Fresh Insights from Madhu Nair | EY Australia

Navigating the Evolving Landscape of Auditing with EY's Madhu Nair

In this episode of the Books of the Boardroom podcast, host Sumith talks with Madhu Nair, Partner at EY Australia, who brings nearly three decades of experience in the accounting profession.

Madhu takes us on his professional journey from handwritten ledgers in India to becoming a Partner at one of the Big Four firms. He shares how his accountant father inspired his career choice and reflects on the satisfaction he's found staying with EY for 25 years while many peers migrated to commercial roles.

The conversation explores the seismic shifts in the audit and assurance landscape:

• How organisations have grown exponentially in size and complexity
• The post-Enron regulatory framework transformations
• Technology's integration into every facet of financial reporting
• The challenge of converting vast data points into meaningful information
• The evolution from offshoring to near-shoring and friend-shoring

Particularly insightful is Madhu's perspective on the expanding definition of stakeholders beyond shareholders, employees, and customers to include communities and governments—especially as sustainability reporting becomes mandatory.

As AI and automation reshape the industry, Madhu offers a balanced view on what can be automated versus where human judgment remains irreplaceable.

Madhu provides refreshing perspective on the importance of community and peer influence in career decisions, revealing how his cohort of colleagues has been instrumental in his professional satisfaction. He also addresses expected future trends in financial auditing, including the continued evolution of sustainability reporting requirements.

This episode delivers valuable wisdom from "the other side of the table" for finance leaders navigating today's dynamic business environment.

00:00 Connecting with My Dad Through Accounting
00:31 Introduction to the Podcast and Guest
02:07 Madhu Nair's Professional Journey
06:15 Challenges and Changes in the Auditing Industry
10:57 Technological Advancements and Their Impact
17:48 Sustainability and Regulatory Changes
22:22 The Role of AI in Accounting
24:44 Conclusion and Final Thoughts

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Transcript

Madhu Nair

[00:00:00] Madhu Nair: I must say my dad was an accountant. somehow I think I found the subject to be a way to connect, more and better with my dad. And, how we look for that appreciation coming from parents and I felt if I pursued this, I'll get more appreciation, but. That could be one side of the story, but I did enjoy this thoroughly.

I'm from that generation where, accounts were handwritten and you would do bookkeeping, in ledgers that are physically maintained. So I did struggle with the journal entries like everyone else did. Starting off and trying to balance a trial balance. 

[00:00:31] Sumith Dissanayake: Welcome back to Books of the Boardroom podcast, season three CFO, catalyst. Today I have a special guest from the Big four Madhu Nair partner at EY Brisbane. Madhu, welcome to the Books of the Boardroom, season three CFO Catalyst podcast.

[00:00:49] Madhu Nair: Thank you, Sumit. Thank you very much. It's a pleasure to be here.

[00:00:52] Sumith Dissanayake: It's wonderful Madhu, like how has the day been so far? Busy.

[00:00:58] Madhu Nair: It's a good day. It's a good [00:01:00] feeling we are getting to the near, getting to the end of the day, which is also great. And days are busy, which is something which are how I prefer it to be, to be mentally occupied with, challenging tasks, challenging things, and working with people. I think that's probably the best part of, of my professional career and professional life, is that I get to engage with.

With people from diverse backgrounds, different age groups, different mindsets, different professions, so I love it.

[00:01:27] Sumith Dissanayake: Wonderful. Work weekend is not, far off now, so you can probably go play golf. That's your new sport, isn't it?

[00:01:34] Madhu Nair: Yeah, there's something which I enjoy and, I won't say I'm anywhere near good at playing that sport. It's something which I picked up only two or three years ago. but I go out for the walk for the stroll to, to be with my friends, the cohort that I enjoy, having a bit of that banter, while we walk around and have some fun.

I think the story of my life will be that it is a work in progress.

[00:01:57] Sumith Dissanayake: Huh, that's always the case. [00:02:00] That's wonderful. As long as it's an upward, so it's all should be all right.

