BY its simplest definition, corporate governance is the framework of rules and practices that direct how businesses operate to ensure there is the highest possible accountability, transparency, integrity, and sustainable success.

Accountants, as trusted professionals, have a duty to guard, track, analyse and report on business decisions in accordance with the highest professional and ethical standards, and under guided principles of regulatory and professional conduct.

Consequently, good corporate governance is integrally interwoven and forms a major part of the role of the accountant, who is effectively the gatekeeper, police and guardian of an organisation’s governance policies and processes. This, of course, in no way diminishes the primary role and responsibility of the board, as corporate governance is primarily the responsibility of the board as a group.

Given the above simple definitions, we can therefore safely conclude that good corporate governance cannot exist without good accounting practices and policies as they are clearly symbiotic or mutually supportive, with one being the basis and outcome of the other. Moreover, sound accounting practices are highly effective instruments of corporate governance, which ensures businesses are able to make efficient and intelligent financial or investment decisions based on the availability of accurate financial information.

The value that accountants bring to a business, given their professional duty of integrity and high ethical standards, does not only ensure the business delivers on its mandate for good corporate governance, but also ensures the business maintains a positive reputation and focuses on strategies to sustainably grow and achieve profit targets.

Since the 2001 Enron saga, a large number of corporate governance failures globally have unfortunately been linked to failures or a breakdown in the accounting function and, as a result, the regulatory, reporting and monitoring environment for accountants have become increasingly demanding. In this environment, the accountants’ areas of responsibility in corporate governance are ever-increasing, and the need to maintain transparency and accountability in the day-to-day business operations remains paramount.

Similarly, in recent years, the number and value of incidents of governance failures involving issues of ethics (or lack thereof) from the helm — including corruption, bribery, fraud, greed, etc — have also been on the increase.

The Caribbean, regrettably has not been spared, and some of our small and very vulnerable open economies are still battling with the significant impact from some of these incidents, with some countries and victims still on the long road to recovery.

Given the current environment and increasing prevalence of corruption and sophisticated fraud strategies impacting businesses, accountants, and the profession as a whole, are well-positioned to provide exponential value to the business community using sound corporate governance strategies.

Many Caribbean businesses discount or undervalue the quality or quantity of professional accountants needed on their senior teams. They accordingly either engage a minimum or token complement to cover the functions of many due to the business size, or simply substitute the role with personnel who purport to have the knowledge but not the requisite professional training and mandates. Such realities undoubtedly cannot be sustained as they invariably represent a potential governance disaster-in-waiting.

As we would have noted, the value of the qualified accountants’ contribution in corporate governance, though substantial and varied, continues to change on a regular basis — with new regulations, reporting standards and governance requirements continually being effected.

Businesses who understand and appreciate the value added are able to gain competitive advantage from having well-trained, qualified accountants on their teams. These undisputed benefits are both directly quantifiable and indirect (non-quantifiable), with significant cost savings through risk management and operational controls being among the biggest indirect (non-quantifiable) areas.

Whilst most stakeholders in the Caribbean understand the reporting role of the accountant; the greatest undervalue and underappreciation are the contributions which are integrally aligned to governance. Chief among these alignments, in my opinion, include the accountant’s responsibility to ensure:

1)Accountability and accuracy of information on which decisions are to be made;

2)Areas of risk are properly identified and managed and, by extension, loss reduction or elimination attained;

3)Internal controls and fraud-mitigation processes are in place, also a prerequisite function of cost/loss management; and

4)Stakeholder accountability and management are efficiently discharged. This duty to stakeholders is perhaps the broadest responsibility, which is loaded with reporting and other requirements which effectively (in the strictest sense) can encompass all of the above.

Through the discharge of these functions, the value accountants provide to any business is truly significant yet the value ascribed, especially in the Caribbean, is only appreciated after an unfortunate scandal, fraud or loss of revenue due to the absence of same.

As the corporate governance floodlights and scrutiny of business activity increases along with greater stakeholder demands for accountability and transparency, it is my hope that the future for the accounting profession will further transform to meet the demands.

I am also optimistic that there will be an even larger proportion of accountants who will be appropriately trained and equipped to valiantly fight to uphold their duty of professionalism and highest standards of ethics and integrity, above all else. They will choose to whistle blow, report, or publicly denounce incidents of corruption and poor corporate governance where needed, and accordingly reinforce the strong professional values of ethics and integrity that the profession commands!

By Carole Eleuthere-Jn Marie, FCCA, chief executive officer, FCB Barbados