluru, Chennai, Mumbai, Delhi, Kochi, Kolkata, Pune and Hyderabad.
The role of the finance function in India is evolving to include new high priority responsibilities in addition to the traditional, limited remit of the cost accountant, finds new research from IMA® (Institute of Management Accountants), MyCFO and the Institute of Directors (IOD) India. To see the full report, visit here: https://goo.gl/vqMu7v.
IMA in collaboration with MyCFO and the IOD India, conducted a survey of finance and accounting professionals working in businesses to assess the state of management accounting practices in India. Survey respondents were from firms of various sizes, with midsize (100 to 999 employees) and large (greater than 5,000 employees) firms more numerous than firms of other sizes. For this report, IMA engaged with firms across key Indian markets including those in Bengaluru, Chennai, Mumbai, Delhi, Kochi, Kolkata, Pune and Hyderabad.
As the Indian economy embraces industry 4.0, characterized by automation, machine learning and widespread use of the IT, Indian companies are hard pressed to embrace an exciting new world-one characterized by rapid economic change. Industry 4.0 presents companies with new opportunities but also greater risks. Like other corporate functions, fiscal jurisprudence is also affected and requires new approaches to help CEOs mitigate new challenges and embrace new opportunities. Today more than ever before, accounting and finance professionals need to possess the knowledge, skills, and abilities to enable them to act as strategic business advisors. The report identifies similarities between the evolution of the accounting profession in India and other developing countries. China sees a great demand for public accounting professionals as companies have restructured and gone public to raise capital in an increasingly competitive global business environment.
In India, there's currently a great focus on activities related to business financing (business valuations, start-up companies, and so forth). The Indian business environment is rapidly evolving and newer finance responsibilities such as forecasting, planning, and strategy are emerging priorities, and newer management accounting techniques, are being adopted. Yet Indian companies, like their counterparts elsewhere in the world, under-prioritize investment in developing practices that are considered to be most effective in yielding better business insight.
"Indian companies are entering an exciting new world-one characterized by rapid economic, social, and political change. While planning, forecasting, and providing business insights are high priorities for the finance team, India's complex tax and regulatory environment requires substantial focus and resources, which reduces their ability to focus on providing business insight," said Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research and policy and author of the study.
As IMA's first research project in India, the study focuses on the state of the finance function among Indian companies of various sizes and types of ownership. The study also compares the survey results from India to prior studies in China and other regions to examine how management accounting practices differ. It found that Indian companies spend a similar amount of time on statutory reporting compared to other companies in emerging economies.
"The results of this study provide a revealing portrait of management accounting practices in India," said T. Subbarayudu, President of IMA's Bangalore Chapter, who spearheaded the execution of the survey. "Prior to this report, there has been relatively limited research on the role that management accountants play within their organizations, the enterprise performance management (EPM) systems that they help design and deploy, or the tools and techniques they use."
"The report indicates that while the industry classification of a firm didn't significantly affect how the finance function spends its time, there were significant differences based on type of firm. As might be expected, publicly traded companies and wholly foreign-owned companies spent more time on statutory reporting than partnership firms and privately held companies," explained Manoj K Raut, CEO and director at IOD. "Surprisingly, though, partnership firms spend much more time on strategy development than other private and public companies."
"While statutory reporting still takes up most of their time, finance professionals are spending an increasing amount of time on strategy development as the regulatory burden eases. This is a positive indication that finance will be well-positioned to enhance its business partnering role in the near term," said Deepak Narayanan, co-founder at MyCFO, which works with companies in finance transformations, performance measurement, turnaround and restructuring, post-merger integration and interim management.
"The Indian business environment is rapidly evolving, and so is its management accounting," said IMA's Lawson. "Newer finance responsibilities such as forecasting, planning, and strategy are emerging priorities, and newer management accounting techniques are being adopted. Yet Indian companies, like their counterparts elsewhere in the world, under-prioritize practices that are most effective in yielding better business insight.
"Companies need to ensure that their accounting and finance professionals possess the knowledge, skills, and abilities to act as strategic business advisors. By being able to help their organizations develop and implement effective strategic performance management systems, today's management accountants can greatly contribute to the success of their companies."
About IMA (Institute of Management Accountants)
IMA is the only global management accounting organization to consistently be a forerunner in delivering relevant research on the evolution of the financial professional to business partner. With a history of nearly 100 years of management accounting innovation and insight, IMA is a global member association for those professionals involved in strategy, financial planning and analysis, and other areas that enable organizational growth.
Media Contact:
Anika Wadhwa
[email protected]
011-43898907
Cohn & Wolfe Six Degrees India
Share this article