Adam Larson: 00:21

Hey, everyone. Welcome back to another episode of Count Me In. I'm your host, Adam Larson. And today, we're excited to have Rohit Karbanda, the head of finance and operations and growth at IHG Hotels and Resorts. Rohit brings extensive experience in finance and accounting across various industries.

Adam Larson: 00:37

In this episode, we'll explore the constantly changing regulatory landscape in finance and accounting. Rohit will share insights on fundamental accounting principles, significant regulatory shifts since the 2008 financial crisis, and the rise of digital and AI driven reporting. We'll also dive into the importance of ESG and carbon accounting in hospitality, change management, and how technology is reshaping compliance. This episode is packed with valuable insights. Let's get started.

Adam Larson: 01:12

Rohit, I'm so excited to have you on the podcast today. We're really excited to be talking about the regulatory landscape and a bunch of different things happening within the finance and accounting industry. But I figured we could start off a little bit by talking a little bit about your story. You've had quite a different career, going from different organizations and now ending up and at the head as the head of hotel and finance services. And I thought you can maybe start off by introducing yourself to the audience a little bit.

Rohit Kharbanda: 01:35

Thank you, Adam, for having me. Thank and thank you for asking me about my career journey because it has been in in multiple organization, different industry every time. I started off with General Electric, and all all along finance and then, did with Oracle, as as the computer science and then, Hewlett Packard and now with Intercontinental Hotels Group, IHG Hotels and Resorts. I've been with them for last 15 years. So, very diverse when it comes to industries, but very well intertwined, through finance and accounting through and through, and, have gone through every possible change of the regulatory environment as they say, as the whole industry is going through it.

Rohit Kharbanda: 02:28

So, yeah, some amazing years and some very, very fruitful experiences.

Adam Larson: 02:37

That's amazing. And when you cover different industries, one thing you've said to me when we we had conversations outside of this recording is you're like, it doesn't matter what industry in because accounting is accounting is accounting, and talk a little bit about that.

Rohit Kharbanda: 02:51

Say, fundamental accounting is all the same. Mhmm. The debits, credits, balance sheets, PNLs, and and everybody's gonna talk about it in the same manner. It's just that, which industry you are in. The presentation of your books of accounts matters accordingly.

Rohit Kharbanda: 03:09

Like, for hospitality industry, we largely, follow USALI, which is your, uniform system of, accounting for lodging industry. That's a global protocol. Most of the hotels, follow this to give a standardization because at least in hospitality industry, we share a lot of information in the concepts, which helps us establish regional parities, and provide a level playing field from an organization and hotel chains to hotel chains. So that's how we operate.

Adam Larson: 03:49

It must be really interesting working for an organization, you know, that has hotels all around the world. And as you're, you know, as you're looking at different accounting systems, it was nice to have one accounting system that can, you know, grab everything together. But, you know, as as we as we are in this kind of very fast paced changing environment, you know, have the complexities of financial reporting, you know, how have they changed and has it gotten more difficult to do your job, you know, in the past decade, especially if you've been, you know, looking at different industries?

Rohit Kharbanda: 04:23

Has regulatory environment changed enormously? Has it changed for good? Definitely. Considering, most of the, regulatory authorities are keeping the end customer in mind, trying to protect their interests. When I say end customer for organizations, it could be their shareholders, it could be the guests, it could be the end users of their products.

Rohit Kharbanda: 04:49

So, yes, that all is adding complexity because we are dealing with diverse requirements. Each segmentation has, its own requirements and and and accordingly, not just the regulatory environment in terms of financial reporting, but a lot many more, reporting requirements have been introduced in past decade. It all started off with the 2,008, financial crisis. I think that was the onset when we started receiving whole lot of stricter governance around financial reporting. And then, the world started switching to IFRS, as the reporting standards.

Rohit Kharbanda: 05:31

So with more and more countries starting to follow, there's there's in fact a road map when countries are adopting IFRS, in near future. And then, hence hence, brings a whole lot of change for that particular country. And similarly for industries, with ESG's introduction and and other requirements, definitely, that has made the organizations invest a lot more in their reporting systems. So so that's another dynamic which has been introduced with technology advancements, you know, the rise of digital reporting, that has made people to change the ways of working. Plus, data collection has become big.

Rohit Kharbanda: 06:21

When when people talk about data, it's it's always big data and how it can be analyzed to everyone's use. And now with AI and Gen AI, it's taking a total different turn. So yeah. Financial reporting complexities and dynamics have changed dramatically in the last, few years.

