The era of accountants as bean counters has long since faded. Today financial professionals play both strategic and leadership roles in the private sector. In the latest Re:start21 webinar, the panel discussed how strategic finance has been challenged by the post-pandemic era.

Manil Jayesinghe, Country Managing Partner of EY Sri Lanka and the current President of the Institute of Chartered Accounts Sri Lanka, Dilshan Rodrigo, Chief Operating Officer of HNB, and Hasitha Premaratne, Group Finance Director of Brandix, discussed how to plan for the post-pandemic era.

Imran Furkan was the moderator. He started by asking Manil Jayesinghe about how he thinks are the immediate challenges to financial reporting from the pandemic. Excerpts of the conversation…

Manil Jayesinghe: Two or three key aspects are somewhat of a challenge when it comes to financial reporting. One is that the financial reporting framework is primarily principle-driven and somewhat futuristic, and there’s an issue of how to make predictions.

Generally, when making predictions, one would look at history and extrapolate that to the future. But today, history and the future are two completely different things. So one of the biggest challenges corporates will face in financial reporting is how to deal with future uncertainty in making estimates.

To a great extent, we have addressed these issues on the part of the Institute and brought in some degree of stability in the reporting arena.

However, we are dealing with estimates that by nature have a certain degree of uncertainty and there are errors that will come through. But by and large, the corporate sector in Sri Lanka has addressed some of the issues from a financial reporting angle.

There are also new challenges that are emerging, with one being the exchange rate. There are two or three different exchange rates floating around, including the official rate, as well as the rate on the black market. So which rate do you use when it comes to financial reporting?

The financial reporting framework is able to address many of these challenges and has averted such problems over the last 18 months. We have managed to steer through and I don’t think it’s going to be a major issue going forward. Due to a lack of data and information, we may have to make certain assumptions, but as long as these are educated assumptions, there should not be too much of a hassle involved.

Another area that is partially to do with accounting and partially realty is how to determine fair value. Many balance sheets carry assets at fair value or as revalued assets. As fair value is in relation to the future, in the current context, how do you determine it? There are inherent difficulties here, but they can be addressed with the proper thought process in place.

Auditing is a different ballgame altogether. By and large, the auditing profession has been paper-based or evidence-based. With the pandemic, working from home and remote working, there arose an enormous challenge with regard to scanning documents, thereby creating a new era and dynamic going forward.

In the future, there will be a greater reliance on data and what I foresee to be data-driven audits whereby technology is used to a great extent.

While historically, we would physically inspect inventories, in the present context, a physical inspection may not be possible, so we may have to use technologies such as Zoom. This in turn may create new challenges where for instance, someone could show a visual that may not be of a given inventory warehouse. But I’m sure these challenges will be addressed as time goes on.

As already mentioned, there are difficulties in making estimates and judgments, which creates problems for auditing as well. If the preparers of financial statements are finding it difficult to do so, how would an auditor tell you whether these judgments have been properly exercised? So there are two sides to the equation. Nevertheless, with sanity and a logical approach, these issues can be addressed and are unlikely to cause serious problems.

The question is, with subsequent waves of the pandemic, do you consider this whole equation to be a rare situation? Can you restate certain items, taking all things into consideration? These are unique situations and even more unique for Sri Lanka. The whole world has experienced the pandemic but Sri Lanka faces unique situations such as foreign exchange restrictions. As a result, inflows are restricted, and certain actions taken by the government seem somewhat dramatic.

All of this can create difficulties for accounting. We have been able to address whatever has come about so far, but whether industry will like the outcome is uncertain.

Dilshan Rodrigo: From an accounting perspective, it’s fundamentally about viewing the situation in an uncertain world. One aspect that I would like to just leave out here would be to say that you can’t look at one future.

Historically, we have been used to having a budget and a forecast. That’s one future or state. But today, you have to think in terms of scenarios. What is most likely and what are the underlying assumptions, and what could be the outcomes? Consider both what would be pessimistic and optimistic, envision scenarios and plan accordingly. Thereby, you will be far more accurate, and the quality of thinking in your organization and your ability to cope with unpredictability will improve. That would be a key takeaway.

Our bank did this, and it has helped us bring the top management on board in terms of how we think and communicate with others. If something were to happen, we know what we should be doing in a given scenario, which helps deepen the mind in terms of how we cope. Accounting needs to think along these lines, particularly when it comes to management accounting.

