Rick Telberg
Rick Telberg
  Five Global Issues CFOs Canít Ignore

World leaders reset agenda for finance strategies.

March 4, 2010
by Rick Telberg/For the Finance Executive

In this increasingly globally connected and dependent world, corporate finance executives can glean a few lessons from the World Economic Forum’s meeting of some 2,500 business, government and civic leaders in the Swiss ski resort of Davos last month.

This year’s meeting focused on rebalancing the global economy, reforming banking and finance regulation, dealing with climate change and innovating in healthcare. Each of these issues presents challenges and opportunities for accountants and finance managers.

In a post-conference summary, McKinsey & Co. analysts cited four mega-trends to emerge this year:

1. Debt and deleveraging — Almost two years since the first signs of a credit crash, several major economies are still facing additional debt markdowns. “If history is any guide, it will be a lengthy and painful process,” McKinsey says.

2. Global consumer shifts — China is moving from a centrally-managed industrial economy to one driven more by a new middle-class consumerism, which bodes well for manufacturers elsewhere, even as the U.S. consumer confronts an imperiled standard of living after almost 20 years of “unsustainably high spending.”

3. Climate change — Sustainability accounting and reporting is gaining a foothold in corporations and governments around the world. For U.S. CPAs, it means acquiring and practicing a new body of knowledge, as well as opportunity.

4. Healthcare — Not just in the U.S., but across the globe, governments and insurers are struggling to pay for the medical care that their longer living and more affluent populations are demanding. The winning countries will be the ones who can create the incentives for citizens to live healthier and build the systems to spend smarter.

But for CPAs, the single biggest issue in accountancy may be...

5. The outlook for U.S. adoption of International Financial Reporting Standards — Big Four chief executives were quoted casting doubt on the IFRS timeline (see related story), warning that powerful U.S. corporate preparers could very easily prevail on lawmakers to push the SEC’s 2014 target date to 2020, much as Wall Street interests forced accounting standards setters to waver on mark-to-market rules at the height of the banking crisis.

"The single biggest risk is undue and inappropriate political influence into the standards-setting process," Deloitte Touche Tohmatsu CEO James Quigley told Reuters. "The next six months are going to be defining." Tim Flynn, KPMG International chairman, agreed, saying, "We need an independent standards-setting process that should be void of politics."

“But,” Flynn added in a nod to political reality, "independence doesn't mean isolation. We have to consider the environment that we are in."

Bob Moritz, PricewaterhouseCoopers’s U.S. chairman, may have had the most sobering view. "I don't think you are going to rush to a global set of standards that everybody has bought into anytime soon," he said.

In a world of economic hurt and uncertainty, the continuing questions over a precise IFRS timeline may be the least of their immediate worries. 

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Copyright © 2010 CPA Trendlines/BSG LLC. All Rights Reserved. Used by Permission. First published by the AICPA.

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Rick Telberg is editor at large/director of online content.

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