Adam Larson: 06:41

So what what is that what have you had to do to help your team prepare for all that and and make sure that they're ready to to handle all these complexities?

Rohit Kharbanda: 06:52

See, for any change management, it's the awareness is the first step.

Adam Larson: 06:57

Mhmm.

Rohit Kharbanda: 06:58

Once, we are informed of a change that would come about, is that that's when you start preparing because you get, some kind of recap on on what would be required, what sort of formats would be required. Then you scramble for what sort of data would be required for us to do the reporting, what could be the data source. So once you've gathered all that, you generally put a project team, who, while continue to work on the technical aspects of delivering, the expected results, would also create awareness sessions for the teams. And then depending on how big or small an impact is, the the preparation of the team ranges from just a good to have information vis a vis technical expertise to be created to deliver, the reporting requirements. Mhmm.

Adam Larson: 07:59

Yeah. It takes it takes a you know, you kind of have to build that trust and make sure that everybody's ready to go and kind of you you can't just say, alright. Today today, we're doing this new process, and you have to be ready for it. You have to kinda, okay. Let's work and build this up and make sure that we're ready to go.

Adam Larson: 08:13

Because if you just throw just do this do it this way now. They're like, but we've been doing it this way for so long. You know, you have to kind of you can't just switch things overnight. So I I like that that that's a great approach. I like that.

Rohit Kharbanda: 08:25

Yeah. And the other thing is, you also have to go and, figure out what technology is available. Right? With in this, digital world, it's always good to have an automated solution technical solution deployed first. Because any change management, being done through teams by deploying manual effort is not, the best way forward.

Rohit Kharbanda: 08:49

You know, sooner or later, you will have to switch. So it's it's better you try to put the best and most optimal solution from day 1. Mhmm. Is that possible every time? No.

Rohit Kharbanda: 08:59

But is that an endeavor? That should always be 1.

Adam Larson: 09:03

Yeah. That makes a lot of sense. So when we're talking about reporting and the complexities, you know, you mentioned ESG, and that's a huge it's a huge deal. Carbon accounting, you know, trying to measure your carbon footprint is is really big, especially for multinational organizations. And in the health in the not the health care, the, hotel industry.

Adam Larson: 09:24

That. Hospitality. Thank you. The hospitality industry. In the hospitality industry, that's especially a big deal.

Adam Larson: 09:30

I was speaking with, an ESG expert recently, and he was saying that it's very difficult to measure the carbon footprint of of 1 hotel room and then try to measure the it's and and each each place measures it differently. And, you know, how are you guys met handling that that those that added pressure, especially from stockholders, from consumers, and making sure that you're, you know, you're doing best for the environment, but also, you know, helping your your organization as well.

Rohit Kharbanda: 09:56

I'd love to say there are quick wins and there are others, but, good part is, especially hospitality, We've got multiple factors we work through when it comes to ESG, maybe lighting at the properties, air conditioning, water, disposable system, waste disposable systems, or recycling systems. So there are huge factors. So we started off by doing the way single use plastics across our properties. Mhmm. May it be, bathroom toiletries or straws, at the restaurants or whatsoever.

Rohit Kharbanda: 10:39

So those were removed from every property, and we created more sustainable usage, volume based products in our, hotels. Then we started, revisiting the whole design of our properties. Every time there's a grounds up, hotel, we look at the designing where we can use natural lighting a lot more. Similarly, how we can better utilize and sustain the heat which comes into the property, to be less dependent on air cons and reduce that side of, carbon footprint. Definitely food wastage is another one, and and I think water recycling plants are being used, and and the wastewater is channelized into different usage within the property or outside property.

Rohit Kharbanda: 11:27

So those are a few areas which are very simplistically put. They're carved out. The challenge is not identifying these areas. The challenge is more behind the scene in terms of ensuring that we're making sustainable investments, though they are, cost oriented. But in the long run, definitely, you benefit out of them.

Rohit Kharbanda: 11:51

Similarly, whatever you implement, you will have to ensure you're compliant with the regulatory requirements around that particular, factor of ESG. Biggest challenge for any industry is your sustainable sourcing. You have the influence, on your immediate, property or your organization, but when you look at your supply chain, we'll have to ensure that they all of they also follow the same principles of ESG. Trying to create that whole chain, as sustainable sourcing is one of key factors, which drive, the positive results into an overall amount of carbon footprint reduction we want to do. Similarly, consumers are a big driver when it comes to change.