[00:02:03] Madhu Nair: that's the aim. I don't know if I'm achieving it, but that's the aim.

[00:02:06] Sumith Dissanayake: Wonderful. I'm sure today's discussion is going to be bit different because you are on the other side of the spectrum in the CFO or the finance industry. So you are pretty much doing the. auditing and assurance side of it, and, but I think you are directly involved with the CFOs and been in the industry for too long and got a lot of insights that I probably need to unpack.

starting with Madhu, like in the, the industry that you are in, like how does that relates to the finance industry, for our listeners to understand your role a bit better?

[00:02:37] Madhu Nair: sure. So I'm with a, I'm a partner at a professional services firm and partner with EY and, I'm a auditor, and a financial auditor, as background, but the role of the auditor is changing and evolving so much with the new. Regulations coming through, for example, sustainability, is one aspect of,of what an auditor will,will have as part of their day-to-day [00:03:00] responsibilities or sustainability reporting, to be more precise.

Which, so I'm always, almost always on the other side of the table in terms of financial reporting because I see the output. but as I see the output, I've gotta understand the process and the inputs that go into generating the output, which is in most cases a financial report. And understanding that process, requires you to understand the culture of the organization that you're working with.

Which is so much more important, because that determines the quality of, not quality of the data, integrity of the data that goes into it. with a financial, with a financial, auditor or an auditor's role, it is so much more integrated when you're working with a corporate organization.

[00:03:42] Sumith Dissanayake: That's wonderful. So I would like to understand like where this start,tell me a little bit about your, startup process in getting into the accounting industry.

[00:03:50] Madhu Nair: Yeah, sure. I've been in the profession now for,nearly 30 years. I started off as a 18-year-old back in the day,in India, [00:04:00] doing the charter accountancy course. And, it is something which I've, I wanted to go into and wanted to do it. and I don't know whether it was because I was so bad at maths and science.

I saw, some sort of, solace in being.in following the accounting,accounting subject. we had the subject back in grade 10, and it was an optional subject of, where we could study commerce and accounting. it was a tiny, it was tiny part of the entire curriculum, but, somehow it got me hooked and I seem to enjoy it.

I must say my dad was an accountant. somehow I think I found the subject to be a way to connect, more and better with my dad. And,how we look for that appreciation coming from parents and I felt if I pursued this, I'll get more appreciation, but. That could be one side of the story, but I did enjoy this thoroughly.

I'm from that generation where, where, accounts were handwritten and you would do bookkeeping, in ledgers that are physically maintained. so I did struggle with the journal entries like everyone else did. [00:05:00] starting off and trying to balance a trial balance. That was probably the most stressful thing that I would've done as a twenty year old.

[00:05:05] Sumith Dissanayake: No doubt.

[00:05:06] Madhu Nair: and that, that was the start of the journEY. And, I worked with a very small organization back in, in those days, did not train with a big four. but that, that training that I received there has grounded me in a lot of different ways as a person, as an individual, but also, the, the accounting skills that I've gained, during those days or from those days. From there, the journEY, took me as a qualified accountant to work in the Middle East, where again, I was, in a, in an accounting firm or a professional services firm as an auditor. and continued that journEY, with EY ever since then. So I've done, 25 years with EY. This is actually my, this is in fact my 25th year. Moving to Brisbane with a very young family in 2005.again, we're continuing with EY and that's a journEY that I've always had and I've enjoyed it ever since.

[00:05:56] Sumith Dissanayake: All right, so you have very steady career, right? It's in, [00:06:00] when most of the people who get trained in the Big four in an accounting firm, so thEY've sometimes, thEY go into the commercial, careers like, financial policy C four. So what made you to stay in the auditing and insurance space, then going into the, into a commercial role?