 

Hasitha Premaratne: On the financial accounting and reporting side, the times have changed, and audits are conducted virtually, which is something we’d have never done if not for COVID. We have ventured significantly into advanced or accelerated mode when it comes to digital and virtual work environments.

That’s an area that requires further exploration because this is just the start. We faced a shock, reacted to it and are in survival mode at the moment. Some organizations may have invested to make it a sustainable, long-term, ongoing way of working, whereas others are still figuring it out in a mad rush to see how they can bring things together.

What I’m more interested is to see how we should make it a sustainable solution, which is a very important aspect from a digitization angle.

In this part of the world, digitization has not taken off at the pace that we would have liked. But there is an opportunity to capitalize on, not only in terms of investing money but other resources as well. There is a need for change management, bringing about a culture of digital transformation within organizations and the economy itself, to gradually move at an accelerated pace in that area.

In this part of the world, digitization has not taken off at the pace that we would have liked. But there is an opportunity to capitalize on, not only in terms of investing money but other resources as well. There is a need for change management, bringing about a culture of digital transformation within organizations and the economy itself, to gradually move at an accelerated pace in that area.

Imran Furkan: For banks, foreign exchange has been a significant issue, not only in terms of a depreciating rupee but also a crippling lack of access to foreign exchange, along with import restrictions for different sectors. How are your clients coping and are there takeaways others can adopt?

Dilshan: First of all, I don’t want to weigh in on what the correct exchange rate should be. The important thing is how do you bring about some kind of stability? It’s not sustainable to have three different exchange rates. You have to get everybody into the formal economy. There cannot be a big informal economy and a small formal economy, as then there is no such thing as what is rational, and you’re going to drive the wrong kind of behaviour on the part of everybody, which ultimately can destabilize an economy. But that’s a very different debate.

In terms of how you cope with a situation like this from a typical organization’s standpoint, the most important thing is to anticipate and plan early. You saw the writing on the wall perhaps a year back and saw certain signs – a huge amount of macro-economic debt, twin problems of a balance of payments deficit escalating and fiscal deficit as well, and challenges in terms of foreign debt.

Many businesspeople would have their own views. We tend to hear what we like to hear, hope for something positive and then justify that. This is particularly rampant in the age of social media. Ultimately, it’s about your reading of what is going to happen. If you have that reasonably well set out, it becomes so much easier to get the basics right.

A lot of progressive companies moved away from credit and started doing more sales on a cash basis, restricting credit only to customers they felt were the most creditworthy. Otherwise, companies could have doubled or tripled their sales but ultimately, they would face huge collection problems. So that is one simple measure that makes a lot of sense in this kind of environment.

The second, is proactive raw material sourcing. When you know there are going to be supply chain disruptions, start stocking early. If you know there’s going to be a potential issue in terms of foreign exchange, start stocking. A lot of people did this early on and as a result, they were able to manage the challenges being faced right now.

Reduce waste, manage working capital better and costs more effectively, understand your cost structure and look at areas where you can get things right the first time. Managing costs is about managing efficiencies and how to get things right the first time because the cost of rework is massive.

We’ve been through multiple lockdowns. For banks, one of the biggest challenges has been to support customers in terms of moratoriums. Even the moratorium process was initially a paper-driven exercise and very inefficient. But over time, we’ve made the whole process completely paperless and much more efficient, with fewer people at the centre and less inconvenience at every stage of the process.

Managing waste and cost optimization through efficiencies is a huge area for every organization to really understand their supply chain, and see how best they can make that work for them.

I have also seen progressive suppliers getting closer to their customers overseas, and persuading them to invest in the business and become co-owners of the institution, to change the paradigm completely. That has also helped them bring in more capital to the business, strengthen the whole operation, get more done, and have a better overall relationship.

And of course, overall digitization is an extremely important area. It starts with how you’re going to sell your product and collect funds to engage with different aggregators. So you are now beginning to see people buying all their stuff from supermarkets online. It’s a huge change and a lot of companies have been able to really benefit from this. It’s only a mindset change. You start engaging with your customers as the technology is there. The more you work on it and the more mistakes you make, the better you get at it.

