As the world emerges from the pandemic, who will be trusted to support business recovery and to build the sustainable, resilient economies we need?
Chartered Accountants Worldwide partnered with Edelman research to understand the views of over 1,000 international business leaders and the role that they expect the finance and business profession to play in shaping the future.
The speakers consider what matters most now to business leaders as they recover and rebuild for the future? Key questions such as how we integrate sustainability into future business models, how we guard data integrity and how we tackle the misinformation crisis will all be under discussion.
This episode features an introduction from Dan Thomas, Chief UK Business Correspondent, Financial Times and the Edelman report delivered by Penelope Mantzaris
As the world emerges from the pandemic, who will be trusted to support business recovery and to build the sustainable, resilient economies we need?
Chartered Accountants Worldwide partnered with Edelman research to understand the views of over 1,000 international business leaders and the role that they expect the finance and business profession to play in shaping the future.
The speakers consider what matters most now to business leaders as they recover and rebuild for the future? Key questions such as how we integrate sustainability into future business models, how we guard data integrity and how we tackle the misinformation crisis will all be under discussion.
This episode features an introduction from Dan Thomas, Chief UK Business Correspondent, Financial Times and the Edelman report delivered by Penelope Mantzaris
Rebuilding Trust Episode 1 Intro and Edelman Report
00:05
Good morning. My name is Daniel Thomas. I'm the chief business correspondent at the Financial Times. Just my great pleasure to welcome you to the C aw Summit, looking at how to rebuild trust in a profession and the crucial role of finance executives in shaping our post pandemic future. The first question of course, is whether there is a need to rebuild any trust. And to answer that we have the exclusive first peek at findings from the Edelman Trust Barometer. I don't want to give too much away. But spoiler alert, accountants have much more reason to be happy than us journalists. But this session is about much more than fixing past mistakes. In this week of cop 26. It is clear that the role of the finance professional needs to change and adapt as the needs and demands of all stakeholders are changing and adapting from investors and banks and finance companies to customers and employees. There's never been more demands made of a modern Well walk, run and forward thinking firm. The shift in the profession from traditional bean counters to change agents is crucial in this from reactive to proactively pushing companies to do better faster. This means that seizing the conversation around topics such as the environment and diversity will be key alongside more traditional discussions around the G
01:24
in ESG. Within this, there are some longer term questions over approaches to technology that will require close to working with auditors and regulators. The sorts of discussions that are arising such as How can one audits and algorithm will also cause fresh skills challenges for profession, already finding it hard to recruit. The role of the CFO and other finance chiefs on the board will be just as key in steering company's decisions towards corporate objectives, not just about the immediate p&l, but about the opportunities of the future that will take time and effort now to deliver rules down the line. And these demands come after a bruising period for the audit profession. Generally, scandals may be relatively rare, but they are still too frequent. And even one bad apple can sour opinion of the entire industry as we have seen in the UK with failures around Karelian and patisserie Valerie. The pandemic has also thrown new challenges to the hundreds of billions of dollars of COVID spores creative fertile grounds for fraud and deceit on one side, and on the other a high tide of money that will leave many companies scrambling for survival. As it disappears. That COVID bailout money has saved the economy's saved healthcare systems, but at the same time, there will be a financial reckoning around companies which have taken the money and how they have used it. The use of clothes bailout funds will be scrutinised rightly. And the threat of insolvency will not leave the headlines for some time, I would count I would guess for some time to come. This session will discuss the reforms to audit and corporate governance not just in the UK where we're facing very significant changes to rules and generations, but also elsewhere the similar challenges and opportunities for improvement and growth in countries such as Australia and South Africa. Because these are all global challenges, and working together can create global opportunities. In fact, I'm delighted to welcome audience members taking part today from more than 54 countries from Equatorial Guinea on one side of the world to Costa Rica on the other from Chartered Accountants, students and finance executives. So welcome all. And on that note, I'd like to introduce them as we are very lucky to have such a fantastic and talented panel of speakers this morning from around the world to discuss all these issues. From South Africa we have Freeman non follow. He is Chief Executive of the South African Institute of Chartered Accountants and former accountant general for South Africa. He has had a stellar career as the country's top auditor, which has led to being asked to help restore trust in the profession following a number of high profile corporate governance failures. From Australia we have Carolyn Holley, non Executive Director and co founder of analytics platform fathom, which helps companies and governments understand the impact of technology on their workforce and business model. She has more than 30 years of leadership across financial services and fintech including a KPMG VT financial Macquarie and now holds a number of independent non exec positions such as specialist investment for Milford recently. And joining me in the UK we have Michael its CEO of the Institute of Chartered Accountants in England and Wales and Chair of Chartered Accountants worldwide. Michael has been at the coalface of the profession since 1983. Joining Coopers and Lybrand first known as PwC, then serving as finance director at various firms before becoming the UK Top auditor and becoming a valued adviser to governments on all matters corporate governance, and from the US where it is currently an eye rubbing 3am In the morning, we have Ronan Dunne, Chief Executive of Verizon, and a much ms contact of mine from his days Oh to where your CFO and then CEO for the Merck reported merger with three sparks his move overseas. He now provides services to more than 100 million consumers every day and is helping build the all important 5g Technology Network. But before we come to them, I'd like to introduce Penelope Manzanares, who is senior vice president at Edelman to provide the results of their Trust Barometer, and the floor is all yours.
