Potential for Sustainable Development

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Sustainable Development

Nataliya Vovchuk, Country Representative of the UK-based Chartered Institute of Management Accountants (CIMA) in Ukraine, has kindly agreed to talk to Destinations about experience which Ukrainian agricultural companies are lacking in international cooperation and the ways of achieving sustainable development in a modern competitive environment.

Vovchuk Natalia
How does raising foreign capital affect management accounting of an agricultural company in the current business environment?

Let's start with the environment... Effective decision making has never been so important and at the same time so complex. Competition is inevitable as innovations and innovators disturb the status quo on a daily basis. The situation is exacerbated by the fast exchange of unstructured data and their volume.

The Global Management Accounting Principles – GMAP (hereinafter the Principles – ed.) were developed namely with this environment in mind. An agricultural company with international operations must play to the global rules. The Global Accounting Standards are no longer a novelty for the agricultural sector, but the Principles are an absolute terra incognita. Developed jointly by CIMA and the American Institute of Certified Public Accountants (AICPA) in 2014, they had not been translated into Ukrainian until 2016.

The area of cooperation between Ukrainian agricultural companies and foreign investors, which requires dire attention, is the development and submission of a business model that will ensure sustainable development in the long run, at least for the next 5-10 years.

– Why is it important for a financial manager to have an international competence when a company has a prospect of entering the global market?

International qualification, for example CIMA, is an intellectual and reputational trophy. After all, having world-class knowledge and skills, a financial specialist of any managerial level can understand foreign partners' needs, build a proper procedure of managerial reporting and process analytical data.

Global financial market players must be able to make fast and, at the same time, competent decisions based on the profound understanding of a specific business model and macroeconomic environment in general. This involves analyzing information at all stages of the creation of value, evaluating opportunities, and accounting for risks, costs and potential for value creation.

– What determines the success of an agricultural company in terms of management?

Collectively, a successful agroholding is described as specialized, vertically integrated, using rational production and management technologies, having significant land resources and developing new business directions. It had an IPO and its stocks are quoted on international stock exchanges.

But it is important to remember about a huge number of small and medium domestic agribusinesses. What should they do? Their weak point is the absence of standard reporting procedures, planning or budgeting. This toolkit allows them to develop a strategic plan for a period of more than three years.

– How does integrated thinking influence the formation of a business strategy of an agricultural company?

Agricultural companies following the principles of sustainable development achieve long-term economic efficiency while benefitting society and reducing their impact on the environment. Often a rational economic strategy does not guarantee the rational use of land. For example, in the case of an excessive use of one crop per rotation, if specialization was chosen as a strategy.

Management accounting coordinates sustainable development activities with a strategy, combining them with business drivers, planning and reporting. Thus, the systemic identification of economic, environmental and social risks is done. Companies need to be prepared to cut on resources, reduce dependence on fossil fuels and develop critical skills.

– What are the prospects for financial managers in the agrarian sector after CIMA qualification?

CIMA professional qualification is a passport to the world of international finance for specialists and a guarantee of domestic competitiveness and access to global markets for employers.

• Two of the world's most accredited accounting associations – AICPA and CIMA – have jointly introduced the status of a Chartered Global Management Accountant. They bring together over 600,000 members and students from 177 countries of the world.
• Register now at www.cgma.org/gmappioneer and start working closely with the world's most influential professional accountants.
• CIMA cooperates with the Federation of Auditors, Accountants and Financiers of the AIC of Ukraine.
An effective management accounting strategy takes into account:
• priorities of the organization,
• needs of management accounting users,
• existing management accounting system,
• options and drawbacks,
• staff and technology,
• terms of investment,
• performance indicators.

CIMA and AICPA are developing an online diagnostic tool to help companies check their management accounting service for compliance with the Principles described.

Interviewed by Natalia Kyrylenko
Photo: provided by Nataliya Vovchuk, depositphotos.com

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