There are certain areas where more could have been done. One such area is in terms of visioning. Some industries benefit from an environment that has manufacturing, assembly, import-substitution, IT, technology and education. Many companies that engaged in the simple importing and sale model could have migrated to this environment much earlier, but only a few did.

There is also an opportunity for B2B in this country. We see B2C, but don’t have enough work done on B2B for businesses to connect with businesses using digital.

Manil Jayesinghe, Country Managing Partner of
EY Sri LankaOne might assume that for an apparel exporter, the depreciating rupee is a blessing. But then input costs have been rising and shipping costs have skyrocketed several fold. How has the industry managed and what are the takeaways for others from its example?

Hasitha: Yes, logistics related costs went up significantly, due to shipping issues across the world. There’s also the disruption due to logistical bottlenecks, especially when raw material is imported. If raw materials are not arriving on time in your warehouse for production to commence, there is a much bigger cost that you have to incur due to a lack of raw material availability to run your operations and production lines.

As a result, the lost hours in manufacturing can lead to a much higher cost. So it’s important to manage that angle differently. You might spend a bit extra in terms of logistical costs and pay more to get the goods on time, which is one reason why prices have been skyrocketing.

Another angle is to look at how you can increase your warehousing capability with additional stock, at least when it comes to the imported component of the raw material. As much as possible, opt for localization or digitalization of the raw material sourcing, which definitely helps to manage the situation better in times of logistical bottlenecks and disruptions.

A second aspect I want to touch on is COVID related expenses. In the manufacturing world, this is a huge burden, particularly because of the social distancing requirements that take almost 10% of your capacity, as well as sanitization, masks and other related expenses. There is also a need for social distancing in transport, which means the number of buses and so on increases. This creates a huge disruption to the cost structure.

In order to keep orders going and business flowing, we have looked at hiring up to 15% more workers for each location than would be required under normal circumstances, so that production lines can run at a reasonable scale and operating capacity is maintained even when there is higher absenteeism.

All of these hit the cost structure and overheads will increase. So it’s a question of making a call between increasing the cost structure versus the supply disruption to your customer. At the end of the day, it’s very important to assess that.

Ultimately, the health and safety of your people is the number one priority for any organization. Whilst maintaining that, how do you bring keep customer deliveries and expectations going amid obviously higher costs, which hurt margins in the short term? That’s a decision organizations will have to take, while managing the two areas very consciously and carefully because it’s important to balance that equation.

The third angle in relation to input costs is completely outside the COVID picture, which is to do with cotton – a raw material for our industry. The US banned cotton and related product imports from China, and as a result, there was a significant supply drop globally that led to increased Indian, Pakistani and Indonesian cotton prices, which surged by more than 50% compared to the prior year.

This had a huge impact on the cost structure, although it has not been passed on to customers in the same magnitude, which is a key concern. The answer has been to manage the short-term shocks and keep price movements going.

It is more important to see how productivity improvements can be brought in to offset the impact as much as possible because these are times where the pressure is so high that you’re pushed to a corner to deliver on productivity, and you start thinking out of the box to come up with better solutions.

I also want to highlight that these are extraordinary situations that you cannot handle by maintaining pre-COVID margins. As finance and business leaders, shareholders and stakeholders, we have to recognize how to minimize the implications and still work through a solution that is tailored to our customer, employees and the safety of shareholders returns, and come up with a formula that is acceptable to everybody during these difficult times, so that as an organization, we will be able to survive and achieve sustainable growth.

We have gone through a lot in this country. But we are approaching a situation unlike any before; an economic shock in the form of a possible sovereign debt default. So how should companies plan for this potential massive economic shock?

Dilshan: When it comes to scenario planning, you need to, first, list out what you think are the Black Swan events, and there could be many of them, such as a rating downgrade, food shortages or a social issue. For each of these, start identifying what would be the company’s response in such an environment and then broaden your outlook in terms of how you think, to be able to plan for such a scenario.

You can also lobby as an industry for certain actions to be taken. That’s something we’re not doing enough of; we seem to take things for granted. As professionals, we have a huge role to play, to ensure that our voice is heard in the interest of the industry and company that we represent because ultimately, we need to drive the formal economy.

There is no point in working around a problem. At the end of the day, we need to be true to ourselves as citizens to support the country. That’s where it all starts.

