Accountants Say Companies Would Sacrifice Profits To Preserve Reputation
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Accountants Say Companies Would Sacrifice Profits To Preserve Reputation

More than three quarters of chartered management accountants say their organizations are prepared to lose profit in the short term to protect their images over the long term.

Holmes Report

More than three quarters (76 percent) of chartered global management accountants say their organizations are prepared to lose profit in the short term to protect their images over the long term, according to a new survey by the American Institute of CPAs and Chartered Institute of Management Accountants.

The finding comes as organizations around the world, from electronics manufacturers to clothing retailers, face more scrutiny for their supply chains, factory processes, sales strategies and other practices.

As a result, 76 percent of CFOs and other finance leaders globally say they now see at least somewhat more focus on reputation risk in their industries and cited three main reasons for the trend: market demand for more transparency; reputational failure at a leading organization or competitor; and the rise in social media.

In the US, 60 percent of respondents say their organizations often or always consider the financial implications of reputational risk when making decisions. And just more than two in five, or 43 percent, say their organizations have rejected projects that made financial sense because the reputational risks were too great.

"Reputation might not be on the balance sheet, but it is one of the most important assets that companies have," says James Blake, CFO of Morey's Piers in New Jersey. "In an age where reputation can be wrecked at the speed of a Tweet, finance teams increasingly have to understand that reputation lost in an instant can have a long tail in affecting the company's future.

“That requires a broader understanding of the business environment so that such risks can be appropriately assessed."
 

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