Archives For CFOs

“The talent agenda is vital” says Richard Moat FCCA, Chief Financial Officer at Eircom Group and Chair of ACCA’s Accountants for Business Global Forum, in this latest video about the changing role of the CFO.

He adds: “To be an effective business partner, finance people have got to understand the commercial realities of the business – have to have a strong commercial link as well as experience in finance.”

Richard also talks about how managing cost, rather than growth, is a big priority for CFOs today.

The Changing Role of the CFO report explains how the financial and business landscape is changing: greater uncertainty for the global economy, fluctuating energy costs, rises in commodity prices, currency fluctuations, government deficits and cost cutting.

A return to old school?

accapr —  19 February 2013 — Leave a comment

tall building, modern CFO

By Jamie Lyon, head of corporate sector, ACCA

In a recent global survey of finance leaders by the ACCA and IMA (Institute of Management Accountants), there was one stand-out data point of significant interest on the priorities of CFOs. The data suggests an entire balance of different priorities, some of which are entirely consistent with the finance leaders growing mandate, particularly around business insight and risk, while others were more akin to their traditional finance responsibilities; cost management, control and working capital. This isn’t entirely a surprise and is consistent with soundings we get elsewhere across different markets. This is also a probable underlying story of re-adjustment post-crisis.

Pre-crisis, many CFOs were in deal-making mode and, over the last five years, merger and acquisition activity has generally been one-way traffic; it’s only now that we’re starting to see a potential surge. Pre-crisis too there was much talk of the role of finance as a business partner. The partnering agenda and drive for insight hasn’t gone away but there’s a sense post-crisis that most finance departments earn their spurs first and foremost on ensuring the business is effectively controlled, that it meets its regulatory requirements and that it protects and maximises the funds it creates. The crisis brought into focus sharply a refocus on the finance fundamentals, the importance of sufficient liquidity and strong financial control. Part of the rationale here also relates to the broader call out now for business practices that drive long-term sustainable performance.

To this end, CFOs have a tough job on their hands, balancing the need to develop financial strategies that are beneficial over the longer term, knowing most eyes continue to be on quarter-by-quarter results… and that’s no easy call for today’s finance leader.

Check out the full survey results here….

The big picture fades

aksaroya —  28 January 2013 — Leave a comment

By Romano Dzinkowski, economist and business journalist

2012 brought CFOs in the US so much to get to grips with on financial standards and mandatory auditor rotation that precious little headspace was left for strategic direction of business.

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2012 was a tough year for US corporate accountants. With heads down, eyes focused on managing risk, and more often than not buried in compliance and tax issues, there was little room for strategic growth for the finance C-suite. While most CFOs would claim their role is to be a true business partner and a critical forward-looking thinker on the C-level team, last year was full of distractions.

First, the US Financial Accounting Standards Board (FASB) issued up to 15 new exposure drafts (13 at the time of this writing) and seven freshly linked new standards. CFOs were also anxiously awaiting the final revisions to several big memorandum of understanding projects with the FASB and International Accounting Standards Board (IASB) – on financial instruments, impairment, hedge accounting, accounting for macro hedging, leases, and, last but not least, revenue recognition. Many finance folks were busy figuring out exactly what the proposals would mean for them.

Also on the standards agenda, the FASB and newly formed Private Company Council (PCC) proposed a new, simplified framework for modifying US GAAP for private companies. There was much debate on whether what many are calling a two-GAAP system would ultimately be good for corporate America as a whole. That argument continues.

Also in 2012, the coming of International Financial Reporting Standards (IFRS) was again a source of confusion for public company CFOs who would have liked some direction one way or another. An announcement regarding adoption (or not) was expected at the end of 2011, and again in 2012…but none was forthcoming. This has angered many US finance chiefs who would like a heads-up for their planning cycle and have already started going down the IFRS adoption path.

Against the backdrop of a fairly heavy accounting standards agenda came the threat of mandatory auditor rotation in the US, which many CFOs say would make their life much more complicated, not to mention expensive. The Public Company Accounting Oversight Board is now deliberating on what, if anything, it is going to do about changing the rules on mandatory auditor rotation in 2013. Currently, most votes are in the nay camp.

At the same time, COSO – the Committee of Sponsoring Organisations of the Treadway Commission – released a significant update to its original risk management framework, which many SOX 404 filers have adopted. The new model has been criticised for being prohibitively large for all but the bigger public companies with the resources to adopt it. COSO is revising the document; the hope is that the new framework will be ready for CFOs to start implementing in 2013.

So what does it all foreshadow for the role of the CFO this year and beyond? More of the same, says a recent ACCA/IMA study released in October 2012. CFOs, predicts the study, will continue to be challenged by the tug of war between their role as senior strategist and business partner and the ever-increasing demands of greater compliance,control and regulatory complexity.

This post first appeared in Accounting and Business International, January 2013.

