THE ROLE OF ACCOUNTING IN AN ORGANISATION Blog 3 | M1: Evaluating the Accounting Function in Meeting Organisational, Stakeholder and Societal Needs A Case Study Reference: Hemas Holdings PLC, Sri Lanka
Introduction: Accounting as a Multi-Dimensional Service Function
The accounting function
has traditionally been conceptualised as a technical discipline concerned with
numbers, ledgers, and financial statements. However, a more nuanced evaluation
reveals that accounting serves a far broader set of purposes — functioning
simultaneously as an organisational management tool, a communication channel
for stakeholders, and a mechanism for societal accountability. Weetman (2019)
argues that the accounting function creates value not just for the entity
preparing financial reports, but for the entire network of parties who depend
on those reports to make informed decisions. This perspective frames accounting
not as an internal administrative activity but as a multi-dimensional service
function that bridges the organisation, its stakeholders, and society at large.
Hemas Holdings PLC, Sri
Lanka's diversified conglomerate operating across Consumer Brands, Healthcare,
and Mobility sectors, provides a compelling case study in how a sophisticated
accounting function can simultaneously serve organisational imperatives, meet
diverse stakeholder expectations, and fulfil broader societal responsibilities.
With a group revenue of Rs. 121.6 billion for FY 2023/24 and operations
spanning multiple countries, Hemas's accounting function must navigate a
complex landscape of competing demands and expectations (Hemas Holdings PLC,
2024a). This blog evaluates how effectively the accounting function at Hemas
fulfils these multifaceted roles, drawing on both theoretical frameworks and
empirical evidence from the company's published reports.
1. Meeting Organisational Needs: Strategic Decision Support and Performance
Management
At the organisational
level, the primary need served by accounting is the provision of financial
intelligence for strategic decision-making and performance management. As
Atrill and McLaney (2018) explain, organisations require financial information
to plan future activities, allocate resources efficiently, monitor performance
against targets, and evaluate the outcomes of strategic choices. Without a
well-functioning accounting system, management would be navigating in the dark
— unable to distinguish profitable from loss-making activities, unable to
identify emerging financial risks, and unable to assess the return on major
capital investments.
At Hemas Holdings, the
accounting function's contribution to organisational decision-making is evident
across multiple dimensions. The group's three-year compound annual growth rate
(CAGR) of 23.5% in revenue up to FY 2023/24 (LankaBIZZ, 2024) reflects a series
of strategic decisions — investments in healthcare infrastructure, expansion of
consumer brand portfolios, and entry into new geographic markets — each of
which was underpinned by financial analysis generated by the accounting
function. The decision to invest Rs. 1.0 billion in a state-of-the-art
Catheterisation Laboratory (CATH Lab) at Hemas Hospitals Wattala (Hemas
Holdings PLC, 2025a) would have required detailed financial modelling,
including projected patient volumes, revenue per procedure, capital cost
recovery timelines, and sensitivity analysis — all core accounting activities.
The accounting function
also supports Hemas's performance management system through segment reporting.
By providing detailed financial data for each of its three main business
segments — Consumer Brands, Healthcare, and Mobility — the accounting function
enables management to evaluate relative performance and make resource
allocation decisions that maximise group-wide value creation. For example, the
Mobility segment's strong performance in FY 2024/25 Q3 — with revenues of Rs.
518.7 million representing 12.6% growth and operating profits increasing by
23.2% (Hemas Holdings PLC, 2024b) — allowed management to identify this segment
as a priority for further investment. Without segment-level accounting data,
such informed allocation decisions would be impossible.
The accounting function
further serves the organisation through budgetary planning and control. Hemas's
Finance Division, working alongside business unit management teams, develops
annual budgets and quarterly forecasts that provide the performance benchmarks
against which actual results are measured. The Enterprise Risk Management (ERM)
framework, within which the accounting function is embedded, ensures that
financial risks — including currency risk, interest rate risk, and liquidity
risk — are systematically identified, quantified, and managed (Hemas Holdings
PLC, 2024b). This integration of accounting with risk management reflects a
mature understanding of the accounting function's role as an organisational
safeguard, not just a reporting mechanism.
