"But we have been so engrossed and embedded in those aspects we have forgotten that we have a wider role."
The farther of modern accounting Luca Pacioli, a Franciscan priest and mathematician, with Italian inventor and painter Leonardo da Vinci, laid the foundation for double-entry book keeping in the late 14th century.
Joachim, the first non-British and Irish national to become president of CIMA, said corporate collapses cannot happen overnight and came after long periods of poor performance.
He said finance professionals should not limit themselves to finance functions and should ideally have hands on experience of the business to make the right decisions.
"They must be more proactive, more influential and therefore more strategic," Joachim said.
"Very few finance professionals seem to be able to make that shift. How many of you have hard hats and safety shoes (in your office)?"
Joachim was speaking on 'The emergence of finance as a key to business transformation in light of the global downturn' at the LBR-LBO CFO forum held recently for a large group of senior corporate executives at the Ceylon Continental Hotel, Colombo.Finance professionals failed to influence, challenge and direct their organizations during the global financial meltdown, Joachim said.
"I often think to do this requires a huge amount of confidence, a huge knowledge about the organization, what's driving the organization and that is sadly what finance professionals are lacking," Joachim said.
"This is where at your level you should be training your people."
Crying Wolf
Joachim, a finance professional with over 30 years of experience, said most of the corporate collapses could have been avoided if the finance division had 'cried wolf'.
Enron, WorldCom, Satyam and Sri Lanka's very own Pramuka Bank are examples of corporate crime where companies keep large losses off the books and show profits.
Staying silent in a bad situation leads to write-offs in millions and trigger corporate collapses when the secret is out, he said.
"It is not so much what finance professionals did do, in fact it is what they did not do and that's a fact," Joachim said.
"Very few of them cried foul, a very few of them stood up and put up their hands."
Going against the Short-Term-Results-Mentality that is glorified and thus becomes prevalent is not the way to become accepted and popular.
Unfortunately, the need to be accepted by the herd is hard-wired in to the human psyche.
The writer was a Finance professional (FCMA) who dared to raise the hand up and cry foul. Whilst serving two separate entities to two separate governing Boards of Directors. Occasion one was 18 years back, the other 10 years back.
Result : On both occasions, losing the “Confidence of the Board” and having to leave. Sad to say, the entity of 18 years back, part of a conglomerate, had to face major share price adjustments once the truth came out; from >30.00 LKR to 0.70 LKR. And that’s not a typo!
The writers BIL who too is a Finance Professional (ACMA) served 10 years back in a Finance Company in the same conglomerate, and had occasion to cry foul, to no avail. The conglomerate has since faced major stress, with much regulatory intervention ….
Much of this could have been avoided by judicious timely financially prudent action….
Standards and Rules to follow are good; but will only be followed to the extent that the value systems we adopt as a society changes. Otherwise, human ingenuity will be directed to subvert and distort the Spirit of the Rule; of course whilst maintaining superficial appearances, the façade of “All’s Well”.
That said, if we want to grow up and be a responsible and stable society, we need to test the “Thought Patterns” we embrace….