Accountants and procurement experts are urged to team up to tackle the supply chain shortages plaguing the global economy during the pandemic.
A new report, released Thursday by the Institute of Management Accountants, the Association of Chartered Certified Accountants and the Chartered Institute of Procurement & Supply, outlines a “charter of collaboration” in which accountants and procurement experts can work more closely together to better understand and solve the complexities of global supply chains. Recommendations include changing a company’s planning, budgeting and forecasting horizons in response to the changing environment in which it operates, accepting that traditional economic cycles may no longer apply.
The pandemic has stretched supply chains and caused unexpected shortages in recent years in critical components like computer chips. Energy supplies have also been strained as gasoline prices rise in the United States and other parts of the world. The war in Ukraine is expected to push gas prices to new heights.
The report highlights that with all the disruption underway, key flaws need to be addressed, including the fact that many organizations do not fully understand their supply networks; that regulation is accelerating; and that financial and non-financial reporting requirements are also increasing. As business models change at a rapid pace, procurement and procurement professionals need to work more closely with finance teams in the planning process, working capital management, supply chain development ethics and enterprise risk management.
Accountants and procurement experts can also link these goals to the push for environmental, social and governance (ESG) reporting to curb climate change and help mitigate other societal issues. “While there is increased regulatory focus on supply chains, including their sustainability and the impact they have on global carbon emissions targets, a strong ethical lens is also needed to tackle poor working conditions, modern slavery and other social issues,” the ACCA said. Chief Executive Helen Brand in a statement Thursday. “These are critical issues that accountants and supply chain professionals have the power to change together, especially in this decade of action to achieve the United Nations Sustainable Development Goals by 2030. “
Procurement and accounting experts can collaborate to provide relevant, accurate and informed advice to support decision-making, including understanding the cost base and cost of service, the report recommends, thereby strengthening the relationship. between supply chains and finance.
“True collaboration between our two disciplines can benefit everyone – from improving capabilities, from managing business and consumer disruptions to reducing uncertainty in businesses, and therefore, ultimately, to the benefit of society,” IMA President and CEO Jeffrey Thomson said in a statement. “For accountants, it’s about being an excellent financial partner, providing relevant, accurate and informed advice to support decision-making. In doing so, he will strengthen the relationship between the supply chain and finance functions.
Technology can also help, as procurement experts work with accountants using predictive analytics, ensuring relevant data is available and understanding how digital supply chains can enable business models to improve. ‘to evolve. The report also recommends finance and procurement experts use the “ethical lens” they share to assess supply chain challenges and entity behaviors, especially when they result in regulatory challenges.
“Through their professional expertise and by working closely together, finance and supply chain teams can add real value to their organizations, customers, suppliers and investors,” said Malcolm Harrison, CEO of the group to the Chartered Institute of Procurement & Supply, in a report. “With increased challenges and increased scrutiny of supply chains and heightened attention to ethics by investors and consumers, the complementary skills of procurement and finance professionals are needed to ensure that every organization has a supply chain it can rely on. A strong ethical stance should be at the heart of any profession. Procurement and finance professionals have the opportunity to build trustworthy businesses for the good of the planet and its citizens. »
To help finance teams and supply chain experts join forces, the “Collaboration Charter” outlined in the report highlights 10 areas of activity for success, including a shared vision that supports purpose. of the company and its operations; risk management and due diligence; and have a clear understanding of ESG policies.
Separately on Thursday, the American Institute of CPAs released its first quarter report AICPA Economic Outlook Survey. He found that supply chain issues, along with inflation fears and a lack of qualified candidates, continue to weigh on business executives’ views of the U.S. economy. The survey interviews CEOs, CFOs, controllers and other CPAs at U.S. companies who hold senior management and accounting positions.
He found that just 36% of business executives surveyed expressed optimism about the US economy over the next 12 months, down from 41% last quarter. The outlook for the global economy has also deteriorated, with 30% of business leaders saying they are optimistic, down three percentage points over the same period. The investigation ended on February 23, the day before Russia invaded Ukraine which resulted in heavy economic sanctions.
Inflation was the top concern cited by survey respondents for the second consecutive quarter, with 42% saying labor costs were the biggest risk in this area and 31% citing material costs. raw. Expected labor and social costs for the next 12 months increased slightly to 4.4%. The rate projected a year ago was a relatively modest 1.9%.
“Our survey shows significant concerns about inflation and ongoing pandemic-related supply chain issues,” said Ash Noah, vice president and general manager of learning, training and development at the CGMA for the Association of International Certified Professional Accountants, in a press release. “With Russia’s invasion of Ukraine and the resulting economic and political turmoil, we expect additional strains across the global economy. We don’t yet know the full impact on energy and commodity prices and on trade in general, but levels of risk and uncertainty have increased for finance officials.
The availability of qualified personnel was the second biggest challenge cited by respondents for US businesses beyond inflationary pressures. In terms of hiring, 45% of business leaders said their organization was looking to fill positions immediately, while 12% said they had too few employees but were still hesitant to hire.