cbi

BE HEARD.BE RECOGNISED.

cbi_subject-review_15a – 170715

subject review

MODULE 1

in this module we provided an introduction to the cbi subject by outlining the various roles of accountants and the ways in which they can provide strategic advice. the opportunities to provide advice are not limited to external providers of accounting services, and we have seen that accountants within organisations should be expanding their areas of influence well beyond the traditional finance function.

with the broadening role of accountants there is a need to demonstrate a much broader set of skills than ever before. in addition to the technical skills and knowledge that are required to perform this role, it is important to demonstrate a wide range of soft skills as well. the importance of effective communication skills cannot be overstated.

we considered strategic advice outside traditional areas, including physical accounting and environmental management accounting. there is a growing focus on sustainability whereby reducing the environmental and social costs of business is a key priority. accountants are well placed to provide services in these areas, including the recording and reporting of physical information, identifying cost and waste reduction opportunities and expanding performance measurement frameworks to capture environmental and social outcomes.

we also considered the ethical dimensions involved in providing strategic advice. while members of cPa australia are expected to adhere to the code in providing services to clients and employers, the need to consider broader ethical issues arises. the need to evaluate business decisions concerning products, services, location, staffing and the use of raw materials raises commercial and ethical considerations. Giving advice in this area must extend beyond an analysis of the financial implications of a business decision to include the impact on various stakeholders, long-term sustainability and the brand and reputation of the organisation.

the module concluded by exploring the ways in which people management is relevant to the viability and profitability of an organisation. Providing advice in this area has created a need to understand terms such as human and corporate social capital as well as examining the issue of complexity. People management sees the role of the professional accountant increasing moving into more innovative, dynamic and people-orientated areas where the demand requires the need for qualities related to being a multiskilled business partner and advisor, a leader, a change agent and a decision-maker.



subject review(cONt.)

MODULE 2

this module addressed a number of major issues relating to the global context in which organisations must operate today. even though much of the information here is non-financial in nature, awareness of these issues is critical to decision-making at all levels of organisations.

both the economic and social impact of dwindling resources worldwide has been covered, with a focus on oil, food, water and biodiversity. Part a highlighted the debate on ‘peak oil’ and how governments are reacting in terms of planning for ongoing energy security, including the accelerated pursuit of alternative energy resources. another aspect that was stressed is how dwindling food and water resources and loss of biodiversity are inextricably linked and pose a significant long-term risk to businesses, unless sustainable business practices are adopted on a large scale and quickly.

Part b addressed the impact of global climate change and the changes that carbon mitigation imposes on business. we began by highlighting australia’s unfortunate position as the world’s leading country for carbon emissions intensity, driven by being the biggest exporter of coal and a reliance on coal for 80 per cent of electricity generation. we then identified australia’s short- and long-term emissions targets as part of the Kyoto Protocol. we examined the european union’s Greenhouse Gas emissions trading system and a brief history of emissions reduction efforts in australia. this section also outlined eu measures to ensure competitiveness, carbon tax differences between states in the usa, and uK environmental performance reporting.

Part c considered the changing and evolving nature of the labour force and organisational culture. as organisations have come to depend more and more on changing technologies and the knowledge of their employees, management of organisations has become increasingly complex. the implications of changing demographics and other human factors were also discussed. this part of the module explored the ways people management is relevant to the viability and profitability of an organisation, and the short- and long-term implications of demographic changes to the workplace. the current workforce comprises four generations (baby boomers and generations X, Y and Z), each with a different set of values and priorities. Firms must develop workforce strategies that involve retaining knowledge, skills and experience, meeting multi-generational needs, rethinking retirement policies, reviewing retirement trends—now and over the next five to 10 years—and reviewing age demographics data and identifying any potential lack of skills due to impending retirement.




Part D looked at additional human resources issues and complexities associated with offshoring. Large multinational corporations, as well as small and medium-sized enterprises, are increasingly ‘offshoring’ their finance and accounting activities. these moves are driven by automation, disaggregation, consolidation, commercialisation, and relocation. typically, highly automated activities such as payroll, accounts payable and accounts receivable are among the first to be offshored. the module described several offshore models and observations about the current state of offshoring in australia.

these issues highlight the need for accountants to step beyond traditional financial matters and consider a wider range of issues that have a significant financial effect on organisations in today’s business environment.




MODULE 3

this module has provided an overview of the range of business crimes encountered by businesses and government agencies, and discusses how forensic accountants are being engaged to assist in the investigation of such activity and in the detection and prevention of t.