Rohit Kharbanda: 12:44

They they the consumers who are aware, they would expect the organizations to switch to more sustainable practices, at a faster pace. And that that benefits us as well because then it generates loyalty from the same set of, consumers because they appreciate the change you're bringing for the world, for the environment, for these end users, and then they they wanna contribute in their own way by staying with you for longer, as as the loyal customer. One aspect which we touched upon the reporting, that definitely is something, most of the industries are still trying to cope up with. How to generate that reporting. Because it's very difficult to create numbers from what you are trying to save or be efficient in and and start reporting it because transparency is required, standardization is required.

Rohit Kharbanda: 13:42

So that's a factor which most of the industries and hospitality as well is dealing with right now. Yeah. Those are certain challenges we face, but like I said, as much these are challenging, these are opportunities to gain competitive advantage because you were able to create brand differentiation. In the long run, you do a lot of energy saving, which ultimately is your cost savings. And, you get, easy access to the capital.

Rohit Kharbanda: 14:12

You know, there are government incentives being provided, if you are able to prove that, you are ESG oriented project. So you get certain governments get those incentives. Or when you try to gain, finance from capital market, you know, those are the credentials you produce, which gets you a little better rate on the capital you are trying to acquire. So, yeah, I I look at it positive and and I think most of the industry is looking at it positive while every change has its share of challenges. But, yes, there's a lot of, creative outcome at the end of the road.

Adam Larson: 14:55

Yeah. It seems like everybody I talked to, they're kind of like, we're kind of waiting for the government to decide how we need they wanna report on us because there's all these voluntary things and these different ones. But everybody who is taking the leap and saying, I'm just gonna do it anyway, and we're already seeing the benefits, it seems like it's a good way to go for an organization because in the long run, it'll help you. But and I wonder because you're getting a jump on it, it'll be easier for you when that whenever that here's the reporting standard that you have to use and you have to report to the government happens. You guys will be in a better position if you're already starting now as opposed to waiting till that regulation comes.

Adam Larson: 15:31

Because when you if you're waiting for the regulation to start, by then, probably, it's too late.

Rohit Kharbanda: 15:36

Absolutely. And and then most of the organizations are very responsive when it comes to such, changes. It has nothing to do with reporting anymore. Plan it as ours as much, as a service provider as it is for the end users. So we are doing it for the protection of our planet.

Adam Larson: 15:56

Mhmm.

Rohit Kharbanda: 15:56

You'd be you know, reporting requirements is just one factor driving the change. It is not the only factor, for the changes required. So most of the organization industries have already responded in a very positive way to these requirements because we all understand and comprehend it is for our better tomorrow, if nothing else. So you are but you're right, in suggesting that people who've already taken on that journey, will only be better off by the time regulatory environment, is more structured and and they clearly bring out what is it that we need to report in what formats.

Adam Larson: 16:39

And and I'd imagine when the governments are ready to start setting regulations, they'll go to people, organizations, organizations like yours and say, hey. What are you guys doing? What are you guys doing? And they'll probably use that to set the framework because why create something that's completely outside of what people are already doing?

Rohit Kharbanda: 16:55

That's that's absolutely correct. Government likes to partner with, big organizations like ours in trying to create a more, homogeneous, ways of, reporting or standardized ways of reporting. And and they might look across industries as well, not necessarily a hospitality. Because if you let you get any manufacturing industry, there's waste treatment there as well required. The large factories use a lot of, energy both in terms of water, aircon, or electricity.

Rohit Kharbanda: 17:26

So requirements are still the same and and and the more standard ways of reporting they create, lesser burden for them as well to analyze how as a country, or how as a, industry, one particular segment is progressing in that direction.

Adam Larson: 17:45

When you think of how far we've come, you know, as a society, when you first started getting into finance accounting, did you think in 2024, you'd be talking on a podcast and and discussing ES environmental, social, and governance, you know, as part of talking about as part of the finance in accounting section? Like, that's not something you think you'd be talking about, you know, all these years later. Right?

Rohit Kharbanda: 18:09

Yeah. Definitely. Earlier accounting finance and accounting was nothing more than, transaction recording and arranging finance for the company. That was it. That that that that's what it was.

Rohit Kharbanda: 18:23

More more around, reporting about how finance how financially strong, or weak the organization was, and that was about it. But now finance has become a more integrated function than it used to be in in the past. Finance earlier used to be just a support function. You do number turning provided to the CXOs. They do the decision making at the vote table.