05:25
I'm Penelope Manzanares. I'm a Senior Vice President at Edelman data and intelligence. And I will be talking you through evaluating trust in the accountancy sector, the proprietary research that we have conducted for Chartered Accountants worldwide. In addition to this as we go through the presentation, I will also be talking through the Edelman Trust Barometer day so we're relevant to provide context to the Chartered Accountants worldwide findings. We have been conducting proprietary research for Chartered Accountants worldwide for three years. The first wave of the research was conducted in 2018. In light of increased scrutiny in the sector. The first study was introduced to benchmark and understand trust in the industry the following year in 2019, the second edition was really focusing on how to diagnose this trust, and identify any actions that the profession could take to build that trust further, taking a break in 2020 and 2021. We conducted the research in order to measure the impact of the Coronavirus pandemic on the industry and on trust, as well as to understand the expectations going forward for the industry and the role that it can play in rebuilding a sustainable and resilient economy. Before I go into the details of this research, though, I'm going to talk a little bit about trust more widely and about the Edelman Trust Barometer. Edelman has been measuring trust in business government, media and NGOs for the past 21 years. In a global study that we run at least annually, which spans nearly 30 nations and nearly 30,000 individuals across the world. Over the course of the pandemic, we conducted several parameters in order to closely monitor trust. In May 2020, we collected real time data which showed trust in government had skyrocketed ahead of the other institutions to become the most trusted for the first time in the parameters history. Over the following six months from May to January 2021. All institutions saw dramatic decreases in trust, giving back most if not all the gains they saw in the spring. And it was government that saw the biggest loss of trust and eight point decline. So going into 2021 business was now the most trusted institution. In fact at 61%. It was the early institution that was trusted, with a two point increase since the previous year, increasing its lead of NGOs. What's more, businesses trusted more than government and 18 out of the 27 countries Edelman measured at this time, many businesses were also taking the initiative to act in ways that gained the public's approval. They were converting production facilities to help satisfy demand for protective clothing, medical aids, and supporting however they could. These initiatives were often highly visible and made a lasting impression. Financial Services however, has remained the least trusted industry over the past 10 years, but has moved from a position of distrust to neutral trust in 2016, with the largest increase in trust over that long term. And this is something that we see continuing in 2021. Now moving back to the proprietary research that we conduct for the CW, how did we conduct this research, we had a 15 minute online survey, we spoke to financial decision makers who are at least director level within their respective businesses. This took place in England, Scotland, Wales, Northern Ireland, Republic of Ireland, South Africa, Australia and New Zealand. Fieldwork was conducted between March and May this year and we spoke to a total of 1450 financial decision makers.
09:12
Accountants remain the most trusted finance professionals earning high trust amongst three quarters of financial decision makers up two points from 76% in 2019. While trust is high globally, there is some divergence across markets reflecting different experiences by geography. Trust in Chartered Accountants has increased of three points since 2019 to 78%, which is the highest to date. across markets there is a more positive trend for chartered accounting professionals than the professional broadly. Similarly chartered accounting professional bodies retain high trust across markets. Secondly, integrity remains the top driver of trust for chartered accounting professionals and 2021 with high expectations on confidentiality transparency and compliance. Financial Decision makers do recognise improvement with chartered accounting performance across all integrity measures tracks in 2019. However, there's still room to grow with financial decision makers placing more importance on these factors as the crisis charted at accountants must continue to demonstrate transparency, which has the biggest gap between expectation and current performance and that is a gap of 12 points. Thirdly, chartered accounting professionals are more likely to be seen as trusted partners and advisors. up three points to 83% agreement and three quarters of financial decision makers say they rely on Chartered Accountants for strategic guidance. Chartered Accountants are widely recognised for their help navigating the pandemic. And Brexit. Businesses are still in crisis mode. But looking ahead financial decision makers the building financial resilience as a key expectation for chartered accountants that support with proving their track record and helping businesses thrive has become more important for financial decision makers. And finally, our fourth key finding was around purpose led initiatives. Purpose led initiatives such as driving action around dei or environmental sustainability are not currently considered a top priority amongst financial decision makers that are recognised as an area that is becoming more important. Chartered accounting professionals show a desire to step up and show leadership in this area being more likely than non chartered accountants to view this as a key responsibility of their role. Chartered Accountants would like more resources from professional bodies to support them drive action, on purpose within businesses. So now let's deep dive into each of these key findings in detail. Trust in accountancy remains high despite a year of turmoil. If we look at these charts from left to right, we can see a steady increase across each of these trusts and accountants overall has increased steadily from 2018. While trust and Chartered Accountants took a small dip in 2019, but recovered strongly to its highest point in 2021. And when we look at trust in the charting accounting professional bodies, we can see that that significant increase that was made between 2018 and 2019 has been sustained throughout the COVID pandemic. Looking at trust in professionals, and comparing where finance professionals and accountants sit within that shows us that accountants are in fact the most trusted finance professionals. They are trusted at the same level as academics and teachers are some 10 points behind doctors and engineers. Doctors interestingly, have seen a real increase in trust over the course of the pandemic. In terms of the other finance professionals, we also see key increases for bankers and insurance brokers, but their trust levels still remain relatively low and quite far behind accountants and auditors. Now moving on to our second finding, which was all around integrity. Here we have quite a complicated chart on the slide. So I'm going to take my time just talking us through it step by step. What this is saying is that performance and integrity has improved. But scrutiny has also increased with transparency, becoming an even more important driver in trust in chartered accounting professionals overall. In the chart, we can see that we have our four integrity measures, operating in an honest and transparent manner, respecting and Protecting confidential information operating within compliance, and also keeping up to date with developments and professional standards and practice. And if we look at the vertical axis, we can see that performance on these has increased when 2019 They were performing poorly or at the bottom end of the average spectrum can see that they've moved right at the top of the average spectrum and all of them out of the poorer box.