[00:06:15] Madhu Nair: Yes, that's something which I've reflected on, very often and when I. When I think about it, it's I think I've found enough challenges within the organization. You,I feel somebody would change an organization for more challenges. Yes, you look at remuneration and other, material consideration, which are equally important, but you would change because you are seeing a growth prospect and you are seeing more challenges. I feel I have had the challenge with EY or within my current working environment every so often. And, if I ever felt bored or I felt I'm not getting enough out of what I'm doing, I've had a change. In 2000, in 2005, we moved to Australia still with EY, and I enjoyed that [00:07:00] challenge of settling down and making another country my home, and learning new tricks of the trade, and learning the art of, of operating in a new environment.

and it's not just the accounting, isn't it? 

[00:07:11] Sumith Dissanayake: I can relate to your experience very well. I've been through the same journEY, but on the other side of the spectrum, because I was in commercial. Accounting, not in the accounting firm's environment.

[00:07:21] Madhu Nair: yes. So it set that thrill that I had doing it. It wasn't, it wasn't easy, it was challenging. It gave me all the excitement. It did give me, gimme me a lot of, lot of moments when I, when I did consider, why did I move? That's, that often happens when you move with a two month old baby to a new country.

went through that. then there was, when I was looking for a challenge again, there was an opportunity to go and set up an office in another country through with EY, which I happily took on that opportunity. And I think that entrepreneurs experience that I always crave for, was really answered, through that journey I had.

With the same organization and I've [00:08:00] had roles changing. while the core function has always been that of an auditor, I've had that role, different, aspects of that role, which involved, different challenges. So that's something which I've always enjoyed and never felt this urge that I have to look somewhere else for employment or look for an opportunity outside, of my current employment.

[00:08:20] Sumith Dissanayake: Yeah. It looks like you had both, that, the compliance and assurance as well as that commercial or entrepreneurial, the journey. you had them both in the, the role that you had. you were lucky from that perspective.

[00:08:32] Madhu Nair: Correct. And I agree. I agree with that. and the other reason, why somebody would move is, for people, for finding a better group of people, better network, better peers. I'd never felt,I think I'm really lucky in terms of the peer group that I've had or the people that I work with. it's just a joy coming in and seeing the younger cohort that is coming through the ranks and my peer group of partners, and they're fantastic.

They're one of, one of the brightest ones that I have seen in my life. I'm really [00:09:00] privileged to be able to work with, with this cohort of people that I. In my profession you deal with clients, as you deal with clients and it's that variety that I have had and the privilege of that variety.

I'm dealing with a company that's into mining one day and within the same day I'll be dealing with a company that's in technology or emerging technology. And that's the beauty of being in Brisbane and Queensland, which is a smaller market as compared to, larger metro cities.there is a lot more focus towards specialization and it's the need of that market.

But here, I think I could, for a long time, I could get away with being more general in terms of how,the variety of, clients or the industries that I focused on and. And I've enjoyed that. it's a different experience when you go out, even in your social setting, many times you know so much more because you've, you know, something about mining, you know something about technology, you know something about medical technology.

You know something about the legal system, the variety that, of topics. And your brain is continuously being stimulated and that is [00:10:00] what. I have enjoyed it and I don't believe, and this is my personal view, I don't believe that experience can be substituted with any other organization, in any other way.

[00:10:09] Sumith Dissanayake: No, that's a very interesting point. You mades one about the, the cohort of people that you work with. So because they're influencing a lot, for you to stay or get out both ways, right? So you had the cohort that you want to be with and that gives you that,motivation to stay more and then, keep contributing at the same time.

That very variety that you were talking about. I think that's spot on. A lot of people moving on because of that monotonous nature of the job that they're doing or the role that they're playing, that, you can't, that human beings, need that variety. The challenges to live their, live them up and then go on the journey.

I.

[00:10:44] Madhu Nair: Absolutely. Yes. I think that's probably what's, what drives a lot of us, isn't it? That's what, keeps us motivated and we need to be the inspiration for the next generation that's coming through. 

That's wonderful. alright, so we go into some, technicalities. I would explore because you're an expert in the, [00:11:00] especially the origin assurance in the area. So what are the significant changes happened within that audit and assurance over the last decade or so?