Rohit Kharbanda: 18:54

But now each CXO has a dedicated finance person for them so that they can understand the impact, at the end of their own, their finances and returns of all the actions they try to do in their department, right, as functional heads. And similarly, CFO's world has changed dramatically, and they are pretty much in the board room discussing all factors. So, yes, there is a long journey. Finance has taken from what it used to be a decade ago to what it is now, but, all very exciting.

Adam Larson: 19:35

It also seems for the benefit of the organization because as the finance teams becomes part, becomes a business partner as at the table, the CFO is in the boardroom, you know, discussing things. We I feel like the finance and accounting team is in a better position to help organizations move forward because if you understand where the money is, how all that stuff's working, if we're talking about, you know, the the finance team is in in these discussions with ESG and all these different discussions, it can only help the organization. And it seems like it is from all the people I talk to in this podcast and in the webinars I we do at IMA. You know, I feel like I feel like this is a good direction for the finance and accounting team to go.

Rohit Kharbanda: 20:15

It indeed is. And, it's not like that we are anymore being, viewed as an enabling group. We are very much partners, with all the decision makers, and you're right in suggesting that, organizations are only benefiting benefiting out of it. And finance, now is not restricted to just getting the money, at a certain cost. It's also about effective utilization of those funds.

Rohit Kharbanda: 20:46

And and, hence, when we partner with these functional heads or, different CXOs, is when they are always looking at the finance, partner on how my decision is gonna turn around into numbers in terms of revenue generation or cost, increases or overheads or returns for that matter, over every dollar spent. So, yes, it's a quicker decision making and more informed decision making.

Adam Larson: 21:19

Yeah. So the finance and accounting, another side of it is is they have to be connected to IT because, you know, we're looking at the cost of all these different services. We have to have a different tech stack and organizations because of things like cybersecurity. You know, how those how these new regulations in cybersecurity kind of impacted your organization and, you know, how are you guys dealing with the different, implications with, you know, all these different new threats coming from every different direction?

Rohit Kharbanda: 21:47

As, every time there's a change, there is there's a risk management you'll have to do. And with the IT industry, the risk is ever increasing and coming in different shapes and forms, like you like you said, a simplistically about data protection. Mhmm. And, especially hospitality industry, we capture, so much of personal data about our guests. So we have to ensure that there is, we stick to the laws of the land, when it comes to data protection.

Rohit Kharbanda: 22:23

Similarly, the threats on our, servers as well as, malware and all that, you know, that's another area which we have to ensure we are protected from. And that could just be, to stop or disrupt your operations. Nothing else. So every threat has to be assessed. Every threat has to be anticipated, and you have to create very strong 4 walls around your, technical capabilities, for any organization so as to ensure that the business is running as smooth as it can be.

Rohit Kharbanda: 23:05

Now I was just gonna say that, yes, when when you pointed out, how it has impacted, you know, there's a whole lot of cost, investment which is required in doing so and and keeping it up to date at all times with the technology gaining such a pace where it rapidly changes and more and more, ways of reaching the security are created. You know, you you cannot just sit back once and for all, like, I'm done and then I'm more secure. No. There's there's always an update required. So that always keeps our, tech teams on their toes.

Rohit Kharbanda: 23:38

So it is a difficult job, to sustain, but, yeah, this is this is the need, of the hour, and we all have to, learn to live with it considering we are in the tech world. Mhmm. Now with with more compliance and regulatory requirements around reporting of such breaches, it has been mandated. So, it is getting difficult and difficult. And and it's in in the interest of, all stakeholders for any organization, and, hence, every organization is, very responsive to such requirements as well.

Adam Larson: 24:18

So as we're talking through this, you know, I it makes me think you're mentioning AI in your previous one of your previous answers. What are some of the challenges that AI brings? Because everybody's talking about how great AI is and, you know, everybody's high fiving. We love AI. It's so great.

Adam Larson: 24:31

But it all it's not the easiest thing. And are there challenges that it's bringing your organs you guys as as you're working through that?

Rohit Kharbanda: 24:39

Let me say AI is great. Now with the next phase of Gen AI, it's even better. But, yes, like I said, every change comes with their own set of challenges. AI and Gen AI bring along the same. As an example, the complexity of AI, including issues around explainability, buyers, and decision making, challenges traditional regulatory frameworks leading to the need for more agile and adaptive technology specific regulations.

Rohit Kharbanda: 25:12

Similarly, data protection and privacy, with ability of AI systems to process and analyze vast amounts of data, raises concerns about privacy and data protection. And hence, regulations like, general data protection regulation, which is in Europe, are setting standards for how AI driven data processing should be handled. So, as much AI is giving us some amazing results in terms of, data analysis, marketing, and whatnot when it comes to data management. There are regulatory challenges which it it throws along. Similarly, when we talk about, financial regulations around AI.