14:06
When we contrast this with the horizontal axis, we can see that the importance of these integrity measures has actually increased from high to critical. So this really shows how even though performance has increased, there is still a real importance on increasing it even further and not becoming complacent. Now we look at how chartered accountants have proven themselves as trusted advisors throughout COVID and Brexit for those in the UK and Ireland, but also looking at what's important for them going forward and building resilience. We can see that in terms of being seen as future facing professionals by financial decision makers. 84% agree that chartered accountants have the skills and expertise to make businesses thrive. 81% say they have the skill to navigate a new environment and The future. And really importantly, 85% say that it is important for chartered accounting professionals to demonstrate a track record of helping businesses thrive. So looking ahead, how do chartered accountants do this? Well, three and four said Chartered Accountants play a vital role in helping businesses adapt to new challenges. And what should they support on the key areas that came out in our research were financial planning for growth, so progress and feedback on business plans, evolving with technologies, so helping them to understand the shift to automation, especially AI and machine learning, as well as digital transformation, building back better AI helping them with building a green economy. And finally, we see a lot of focus that we'll see even more in the next slide around data protection, security, privacy compliance, also making use of data, integration accuracy, and using analytics to inform planning, which really feeds into both those top two points of financial planning for growth and evolving with technology. As financial decision makers look to recovery, ensuring data integrity and supporting businesses and resilience are key expectations of Chartered Accountants. So what this chart is showing us in the grey is the expectation that accountants should do something. And the red is the proportion who believes that this is one of accounting most important responsibilities. So when we look at the top two items, there, we see they're taking the lead in ensuring data integrity and businesses is not only an expected part of an accountants role, so 81% of financial decision makers believe it should do that. But nearly half said, this is the most important thing that accountants can be doing. And similar figures for for helping businesses become more financially sustainable by fostering resilient business models. Now we look at our final key finding which is around purpose driving change and speaking out on societal issues and where the role is there for chartered accountants to be playing. This is a slide from our Edelman Trust Barometer. And it's looking at the proportion of people who expect CEOs to publicly speak out about issues like the pandemic job automation, wider societal issues, taking a step back prior to COVID. Businesses were seen as competent, but not ethical, while NGOs were seen as ethical but not competent. But because of COVID. And the role that business has played in response to COVID. There are more likely now to be seen as both competent and ethical. The upshot of this is that people have demonstrated that they want to hear from CEOs, and they want that information to be accurate. They want that information safeguarded and they want to see that it's in good hands. In this way, trust between populations and business has been built in a unique way during COVID. So this is what the public wants to hear CEOs talk about. But what do financial decision makers want to hear Chartered Accountants talk about when it comes to purpose and societal issues? While 70% of our financial decision makers said that Chartered Accountants are in fact credible spokespeople on societal issues like sustainability, diversity, equity and inclusion. And that is something that we see reflected across geographies to higher or lesser levels with South African Australia in the lead.
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If we look more specifically at what the expectations are of accountants, so in the grey, we have expectations, and purple is showing us not usually expected but becoming more important. We can see that in our purple bars, purpose led initiatives and are currently considered a top priority, but they are relatively high proportions, to say that Chartered Accountants should lead on these things in the future. So for example, speaking out about social environmental issues is a 25% thing. This is something that they expect chartered accountants to lead on in the future.
19:15
Fantastic. Well, thank you so much for that. That was an excellent, great presentation. Some actually genuinely good news for the industry, although I suspect it won't be greatly surprising to many in the profession.