2. Meeting Stakeholder Needs: Transparency, Accountability, and Investor
Confidence
The stakeholder
perspective on accounting recognises that the users of financial information
extend well beyond the organisation's internal management team. Freeman's
(1984, cited in Weetman, 2019) stakeholder theory identifies a broad set of
parties — including shareholders, creditors, employees, customers, suppliers,
government bodies, and the broader community — each of whom has legitimate
interests in the organisation's financial performance and position. The
accounting function serves these diverse stakeholders by providing the
financial information they need to fulfil their respective roles and protect
their interests.
For Hemas Holdings PLC,
investor relations represent one of the most visible dimensions of stakeholder
accounting service. As a publicly listed company on the Colombo Stock Exchange,
Hemas is obligated to prepare and publish quarterly interim financial statements
and an annual integrated report that provides shareholders and potential
investors with a comprehensive picture of the group's financial performance,
position, and prospects (Hemas Holdings PLC, 2024a). The rigour and
transparency of Hemas's financial reporting — including its adoption of IFRS S1
and S2 sustainability disclosure standards and its use of double materiality
assessment to determine reporting boundaries — are key factors in maintaining
investor confidence (Hemas Holdings PLC, 2024a).
The creditor perspective
is equally important. Hemas's current ratio for FY 2023/24 was reported at 1.6
times, indicating adequate short-term liquidity (LankaBIZZ, 2024). Total assets
stood at Rs. 93,723 million, with total equity of Rs. 44,120 million, reflecting
a solid net asset position (Hemas Holdings PLC, 2024a). These
accounting-derived metrics are the primary source of information used by
creditors — banks, bond investors, and suppliers — to assess Hemas's
creditworthiness and determine the terms on which they are willing to extend
credit. The accounting function's responsibility to prepare accurate financial
statements is therefore directly linked to the organisation's ability to access
debt financing on favourable terms.
Employees also have a
legitimate stake in the organisation's financial health. While employees are
primarily concerned with job security and remuneration, accounting information
provides the transparency needed to support fair wage negotiations and to give
employees confidence in the organisation's long-term viability. Hemas Holdings
employs approximately 5,380 people across its operations (ZoomInfo, 2024), and
the company's demonstrated financial resilience — including a 43.1% increase in
earnings for FY 2023/24 (Hemas Holdings PLC, 2024a) — provides its workforce
with confidence in the organisation's financial health and employment
stability.
The government and
regulatory bodies represent another critical stakeholder group served by the
accounting function. Accurate tax accounting and compliance with reporting
requirements under the Companies Act No. 7 of 2007 and the Securities and
Exchange Commission Act No. 36 of 1987 ensure that Hemas fulfils its legal
obligations to the state (IFAC, 2024). The government, in turn, relies on
accurate corporate financial reporting to assess tax revenues, monitor economic
activity, and design appropriate policy responses to economic conditions.
3. Meeting Societal Needs: Sustainability, Social Responsibility, and the
Public Interest
The societal dimension of
accounting's role represents the most expansive — and perhaps most contested —
aspect of the accounting function's responsibilities. Society has an interest
in corporations behaving responsibly, contributing to human well-being,
minimising environmental harm, and operating transparently for the benefit of
all stakeholders rather than just shareholders. Increasingly, accounting is
recognised as a key mechanism through which these societal expectations are
operationalised and verified (Seal et al., 2018).
Hemas Holdings' integrated
approach to sustainability reporting exemplifies how the accounting function
can be extended to serve societal needs. The company's Annual Report 2023/24
was prepared in accordance with GRI Standards, aligned with the UN SDGs, and
included sustainability assurance provided by Ernst & Young (Hemas Holdings
PLC, 2024a). This comprehensive sustainability disclosure goes beyond
regulatory requirements to reflect a genuine commitment to societal
accountability, providing communities, civil society organisations, and
environmental advocates with reliable information about the company's social
and environmental impacts.
In the environmental
sphere, the accounting function at Hemas supports measurement and reporting of
key environmental metrics including carbon emissions, water usage, energy
consumption, and plastic waste collection. The group's reported milestone of
collecting over 1.2 million kilogrammes of plastic waste, with 1.8 million kg
collected to date as part of its effort to collect back 100% of plastic sent to
market (Hemas Holdings PLC, 2025b), is a concrete example of environmental
accounting in action. These metrics — quantified, measured, and reported using
accounting principles — provide verifiable evidence of the company's
environmental commitments and performance.