Hasitha Premaratne, Group Finance Director
of Brandix

Develop your alternative scenarios. Every company needs to have a plan of action for the different Black Swan events that could materialize and how they are going to cope with them. You cannot expect the same level of profitability and comfort that you had before. At the end of the day, you owe something to your shareholders and staff, so you need to ensure that you plan to manage that.

Another important consideration is that we need to move out of a handout, welfare mentality. Even from a bank’s perspective, it hurts me when I hear some pressures coming through asking if we should be writing off some of the interest that has been accumulated by industry during the last two years.

We have incorporated that into the bottom line, and the companies have provided for it over the last two years. It’s an obligation that you need to service. So how does a bank help? There are lots of ways we can continue to help in terms of lessening that burden. But whatever investment you have made and the borrowings taken is an obligation that you have to pay back.

We must not move away from those principles, because that kind of mindset can create bigger problems and have a knock-on impact that could be far greater to some industries than others, which can have a ripple effect on the whole economy.

Manil: We keep talking about this problem and I’m not necessarily sure everyone understands it. There are too many moving parts. To start with, even between 2019 and 2020, there was a shortfall in foreign inflows to the tune of about 5 billion dollars. The corresponding figure for 2021 is yet unknown, but it could also be somewhere in that region because tourism lost about 3.5 to 4 billion dollars. Even the garment industry experienced an overall reduction of about a billion rupees last year.

On the import side, although the government is doing some tinkering, health expenditure has increased, especially with vaccination campaigns and the like. But the biggest issue is to do with petroleum, with the trade gap also expanding further as a result. Whereas we may have saved 1.5 billion on petroleum in 2020, that will have gone off the system now and we will have to find the necessary funding.

So in terms of why there is a foreign exchange crisis, we need to realize that there’s been an almost 5 billion reduction in inflows, as well as higher outflows on account of petroleum and so on.

Expenditure on the likes of medicines has also increased. In addition, there are outflows in terms of debt repayments, with another 4 billion due next year. Put all this into the equation and see what happens. This is what’s creating a shortage of foreign exchange. There should have been some extraordinary measures taken to tide over this problem.

Similar to the moratoriums given to businesses, Sri Lanka also needs a moratorium of some sort. But unfortunately, one of the problems is that over the last several years, the bulk of the foreign debt has been in the form of ISBs, whereas previously it was multilateral and bilateral loans whereby you could talk to each country and reschedule the debt. With ISBs, you are talking of internationally traded bonds.

You have to engage in scenario planning but the difficulty I foresee for businesses is that there are so many moving parts. You can’t isolate one event and come up with a strategy, because it has a knock-on effect on various other aspects.

I hope that tourism will quickly get going because it would relieve some part of the problem. There will also be market speculation going forward, with exporters also holding on to dollars. This could result in the country being downgraded, which further aggravates the problem, as we wouldn’t be able to raise money as well. One has to consider that there is quite a number of moving parts.

Historically, there has never been such a problem, and I don’t think we have a strategy to get out of it. People keep talking about whether to go to the IMF, which in itself could come with a lot of bitter pills that our society may not necessarily be ready to swallow. Going to the IMF could be the last course of action, but the powers that be may opt to borrow or do what it takes to plug the gap.

Default is on the cards because payments are falling due and there is no way of renegotiating them unless we say we’re bankrupt and then try to renegotiate with international bond markets.

Businesses should have read these numbers and figured out that this was going to happen. The longer you prolong Covid and its impact on the economy, the bigger the problem. In addition, there are other complications including logistical issues, which make our exports more expensive. The other concern is the delays due to port congestion around the world, along with delays arising from the Suez Canal issue. How businesses navigate through this is going to be the challenge.

We have to make dramatic changes, and this is the best time to relook at and reinvent ourselves, to see if we are doing the right thing or whether we should move and try to navigate this plus strengthen our businesses.

Hasitha: During any crisis, it is important that corporates scrutinize their balance sheets and see how to increase liquidity because during these difficult times, liquidity – or the availability of cash – becomes a major challenge. In a crisis situation, cash is king. The more challenges there are, the more you need to look at how to increase liquidity on the balance sheet with additional cash in the system.

Organizations that have stronger balance sheets may be able to do this better than others. It depends on the level of risk that is taken because if the balance sheet is not strong enough and there is a solvency risk, business risks need to be taken into consideration in a very careful manner. If you are overexposed to additional business risks, you’re bound to face more difficulties, so you will have to pick your battles carefully.