[00:11:09] Sumith Dissanayake: with the technological advancement especially, how do you describe that?

[00:11:13] Madhu Nair: that's an interesting, one because there's no right or wrong answer, but, and it's such a broad area, isn't it? so much that's changed, when I reflect over the last, say, 20 years or two decades, so much that's. That's changed. The size of organizations have grown, many falls as compared to what we could have even imagined.

Then, take Google for example. a company that, that was, back in 2004 was, what, $23 billion in its valuation today. The valuation is sitting at something like, what, 3 Trillion. 

The turnover back in the day was maybe two or $3 billion, and today it's $500 billion. So who would have imagined the change,that has occurred in that period?

No one could have really, I think it's far beyond the imagination. Who would've imagined trillion [00:12:00] dollars of capitalization? Market cap for companies? and look where we are sitting today. We don't have one. We may have what, three companies that are sitting with that sort of valuation or market cap. So last two decades have seen immense amount of transformation in the size and scale of organizations.

And there are equal number of smaller organizations that have, or companies that have emerged,with the startup phase and the startup era. that have, that started from nineties onwards, but have freely scaled up since then.what also happened two decades ago is important to understand was the Enron scandal.

and, and that resulted in a lot of changes in the corporate regulatory framework and, the, the expectation around, how controls are managed, how controls are implemented and monitored.you've seen the spectrum of companies growing big and the consequences or, and also the need and, need to have those level of controls over the corporate framework.

I think that's probably the [00:13:00] broader, framework or theme over the last two or three decades? Technology, yes. we, you can associate technology with almost everything that we do today. the, technology is not a function on its own today. It is integrated to each and everything that we do.

 it has come to become, an integral part of anything and every function that we execute.

[00:13:20] Sumith Dissanayake: and the other thing is the complexity of the businesses, because most of the business now, operate beyond the boundaries like, they're multinationals, so it. Brings that complexity as well, isn't it?

[00:13:30] Madhu Nair: Absolutely. Yeah. It's.the complexity, as you say, is added by the expansion of organization that need to grow consistently, which also meant, their spanning, borders, which was may or may not have been the case back in the day. so that changed significantly.

Technology also resulted in a lot of data, data points emerging. there's far more, data sources, far more data that's available. So the challenge today is converting that data to useful information to work with [00:14:00] that clutter and the noise of the data, and figure out what is the right information and feeding the right information to business is so much, so important because, If the data is misinterpreted, it results in misinformation and misinformation could result in strategy, not, not giving the desired results, or could be completely,completely derailing the strategy to an extent That emergence of data and how you protect that data has become equally important, as well.

And again, that's the risk of having more information or more data points as you need to store it in a more secure place. And it's,it's available to use, but then it's also accessible to so many more people if it is not predicted and secured.that's probably the one of the other challenges, the role of a finance leader on the, from the other side of the table.

From where I sit and as I see it, role of the finance leader has been, pretty much always been the same. It's about creating value. It's about protecting value, and it's about optimizing of that value, isn't 

[00:14:58] Sumith Dissanayake: Fundamentals are the same [00:15:00] about the approach and how we are going to create that. Of course, now it's just, it has its own complexity into it.

[00:15:06] Madhu Nair: Absolutely. And That broader, theme has not changed as much, but the scale of it has changed, how you execute it and how you implemented,the strategy and that vision is, is got its own nuances. There's lot more available to you, in terms of data and information and how you use it.

the other change that we've seen, and this is a minor point in the scheme of things, is, there is, and this comes back to value optimization, as. the need to have your, control over the supply chain. the concept of whole, the whole concept around offshoring has evolved to,to the extent of now it's near shoring and friend shoring.

You would want to have your investments and your shared service centers or your manufacturing centers, your control over your supply chain. To an extent that you have it at a location that you can control or you do not have that sovereign risk emerging from that [00:16:00] location.

That is something which we've seen through Covid and and coming out of Covid.