Rohit Kharbanda: 26:01

You know, AI is increasingly being used in financial services for trading, fraud detection, and customer service. Regulators must ensure that these applications do not introduce systematic risks, or create unfair advantages or lead to unintended consequence in the financial markets, especially with the cross border transactions. Now that it one word, one market, scenario, both technologies, like AI and blockchain operate on a global scale, which further complicates the regulatory inform enforcement. Some countries are advanced. Some are still, lagging behind in the implementation, so that further causes challenges.

Adam Larson: 26:44

Mhmm.

Rohit Kharbanda: 26:45

So so in that sense, it is not as much as much technology or the systems. It's more the regulatory practices around these which pose a challenge.

Adam Larson: 26:58

Yeah. That make that makes a lot of sense, especially as, you know, one world, one system, you know, everybody's buying from all over the place. You need to be able to track all those things properly. And every every every time you cross the border, there's a different set of rules that you have to follow. And and us as humans can't keep up with all that, and you need systems in place to kind of manage all those things.

Adam Larson: 27:17

So, otherwise, it'll just kinda be a free for all.

Rohit Kharbanda: 27:20

Yeah. Yeah. It it that that's absolutely right. And then, hence, no matter, regulatory environment makes it difficult, for organizations to do business across countries, territories. Yeah.

Rohit Kharbanda: 27:36

But it is the need of the hour. We we must have such practices so as to, not create a kiosk when it comes to financial risks.

Adam Larson: 27:46

Yeah. So we've been talking a lot about regulations and different, things that are needed, especially in the accounting industry and how it's been changing. Are there certain skill sets that you look for in your team members, in your, the team that you when you're hiring new people? What are those skill sets that you're looking for? Because it everything's been changing so quickly.

Adam Larson: 28:04

The skills you needed when you first started in accounting years ago, I'm not gonna say how many years, but years ago, you know, and then what you need now, this it looks different. There's skills that you still need from your those years ago, but there's new ones that are needed as well.

Rohit Kharbanda: 28:22

I'd like to answer this as the whole talent talent management for finance finance and accounting and financial reporting has has changed. Mhmm. What used to be the traditional skills we we needed in our resources or team members has now been substituted largely by these technical solutions, ERPs, and EPMs of the world. Yeah. What we now look for is technical accounting skills.

Rohit Kharbanda: 28:55

So it's more techno functional, resources, which is the ask today. So as technical accounting skills, we need, expertise in different, gaps, IFRS, other regulatory requirements, strong strong understanding of internal controls or risk management, taxation. Again, because of, like, we discussed one word, one market, taxation and its laws have become very complex. And and accordingly, we need experts in that. We earlier did touch upon data analytics, big data.

Rohit Kharbanda: 29:33

So data interpretation, predictive predictive analytics, and data visualizations are 3 key components where we require those skill sets. And those are niche skill sets. And hence, we see a lot of institutes and universities providing that kind of education, to to upscale most of the resources and and and, the workforce is continuously, updating themselves in usage of Power BI or Tableau or or any such methods where which is all related to data analysis and visualization. Similarly, technology proficiency of accounting softwares, the ones, I mentioned like ERPs and APMs, automation tools like, RPAs, blockchain, and Fintech. All that is changing, the skills we need.

Rohit Kharbanda: 30:29

And what regularly we are looking for is more strategic thinking or critical thinking in our resources as a skill rather than, running a business as usual on a day to day basis, which is more like administrative or transaction processing jobs because that's what most of, the automated solution, technical solutions have taken over. Mhmm.

Adam Larson: 30:56

Wow. Yeah. I think that's that's really great insight. And Rohit, I just wanna thank you so much for coming on the podcast. It's been really wonderful chatting with you, and thank you so much for sharing the things you've learned and your knowledge and expertise and your story with our audience today.

Adam Larson: 31:07

Just thank you so much again for coming on.

Rohit Kharbanda: 31:10

No. Thank you for having me again, Adam. It was lovely having a conversation. As much, my responses, like you said, you enjoyed, it's the questions which made the difference and more interactive. Thank you.

Rohit Kharbanda: 31:25

So thank you for having me, Adam. It was a lovely conversation. As much I I know and I'm aware of what's going on, while recalling it, it just made me feel how how much change we are going through on a daily basis. So a great conversation. Thank you again.

Announcer: 31:45

This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.