First, we looked at how forensic accounting is now an established separate discipline and how aPes 215 has been issued to assist practitioners. we noted that tertiary education in forensic accounting is becoming more widely offered by universities and colleges, while many major accounting firms now contain specialist forensic divisions. the role of ‘forensic accounting’ is seen as a relatively new, but now well-established, discipline within the accounting profession.

we also highlighted the important point that an accountant does not need to be a ‘forensic accounting’ specialist to be bound by the provisions of APES 215—any accountant who is member of a professional body that has adopted this standard (including cPa australia) and who is delivering any of the services described in aPes 215 is subject to that standard and must comply with its requirements.

we then covered the concept of ‘business crime’ and its impact on victim organisations.

business crime can have a major effect on businesses and in some cases even cause a business to fail.

the next section discussed how the forensic accountant can help clients to investigate business crimes. it covered ways of detecting business crime and how the risks can be more effectively managed. we highlighted that one of the key aspects of all forensic accounting assignments is a ‘focus on evidence’ where the forensic accountant is primarily concerned with gathering, securing and analysing evidence relevant to a business crime investigation and then presenting the outcome of this work as clearly as possible.




we reinforced that in carrying out assignments in this area of practice, accountants are bound by the relevant professional standard (aPes 215) and a variety of legal requirements, including the rules of evidence. we then discussed how the expert witness guidelines of the various courts make it clear that forensic accountants are servants of the court when giving evidence and must recognise at all times their paramount duty to the court as distinct from the client who appointed them. their reports for courts and clients must, in order to be effective, conform to the principles of accuracy, clarity, independence, assumptions and relevance, and be properly referenced.

the next section discussed fraud detection. we noted that, traditionally, business has been quite reactive to the issue of fraud and corruption. we discussed a range of tools and techniques that can be used to help detect fraud in a timely fashion, enabling incidents to be identified earlier.

Finally, we looked at other proactive measures, referred to as ‘business prevention’, that can be taken in the control of business crime. we mentioned that fraud and corruption prevention is something that is generally not done well. we discussed how organisations should consider whether they have an exposure to fraud and corruption and, if so, objectively consider the potential damage. if there is an exposure, the fraud prevention measures set out in this module could be implemented.




MODULE 4

this module has addressed issues beyond traditional financial reporting. it began with a brief review of the major financial reporting requirements for different types of companies, including iFrss. international developments in both accounting standards and banking regulations were discussed. the issues of liquidity risk and the eurozone sovereign debt crisis were discussed in detail. ethical banking, particularly islamic banking, was addressed.

the module included a review of current pressures on reporting, such as the actions taken by the G20 in the wake of the GFc, and responses of world leaders who are trying to balance domestic concerns with global reforms. these changes are being felt in both accounting standard convergence (between the iasb, Fasb and standard-setters of other countries) and the new banking regulations known as basel iii.

in the later sections, we reviewed the reasons for an increased demand for integrated reporting and non-financial reporting activities. we discussed new developments in sustainability reporting frameworks. these included the Gri G4 guidelines and the integrated reporting framework. integrated reporting is an attempt to bring together the financial and non-financial aspects of reporting in a structured way that reflects real organisational change. a discussion followed of other forms of non-financial disclosures being developed around the world: carbon and natural resources information reported to the cDP, and water accounting, which is a new type of non-financial reporting for general purpose water reports.

Non-financial reporting is a growing area currently experiencing significant change, where we are seeing increased mandatory and voluntary reporting taking place. the accounting profession is well placed to play a leading role in these developments, and ensure that the information needs of stakeholders are appropriately met.



subject review(cONt.)subject review(cONt.)

MODULE 5

this module has addressed a number of topics that arise from having to manage intangibles, including risk, value, reputation, intellectual property (iP), information and communication technology (ict), entrepreneurship, innovation and microfinance in contemporary business.

risk management has been discussed, along with the importance of trust, openness and transparency. the value of business reputation has been presented, with a description of approaches to managing reputation. the impact of social media as a factor affecting reputation has been a particular focus.

there are a variety of iP types, including trademarks, patents and copyrights, and there are a range of methods for protecting and enforcing iP rights. at an organisational level, iP is a significant part of the organisation’s value and it needs to be properly managed and protected. at a broader policy level, there is a need to protect iP rights, but this is balanced with the need to promote competition, innovation and productivity.

some risk factors related to ict, the impact of these and some approaches for managing these risks have been described.

there is a well-established link between having an entrepreneurial culture and innovativeness. accounting professionals will frequently be called upon during their careers to provide advice to entrepreneurs or firms wishing to improve their bottom line by becoming more innovative. consequently, accountants need to be well informed about current entrepreneurial trends, as well as the various options for obtaining entrepreneurial finance.

by addressing the topics in this module, accountants have an opportunity to improve organisational performance, contribute to the overall profitability of a business and achieve real and sustainable benefits for their organisations, their customers and the people with whom they work.




MODULE 6

this module addressed a range of issues associated with modern business communication and ict. One aim has been to increase awareness of how modern communication techniques and technologies can be used to enhance communication between accountants and non-accountants. an aim of this module is to assist the accountant to take advantage of enhanced communication capabilities to both leverage their own position and to contribute to improved organisational effectiveness through an increased understanding of the issues involved.

in Part a, some basic communications processes and cultural considerations were explained, and a number of aspects of communication critical to modern organisations were described. the discussion included a description of how communication functions are arranged in organisations and outlined an approach to planning and delivering effective communication

Part b discussed the application of these technologies by business, including the use of social media platforms and technologies that support knowledge sharing, collaboration and communication in organisations. Part b aimed to de-mystify some of the emerging ict issues that accountants face every day in today’s organisations, including web-based technologies and services, e-commerce, cloud computing, mobile technologies and sbr.

this information will help accountants to better understand ict issues critical to modern business and enhance their ability to both make relevant financial decisions and ensure that they are maximising the benefits of this technology.

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