I think that's probably something which has gained a lot of momentum as well in terms of strategy and the strategic changes that have come through.and that also leads to, the other point I have in my mind is around the geopolitical risk. And the geopolitical risk is it has always been there, and finance, and corporates have always considered this.

where it has become slightly more nuanced now is it is no longer a bipolar, Risk that you have. It is more multi polar world that we are living in. figuring out which country, which two countries have that proximity and that trust and the relationship. I think that becomes a lot more critical now.

And, there are not two sides. There are multiple sides to,to the geopolitics that exist today. So balancing that geopolitical risk with your. With your, aspiration for [00:17:00] growth has become so much more important.

[00:17:02] Sumith Dissanayake: That's right. And I'm sure that is more, that proposition is much more intense for the larger organizations than the smaller organization who are operating within the local boundaries.

[00:17:12] Madhu Nair: Absolutely, isn't it? It's,the bigger the organization, the more the challenge, you have around that. the smaller organization to an extent are, are protected from that. They might see the ripple effects of that, are the consequences of that because, importing, certain items, certain products could be a lot more difficult exporting to certain territories.

Certain in regions could become, there could be barriers that could be erected, which could impact a smaller business. Your raw material supplies coming in,could be interrupted. So small organization will see the ripple effect of that larger organization are the.

[00:17:48] Sumith Dissanayake: So Madhu the other aspect that I want to ask you is Law is always catching up. So that in, in the civil society. So when it comes to the accounting also, I'm assuming that because of the speed that the [00:18:00] economies are developing and technology is advancing, how about the accounting standards and the compliance requirements that you are dealing with?

Are they coping or what's the status between and how does those two get balanced?

[00:18:11] Madhu Nair: Yeah, that's a good question. the accounting standards are. Are catching up, with the changes, there will always be some time lag because,growth and change because there's a lot of creative thinking. And creative thinking means someone has thought about something and executed it, and then the regulatory changes would take some time before it catches up with it.

The regulatory changes or the standards that we see, particularly in under the International Financial Reporting Standards, thEY're more principle based. So there's a broader framework which can capture a lot of those changes that, that emerge. but the, on the flip side, there could also be a confusion in terms of application of those standards because, it could be interpreted in different [00:19:00] ways, in different scenarios if it is too broad and not to say the response to it is often,quite quick and quite fast and efficient. So I don't see that as a concern as such. There are areas where it is still emerging. So sustainability, reporting and and the requirements around that.

It is an emerging area which Australia has legislated now,which is a great outcome, to the, commencement of the process of reporting. And, now companies will have to go through that journey of understanding what should be disclosed and. Is not required. What is the best practice versus what is the minimum required?

I think that's the journey that the companies have been on, the reporters have been on in the last some few months, and that will continue up until the time the first report is launched.we are starting to see That there are stakeholders who are more than just the shareholders and the employees and the customers now,climate initiatives and anything to do with climate change action, you have [00:20:00] more stakeholders than just three or four key people or key groups like shareholders or employees or customers.

If the company's operating in certain area or certain parts c the country, then the community is a key stakeholder because you need to have the social license to operate.

the state is a stakeholder stake, was always a state stakeholder, but has become a bigger stakeholder because the whole reporting requirement is around aim at getting to net zero.

[00:20:26] Sumith Dissanayake: So that role and involvement of, the stakeholder involvement and the number of stakeholders have changed over this period of time, and that is going to be the biggest change that you will see in, in the future as well.

Yeah, that's right. The stakeholder definition is much more broader now. And for that reason, of course, the reporting has to address the concerns of all of those stakeholders. And Madhu, I was going to ask you the, like I know the larger organizations and corporates are already in the kind of, cycle where they're doing some reporting or they're doing a good reporting in that aspect.

But how [00:21:00] about the small to medium businesses? how do you see the uptake from the small to medium businesses about the, the social climate change and the.sustainability reporting.

