Mr Steve F. Vieweg

The National Convention of the Institute of Cost and Works Accountants of India (ICWAI), slated later this week at Hyderabad, seeks to reposition management accounting as a value adding management process, rising much higher than the usual financial or cost accounting framework. The ICWAI is drawing strength for this initiative from two premier institutions in the field, namely, Certified Management Accountants of Canada (www.cma-canada.org) , and the Institute of Management Accountants of the US (www.imanet.org) . Participating in the convention will be Mr Steve F. Vieweg, President and CEO, CMA of Canada, and Mr Paul Sharman, President and CEO of IMA.

Mr Vieweg works closely with CMA Canada's National Board of Directors in setting the strategic direction for the Society of Management Accountants of Canada, developing and implementing business strategies, and building partnerships with allied professional organisations in Canada and internationally.

Mr Paul Sharman, since January 2004, when he was asked by IMA's Executive Committee to manage the association's operations, has established an entirely new direction for the association, its members, and staff. His mission is to advance the management accounting and finance profession through certification, superior professional ethical standards, and competence-based continuing education.

Business Line interacts with Mr Vieweg and Mr Sharman to know their views on a few management accounting issues.

From a global perspective, how do you see the profession of management accounting? And how do you expect it to shape up between now and the end of the decade?

Sharman: Globally, the profession is struggling to regain its proper stature. This reflects the shift in attention to compliance, with ever increasingly complex accounting rules and financial regulations. Although the world needs orderly markets and compliance with law, we must be clear that the business of business is doing business. We must not allow the emphasis on compliance to subsume the important work of business in driving the economic engine of society; business.

Mr Paul Sharman

Assessment of compliance is the domain of the external auditors, tax specialists and financial reporting specialists; actual compliance is the domain of management accountants because it is we who are responsible for design, implementation, management and reporting of processes, procedures and practices.

Education and certification for the variety of roles and responsibilities in any supply chain varies, such is true in accountancy. Assessment roles require different education and certification from management accountants.

The Sarbanes Oxley has changed everything. First, it has returned accountability for financial performance to the financial professionals who work inside organisations, having Arthur Andersen sign the financial reports was a massive deception. Having the CEO and CFO sign is appropriate and correct. The CEO and CFO must depend on the professionals who work inside their organisations to build quality in. So, globally we expect the representative certification of financial professionals who work inside organisations to become dominant, in essence rebalancing accountancy as we shift the emphasis from compliance (or attempting to inspect quality in) to building quality in.

Second, the SEC and PCAOB implementation of Section 404 had unintended consequences as a result of the uninformed audit-centric approach adopted in the first three years. We see them attempting to correct this towards a properly developed risk management approach. This will support our efforts substantially. Globally stock markets and regulators are turning towards risk-based methods.

Vieweg: The demand for management accountants, on a global basis, is increasing. One of the driving forces for the demand is the intense global competition all countries are facing as they export their products and services and determine strategies with respect to the production, marketing and distribution of those products and services.

CMA Canada continuously consults with a primary stakeholder, the employer, to ensure that the CMA graduate has the required competencies. In addition to the consultation process, we also undertake extensive research annually. As a result of the consultation and the research, CMA has developed a competency map the map is at the heart of everything CMA undertakes, whether it is accreditation or recruitment programs, research or marketing the CMA brand.

The CMA competency map is built on three pillars strategy, management and accounting. What sets the CMA competency map apart from all other professions is that it identifies four different career stages for CMAs as we recognise a new graduate requires additional experience and education to master all competencies.

Furthermore, the competency map also identifies six functional competencies these are the technical competencies that individuals can learn through formal education. The functional competencies are strategic management, risk management and governance, financial resource management, performance measurement, performance management and financial reporting.

Strategic management accountants require more than technical competencies, however. The competency map addresses this by identifying the "soft skills" or enabling competencies problem solving and decision making; leadership and group dynamics; professionalism and ethical behaviour; and communication.

We are confident that the framework of the competency map is one that applies worldwide. As evidence of that, it is our understanding that the ICWAI has developed a vision and mission statement and has identified the same three pillars as the CMA competency map. The ICWAI has added a fourth pillar; its regulatory regime.

More importantly though, the functional and enabling competencies are also presented in the in the ICWAI strategic plan. It is initiatives like these that demonstrate how the strategic management accounting profession is aligning itself to meet the current and future demands of global enterprises.

These issues will reshape the entire profession of accountancy, and probably in less than 10 years.

Is India leveraging management accounting for the growth of the economy? Where are the gaps? What are the best practices that India can adopt from other countries in the private and public sectors, and in manufacturing and services?

Vieweg: To date, CMA Canada has had meetings with the leadership of the ICWAI and have not had discussions with any of the other accounting associations based in India. Based on our discussions with the ICWAI, it appears that India is leveraging management accounting for the growth of the economy. The challenge appears to be the significant growth of the economy and being in a position to address the increased likely demand for management accountants.

The initiative that is especially intriguing is the concept of cost audits in the public sector; such audits address the concern that exists with respect to the benchmarking of costs related to the public sector and ensuring that the charges and revenue have properly been allocated. In Canada, these functions are carried out as a function of the public sector.

The ICWAI also appears to be addressing the future requirements of management accountants, as it has developed a new vision and mission and is updating its syllabus to ensure that the new graduates meet the demands of the workplace.

Sharman: Whether India is willing to make this kind of shift in emphasis is another matter. It requires a willingness to change, a determination to adopt new techniques and strategies. Successful corporations have to adapt to a new order where the growing influence of business leaders in China and the Middle East is considerable.

If you accept that a critical condition of any successful business is effective accountancy processes, practices and procedures inside organisations built on properly educated and certified financial professionals, then Indian financial professionals have some way to go.

How will you be collaborating with the Indian Institute (ICWAI)? Are you also working with other institutions in the country?

Vieweg: While CMA Canada has had a relationship with the ICWAI for a number of years, we held our first face-to-face meetings in many years on January 14. At those meetings, we shared our objectives, research focus, membership information, accreditation programmes and we also addressed the challenges each of us face in our country and abroad.

We have a number of meetings scheduled for the remainder of the week, and it is likely that we will develop an agenda for collaborative initiatives. The ICWAI is well positioned with its current agenda and I am very optimistic that the membership growth it is experiencing will undoubtedly continue.

Sharman: We are already working with an educational organisation and are in discussion with others. The IMA CMA is a competent US-based certification which completely satisfies the need of properly educated "inside" financial professionals around the world. Indeed many of our members are Indian nationals who work as expatriates in the Middle East who will come back to India and spread the word.

We believe that the ICWAI is sufficiently interested in preparing their members to be recognised for their professionalism elsewhere in the world that they see making the IMA certification available to their members. They did invite us to come to India.

D. Murali