From a social perspective,
Hemas's accounting function supports reporting on community investment,
healthcare access, and education initiatives through the Hemas Outreach
Foundation. The Foundation's 23rd consecutive annual Piyawara Teacher Training
Programme, bringing together 150 teachers for professional development,
represents a social investment whose value — though not captured in traditional
financial statements — is reported as part of the company's broader
accountability framework (Hemas Holdings PLC, 2024b). The accounting function's
role in tracking and verifying these social investments is essential to the
credibility of Hemas's claims of societal contribution.
4. Balancing Competing Needs: Tensions and Trade-offs in the Accounting
Function
A critical evaluation of
the accounting function's role in meeting organisational, stakeholder, and
societal needs must acknowledge that these roles can generate tensions and
trade-offs. The organisation's need for financial performance may sometimes conflict
with societal and environmental expectations. For example, the short-term cost
of environmental compliance may reduce reported earnings, creating tension
between shareholder expectations of profit maximisation and societal
expectations of environmental responsibility.
Hemas Holdings navigates
these tensions through its integrated strategy, which explicitly links
financial performance with sustainability commitments. The company's Strategic
Transition and Adaptation Plan, aligned with its ESG Strategy and Environmental
Agenda 2030, frames sustainability not as a cost but as a source of long-term
competitive advantage and risk mitigation (Hemas Holdings PLC, 2025). This
framing — supported by accounting analysis demonstrating the financial risks
associated with climate change and the business opportunities presented by
sustainability innovation — allows the accounting function to reconcile rather
than merely balance competing demands.
Similarly, the tension
between transparency (serving external stakeholders) and confidentiality
(protecting competitive information) is a constant challenge for the accounting
function. Hemas's accounting function must provide sufficient disclosure to maintain
investor confidence and regulatory compliance, while protecting commercially
sensitive information about pricing strategies, market expansion plans, and
product development pipelines. The accounting standards framework, including
the materiality principle embedded in SLFRS, provides guidance on where this
balance should be struck (Weetman, 2019).
Conclusion
The accounting function at
Hemas Holdings PLC serves a rich and multi-dimensional set of organisational,
stakeholder, and societal needs. At the organisational level, it provides the
financial intelligence that drives strategic decisions and performance management.
For stakeholders — investors, creditors, employees, and government bodies — it
provides the transparent, reliable financial information needed to make
informed decisions and protect legitimate interests. For society, it
increasingly serves as the mechanism through which environmental sustainability
and social responsibility commitments are measured, reported, and verified. The
FY 2024/25 Annual Report's adoption of GRI Standards, IFRS S1 and S2, and UN
SDG alignment represents the culmination of an accounting function that has
evolved well beyond its historical remit to become a genuine multi-stakeholder
service. Evaluated against this expanded set of expectations, the accounting
function at Hemas Holdings demonstrates a sophisticated commitment to holistic
value creation — one that reflects the best contemporary understanding of what
accounting is for.
References
Atrill, P. and McLaney, E. (2018)
Accounting and Finance for Non-Specialists. 11th ed. Harlow: Pearson.
Drury, C. (2015) Management and Cost
Accounting. 9th ed. Cengage Learning.
Hemas Holdings PLC (2024a) Annual
Report 2023/24. Colombo: Hemas Holdings PLC.
Hemas Holdings PLC (2024b) Interim
Report 2024/25 Q3. Colombo: Hemas Holdings PLC.
Hemas Holdings PLC (2025a) Annual
Report 2024/25. Colombo: Hemas Holdings PLC.
Hemas Holdings PLC (2025b) Interim
Report 2025/26 Q1. Colombo: Hemas Holdings PLC.
IFAC (International Federation of
Accountants) (2024) Sri Lanka – Member Country Profile. [Online] Available at:
https://www.ifac.org/about-ifac/membership/profile/sri-lanka [Accessed: 10 May
2026].
LankaBIZZ (2024) Hemas Holdings PLC:
Profitability and Financial Performance for year ended 31st March 2024.
[Online] Available at:
https://lankabizz.net/2024/05/23/hemas-holdings-plc-profitability-and-financial-performance-for-year-ended-31st-march-2024/
[Accessed: 10 May 2026].
Seal, W., Garrison, R. and Noreen, E.
(2018) Management Accounting. 6th ed. Maidenhead: McGraw-Hill.
Weetman, P. (2019) Financial and
Management Accounting: An Introduction. Harlow: Pearson.
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