[00:21:09] Madhu Nair: So there are two parts to it, The way I see it, one is the regulatory requirement to make disclosures. and the other part is, those who are not required to make the disclosure and the measures they are taking those who are not making the disclosure And would choose to adopt strategies and means to, to minimize the emission, isn't it? So, in terms of reporting obligations, I think, I believe the way the standards have been cut out, have been drafted. It will allow more time to smaller organizations because of the reporting threshold that has been defined.

Now, what does that mean for the smaller organization? I believe what it would require is the smaller organizations to still go ahead and look at the emissions, look at the, exposure that they have. to comply with these requirements in the future. and the ultimate objective is cutting down on [00:22:00] emissions.

So if that is the ultimate objective, then it needs to be applied in, it's a substance over form thing, and you go ahead and start bringing in,changes to the, to the way the organization functions, to reduce that level of emission and become more sustainable as an organization.

[00:22:16] Sumith Dissanayake: Yes. Wonderful. got so much to ask, but because of the time limitations, I might have to, wrap up soon. Madhu, So I think we can avoid this question about AI. So how do you see AI, getting involved in the account industry, especially from the origin and assurance, what changes are going to happen, for your industry and how it's going to impact, your work and how it's,translating to more productivity or, profitability from your side?

[00:22:42] Madhu Nair: AI and technology, they go hand in hand. Now isn't anything you talk about technology has, AI is within brackets and it's assumed that you are talking about AI. When you talk about technology. they're not two separate things, but, automation is. Is something that I've seen is an area of, of focus [00:23:00] for, for companies and not just ours, but companies in general as well.

and where automation helps is. Is automating something which is routine, which could be done repetitively in the same way and does not change the outcome. And if that's the process, then it is a lot easier to automate. And you can see a lot of automation happening in t hat space. and you could see this, you work in the finance sector, so you will see in, within large ERP systems or even smaller, smaller financial module based systems, how automation of processes is helping and how it generates exceptions and positions, those exceptions for you to address.

so that to that level, we are seeing a lot of automation and we are experiencing the benefits of that automation, it helps in our sector, it helps to an extent because we do, where there's a short supply of skills. I think automation is a big booster. Automation

I believe will not be able to replace his creative thinking. and [00:24:00] happy to be proven wrong down the track, automation or AI, can do. And it's mainly AI cannot replace that creative thinking, which, because it does not have that information already in there. AI can regenerate information that has been put in previously, To that extent, the, the field of, finance accounting where you still need to apply judgment, you still need to have estimations, you still need to, come up with, identify data points and that are relevant to the business and that is relevant to a market to that extent, I think, there will not be a replacement. And who knows, five years down the track you could play the same video back to me and tell me that I've got it wrong. But as of today, that's what I'm seeing. Things change significantly.

[00:24:44] Sumith Dissanayake: Yeah. no. I think that's a great place for us to conclude our conversation and leave in some space for us to come back again and, reflect on what we discussed today. Madhu, if any of our listeners want to get in touch with you, what would be the best way for them to connect with you?

[00:24:57] Madhu Nair: I have a personal email ID that I can [00:25:00] provide, or I'm on LinkedIn as well with my name that you have there on the screen. they can always get in touch with me, on Linkedin.

[00:25:07] Sumith Dissanayake: Perfect. So Thank you very much for the insightful conversation and I think there's so much of, knowledge that you shared within a short period of time and we'd love to catch up with you again and explore more, at some point. Thank you Madhu.

[00:25:19] Madhu Nair: Absolutely. Thank you very much. Thanks for your time.  

Thanks for joining us on this episode of the CFO Catalyst Podcast season three. If you enjoyed our discussion on CFO leadership, please subscribe on your preferred platform. When you share with fellow CFOs and business leaders, you're helping us build this community of strategic financial thinkers together, we'd love to hear your thoughts.

Connect with us on social media and join the conversation as we explore how the CFO role continues to evolve in today's dynamic business landscape. Until next time, keep innovating in your financial leadership and stay tuned for more [00:26:00] forward-thinking discussions in our CFO Catalyst series. Join us next time, proudly sponsored by Brisca Global with production and distribution by Disrupt X one.