Default is on the cards because payments are falling due and there is no way of renegotiating them unless we say we’re bankrupt and then try to renegotiate with international bond markets. 

On the other hand, a company with a stronger balance sheet might be able to use that to increase their liquidity position and play the game a little differently when it comes to the risk appetite with that additional liquidity in hand.

So it’s about balancing out the risk appetite as an organization, revisiting some of the goals and medium to long-term aspirations, and resetting some of those bases to ensure that you look at the risk appetite differently. Some can take on a higher risk than others. It all depends on how strong your balance sheet is, so that’s something corporates need to look at very consciously.

The second point is to work with stakeholders – with banks, other funding agencies or even shareholders for that matter – to be more transparent and open about where things stand and talk to them regularly. Everybody’s in this together. Whether it’s the bank, the shareholder or any other funding agency, they are going through a similar challenge or different challenges but ultimately moving in a similar direction. So it’s important that you talk to each other transparently, discuss possible options together and come up with solutions.

Collaborations and alliances will be crucial, not only in terms of the supply chain coming together but sometimes also with the competition.

Another important point to highlight is that you need to avoid being overly short term driven. Sometimes, you may take decisions looking at just the short term, which can be detrimental for the long term. You need to think through the implications of decisions and balance and play the implications to ensure that you don’t make a decision to survive for tomorrow, but for the medium to long term.

The times are difficult but we have faced tougher times in the past as well. It’s a matter of being resilient. Sri Lanka is a resilient nation that has come out of so many difficult situations from time to time in a much stronger manner. If we work together on some of these specific aspects by taking calculated risks and with a possible plan to mitigate them, we can definitely come out of this situation.

Moving on to another emerging challenge for companies; is interest rates which are inching up. Internationally too rates are forecast to rise. At the same time, companies are carrying a historical amount of debt on their balance sheets, accumulated over a period of time. In Sri Lanka, a lot of debt came off after economic shocks in 2018-19. 

Paradoxically, companies also have to invest – not thinking of the short term, but to seize opportunities for the long term. How should they mitigate the trifecta of rising rates, huge amounts of debt and the need to invest?

 

Dilshan: From a banker’s perspective, I’ve seen companies that invested optimistically at a time, and then got caught on the wrong foot. As soon as that happened, so many spiralling events took place, such as the constitutional crisis, the Easter Sunday bombing, three phases of COVID, and then some of these customers started investing significantly just before all this happened.

It’s unfortunate. Having more debt on your balance sheet is in reality, not a good thing for a company. You have to manage your debt levels because you’re putting a lot more pressure on earnings when you have high levels of debt. I’m not someone who believes that you can bring in as much debt as you want to your balance sheet, as long as you’re making a positive contribution. That is something that you need to manage carefully. And fortunately, for companies, they’ve been availing of moratoriums now.

If you take our loan book, two years ago, about 25% was on debt moratoriums and 25% of customers were not paying interest on capital. Today, it’s down to 10%. The most recent moratorium that we’re in the midst of right now would probably bring it down further to about 7.5%. This means that business has revived, and that’s a positive sign.

Over a period of two years now, every six months, you’re beginning to see more and more businesses adapting and start servicing debt. Some of them have been availing of only capital moratoriums and some have been doing both. But the worst-case scenario is where I’m talking about the 7.5%. There are many customers who have started servicing the interest and are only availing of capital moratoriums. We are seeing very positive signs in that businesses are beginning to adapt.

Accountants play a big role in terms of productivity.

For us, managing the vaccination process is important. Today, I’m proud to say that at HNB, 95% of our staff over 30 are fully vaccinated, and that’s because of the trackers we have in place. We developed a very simple app, where people just have to update their position, and we then get an image on a daily basis. We follow through at a regional and department level, just to make sure that vaccinations are being carried out. I am confident that 95% of our total staff would have been fully vaccinated by the first week or so of October.

As a finance person, the most important point here is to manage what you measure and have the right trackers in place. How productive are the people who are working from home? You have the technology, but how do you know whether your staff is actually working? How have you changed your operating cadence to ensure you have a way in which to ascertain whether people are actually being productive? How do you bring in those tools and techniques?

