Setting the context: digital trust and efficiency
The digital age presents threats and opportunities. New technologies are disrupting business models. Businesses throughout the world have access to similar resources, they use similar systems (including automation). Empowered consumers cause standards and pricing to converge. This means that intangibles play a critical role that can allow a business to differentiate and gain competitive advantage.
The first intangible on which others are built is the quality of decision-making. Management accounting is the professional discipline that informs and guides decision-making and performance management. Agility in decision-making enables businesses to adapt. And good decisions build trust. Naturally, it’s important for finance professionals to be digitally agile — but they must also be aware of the ethical implications of new disruptive technologies. These range from the potential of bias in artificial intelligence (AI) to data’s impact on personal privacy and the effect of automation on tasks. Failure to address ethical risks holds significant risks for a business, including reputational damage, loss of customer loyalty, declining sales and profitability, regulatory investigation, liability risk and the loss of trust.
Management accountants’ wide remit gives them an important role in this area. While all directors share fiduciary responsibility, the CFO normally takes the lead in ensuring the business is managed compliantly in the interests of its investors. Management accountants report to CFOs and cascade their influence throughout the business. This gives them a better overview than those in other disciplines. They also bring professional objectivity and awareness of public responsibilities to decision-making and performance management. Stewardship has long been regarded as an important aspect of the accountant’s role, both in terms of risk management and ensuring that decisions are taken, and the business is managed in line with stakeholders’ interests. This has direct benefits for the organisation. Ethics and good corporate citizenship provide opportunities for differentiation, helping it build trust in the business and its brands and so ensuring sustainable success for the business.
"Failure to address ethical risks holds significant risks for a business, including reputational damage, loss of customer loyalty, declining sales and profitability, regulatory investigation, liability risk and the loss of trust."