Dare to be different

aksaroya —  21 January 2013 — 2 Comments

Errol Oh is executive editor of the The Star

There’s something about the unique mindset of accountants that sets them apart from other professionals – and a slew of recent studies from the profession bear this out.

Graffiti wall

Are accountants a breed apart? Do you need to possess certain characteristics to have a successful career in accountancy? What really goes on in the head of an accountant?

The first two questions are academic; change the profession and you can ask the same about engineers, doctors, salespeople, lawyers, architects, teachers or, yes, even journalists. But there’s a simple way to address the third question, thanks to a number of studies and surveys that pick the brains of CFOs.

Trawl through the findings and you will discover nuggets of insight and uniqueness that suggest that the mindset of accountants indeed different in some aspects. Because CFOs generally understand economics and finance well, they are more sensitive to signs of trouble. It is no surprise, therefore, that the Bank of America Merrill Lynch 2012 CFO Outlook fall update reports that never before has so much weighted on the minds of corporate finance chiefs.

In past installments of this survey of financial executives from large US companies, when respondents are asked to rate their economic and financial concerns, usually only two or three issues have stood out. This time, a majority of CFOs express concern about seven factors – a fact the report puts down to ‘the complexity and frailty of the US economy, as well as uncertainty about the upcoming US elections’ (interviews took place in July 2012).

When the BDO ambition survey 2012 asked more than 1000 CFOs of mid-sized companies planning foreign expansion to name countries that were considered risky to invest in, Greece landed in the top three; Iran heads the list, with 21% identifying it as the most risky for inward investment. The surprise is that the same proportion of respondents – 18% – mentioned Greece and Iraq. Syria and Libya come next, with 17% and 12% respectively.

Meanwhile, in a benchmark analysis of the finance effectiveness of more than 200 companies, PwC highlights some numbers that illustrate accountants’ high expectations. According to the firm’s report, Putting your business on the front foot, 80% of participants say the accuracy of their forecasts is critical to the running of the business, but only 45% believe the outputs are reliable. Over 90% of participants believe they have established governance frameworks to manage risk, but less than a quarter are truly confident that key controls are operating effectively. It is also worth noting that in the PwC-ACCA finance effectiveness survey 2012, which covers companies in Singapore, the majority of participants indicated that there was room for improvement in their risk management and control frameworks.

Is there a difference between government accountants and those in the private sector? To figure this out, a good place to start is Grant Thornton’s report, Charting a course through stormy seas: state financial executives in 2012. When respondents were asked to assess the level of trust and teamwork in their agency, almost half of executives and over a quarter of online respondents selected ‘neutral’. The report describes that as ‘that middle choice that avoided an opinion’. It adds: ‘It is unpleasantly surprising that so many executives could not or would not assess the level of trust and teamwork in their states’.

This post first appeared in Accounting and Business China, January 2013

The accountant in 2022

accapr —  6 December 2012 — Leave a comment

Drivers of changeBy Ng Boon Yew, chair of Accountancy Futures Academy, ACCA

As the Accountancy Futures Academy chair, I am often asked ‘So what does the future look like?’ As a practitioner myself, I think that the accountant that we know today will be different in ten years’ time – but how different?

For starters, the accountancy profession does not operate in isolation and its main challenges will certainly mirror those faced by the global economy. The areas that will impact the profession the most are: trust and reporting (strengthening public image by providing a more transparent, simplified but holistic picture of a firm’s health and prospects), regulatory expectations, standards and practices (a global approach), intelligent systems and big data (exploiting the repositories of big data), and finally, organisational remit (the increasing expectations that CFOs and the finance function should play a far greater role).

So how can a global accounting professional be better prepared to adapt and respond in a decade of uncertainty and rapid change?

As businesses adapt to a turbulent environment, accountants need to take on a far greater organisational remit, from strategy formulation through to defining new business models, the accounting professionals will need to embrace an enlarged strategic and commercial role. At the same time, accountants will need to focus on a holistic view of complexity, risk and performance and establish trust and ethical leadership. There is growing consensus on the need for reporting to provide a firm-wide view of organisational health, performance and prospects and must acknowledge the complexity of modern business and encompass financial and non-financial indicators of a firm’s status and potential.

Accountant’s global orientation, the ability to master the technical, language and cultural challenges of cross-border operations will be in the spotlight as the pace of global expansion of firms from developed and developing markets increases.

Lastly, the profession needs to reinvent the talent pool. The diverse range of demands on the profession is forcing a rethink of everything from recruitment through to training and development. Entrepreneurial spirit, curiosity, creativity and strategic thinking skills could be the key competences in the selection of tomorrow’s accountants.

There are significant uncertainties about how the driving forces will play out but the accountancy profession will need to be nimble enough to adjust and evolve and be able to maintain the balance between entrepreneurism and pursuing the highest standards of financial stewardship.

How certain is this? From my point of view, pretty spot on but only time will tell!