In the finance function, how do you move to a cheque-less, paperless environment, driving payments and collections, and linking up with your debtors, creditors, suppliers and customers electronically? Managing that entire supply chain is another extremely important aspect.

Ultimately, you may be able to reduce huge amounts of costs and adapt to an environment like this by using digital technology to manage your businesses more effectively.

Having more debt on your balance sheet is in reality, not a good thing for a company. You have to manage your debt levels because you’re putting a lot more pressure on earnings when you have high levels of debt.

As banks, our survival is reliant on businesses. We are there to support, and we have been very supportive. In the future as well, as we come out of this situation, the optimistic scenario would be that we’ll start taking off in November even in a modest way and hopefully start picking up. Let’s hope there won’t be any more Black Swan events on the COVID front, although the numbers are picking up again in the US.

If conditions were to begin to stabilize and improve, then it’s critical that all businesses start reviving, and managing the debt servicing will have to happen. 80% of our customers have actually been able to revive their businesses. So I have no doubt that eventually, at least 90% of businesses will revive.

There will always be an issue in terms of that 10%, how you manage the impairment and all the challenges; 10% of 25% is still quite significant from a banking perspective. Nevertheless, I’m sure businesses will be far more mature and have learned from all these experiences, to be able to manage services in either scenario and build hybrid models and learn from this pandemic to ensure that they realize that they’ve had a lot of space and whether they are using the space optimally.

Even in a pandemic, there are good learnings that will come from it, and you may emerge stronger, and become more efficient and productive in that journey. Getting back to the point about tracking the right things, being detailed and helping that focus towards execution can play a big role.

 

And finally, your thoughts on ESG (environmental, social and governance) standards becoming important? How does this impact the future of finance? 

 

Manil: We have all these buzzwords, including ESG. Fundamentally, it’s about sustainability. Previously, we felt that sustainability was driven by profitability and if companies made enough profits, sustainability for the future was assured. Today, there are many moving parts, and we now have the environmental, and social and governance components coming into the sustainability equation. So entities should not only be making profits but looking at the impact it has on the environmental and social spheres.

A classic example of social impacts would be with regard to palm oil plantations. If these are introduced in villages where they are not acceptable, there can be consequences. It’s the same with the environment. This year alone, we are experiencing unusual weather patterns including a tremendous amount of rain and storms.

So clearly, these factors have now become very important. Investors are also looking at entities that actually tell the story of how these elements are being managed.

The accounting component requires two aspects. One is that it requires you to track these events or activities. We will have to design processes. As Dilshan mentioned, if you can’t measure it, you can’t manage it. So, the first option is to ask how do we measure the environmental impact? We might be a company that has a lot of waste issues, in which case, how do we reduce the impact of waste on our environment, measure and monitor that?

If you were to consider the whole value chain, accounting is at the heart of it. From your strategy on ESG, to how you convert that strategy into measurable activities, and tracking those activities, measuring them and reporting them is all part of accounting. So accounting has a big role to play in this whole equation while companies move to start embracing the principles of ESG going forward.

The pandemic has shown the world that you can’t only make profits. You have to consider the well-being of staff, have a different dimension and ensure social distancing. Going forward, there may be a situation where we might have to test people regularly. Your workplace environment might be secure, but staff may have to travel through areas that are not in the best condition, and that could be a problem. That’s the social component.

These factors will now come into play and entities will have to start focusing on them. If all entities do so, we as a nation will be a very strong contender but if we don’t and everyone becomes very selfish, that’s a formula for disaster.

Dilshan: The chain is as strong as its weakest link.

Hasitha: This is an area in which increasingly, the consumer and society itself is becoming significantly more aware, and with that awareness comes the pressure for everybody to be responsible, particularly on the environmental side of things. We have seen a lot of investment going into reducing emissions into the air, water and earth; all areas of reductions are coming.

Corporates are taking increasing measures to drive that, particularly in the apparel industry, with solar power becoming a very important piece of the puzzle. At Brandix, we are at almost 20 megawatts of power installed in Sri Lanka. That makes us self-sufficient in terms of our energy requirements in the country, and the Indian operation is doing the same thing. There are many other areas of investment on the environmental, social and governance sides.

For instance, on the social side, we are bringing communities together, working closely with them, particularly during difficult times in the economy amid a rising cost of living and other pressures. It has been a continuous partnership that will strengthen the bonds between organizations and society at large.