CGMA: Elevating the Finance Function

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CGMA Presentation at AICPA 2013 CFO Conference

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  • The CGMA recognizes the work you do that goes beyond financial accounting. The CGMA showcases valuable skills and expertise that management accountants do for businesses worldwide. It tells employers that you, the designee, have the competencies, ethics and determination to help businesses succeed.Your CPA tells the world you have the mastery of financial reporting, an understanding of regulations, laws and standards and the technical and analytical skills to do outstanding work. The CGMA, on top of your CPA, further recognizes the work you do that doesn’t fall under the CPA umbrella.With the CGMA, the AICPA and CIMA have created an enormous global community of 180,000+ CGMA colleagues to meet, share challenges and solutions and network, virtually and in-person. The AICPA and CIMA are providing tools, webinars, publications, research—and more—to keep CGMAs at the forefront of the profession.
  • Let’s look at an analogy. Many years ago, a navigator was an important member of the flight crew. The crew now consists of a pilot and copilot.
  • The role of the navigator was to advise the captain, understand the position of the aircraft and avoid hazards. Without a navigator, the captain was flying blind.
  • Technology ultimately made the role of navigator redundant.
  • Over the last several years, finance leadership has driven efficiency and cost reductions in transaction services.
  • Forward looking analysis and business support will help finance drive value for the organization.
  • For most businesses, technology is critical and an enabler. However, analytics many times is backward looking. The finance professional can help the business look forward.
  • Our research shows that currently, the provision of management and operational support services – such as exposing poor performance, actively supporting decision making in the business and supporting product development – absorbs a relatively minor part of the finance function’s resources. The bulk is still dedicated to producing and reporting information. Going forward however, there is a shift with clear evidence that both organisations and finance professionals themselves see the need for an increased allocation of resources and focus on management support and partnering services.This is driven by the strong perception that such activities add value by helping the organisation to perform better through improved decision making.
  • Furthermore, finance professionals also see further incentives in the shift in focus on partnering services. They perceive management support roles as providing better rewards and also a faster careeradvancement route to leadership. CIMA’s globalsurvey has found a high level of agreement tosupport this trend:
  • CGMA: Elevating the Finance Function

    1. 1. CGMA: Elevating theFinance Function GameCFO 2013: The Essential CFOMaximizing opportunities in a rapidly changing environmentSession 202 - Friday May 17, 2013Kenneth Witt, CPA, CGMAAICPA#AICPA_CFO
    2. 2. American Institute of CPAsKenneth W. Witt - BioKenneth W. Witt, CPA, CGMA, serves as Technical Manager in the Business Industry andGovernment team at the American Institute of Certified Public. Ken is the staff liaison to theBusiness & Industry Executive Committee which provides insight and guidance onprofessional issues and trends relevant to AICPA’s members working in business andindustry. Ken also created and manages the AICPA Business & Industry Economic Outlooksurvey, and is involved in a variety of thought leadership and professional developmentactivities for AICPA members and the CGMA designation.Ken received his BBA in accounting from the University of Iowa and started his career withTouche Ross & Co. He has held management positions in audit and control for both publicand privately held companies. He has also consulted to businesses in a wide range ofindustries including manufacturing, distribution, technology, financial services, insurance andreal estate, as well as not-for-profit profit and public institutions.2
    3. 3. American Institute of CPAs
    4. 4. American Institute of CPAsObjectivesTodays session will help participants betterunderstand:• The evolving role of the finance function• What successful finance functions are doing toachieve greater efficiency and increase effectiveness• Barriers to improvement• How CGMA resources can help to “elevate the game”of your own finance function4
    5. 5. Rate your financefunctionOn a scale of 1-5How would you rate yourfinance function in terms of…#AICPA_CFO
    6. 6. American Institute of CPAsRate your finance function #1Data and Systems• Data standards, quality, consistency of data• Standardized chart of accounts and processes• Integrated systemsTransaction Processing• Cost efficient• Quality, continuous improvement6
    7. 7. American Institute of CPAsRate your finance function #2Reporting• Timely, efficient• Management information as well as external reportingInternal Control• Financial Reporting• Compliance• Operations7
    8. 8. American Institute of CPAsRate your finance function #3Staff Capabilities and Development• Technical Skills• Analytical skills and business understanding• Communication, management, leadership skillsOperational Analysis• Across all areas of business model – revenues, expenses,operations, HR, supply chain• Financial and non-financial drivers – market share, customervalue, etc8
    9. 9. American Institute of CPAsRate your finance function #4Decision Support• Forecasting – revenues, cash, operating costs etc.• Capital, other investment appraisal, new business, M&A, etc.Planning• Involvement and utilization of data analysis in processes- Strategic planning- Activity planning – strategic initiatives, performance targets- Financial planning – budgets, forecasts- Capital- Scenario planning and modeling9
    10. 10. American Institute of CPAsRate your finance function #5Leadership and Change• Strategy and performance management• Major decisions• Risk management• New business development• Change managementReputation• Reputation of CFO and senior management• Reputation of finance function as a whole10
    11. 11. American Institute of CPAsRate your finance function - scoringArea ScoreData and SystemsTransaction ProcessingReportingInternal ControlStaff Capabilities and DevelopmentOperational AnalysisDecision SupportPlanningLeadership and ChangeReputationTotal11
    12. 12. American Institute of CPAsRate your finance function - barriersTo what extent do the following serve as barriers tofinance function improvement in your organization?(scale of 1-5)Barriers ScoreTechnology LimitationsCapacity / BandwidthSkills and CapabilitiesOrganization MandateOtherTotal12
    13. 13. Discussion
    14. 14. The changing roleof finance
    15. 15. American Institute of CPAsTechnology drives disruptionThe position of a ‘Navigator’ is now redundant15
    16. 16. American Institute of CPAsThe Navigator….16
    17. 17. American Institute of CPAs…………………………………is redundanttoday17
    18. 18. American Institute of CPAs…replaced by technology18
    19. 19. American Institute of CPAsFinance function has delivered scalebenefitsSharedServiceCentersTechnologySCALEBENEFITSFocus on Process and Technology19
    20. 20. #AICPA_BanksThere is potential to deliver greater businessbenefitsINCREASEDANALYSISBUSINESSSUPPORTREALBUSINESSBENEFITSFocus on People and Organization20
    21. 21. American Institute of CPAsIn business, analytics many times provide a rearview imageDashboards are backward looking and obstructa clear view of the road ahead21
    22. 22. American Institute of CPAsHow a management accountant delivers22
    23. 23. CGMA Researchand Reports23
    24. 24. American Institute of CPAsNew Skills and Fast Track Reports24
    25. 25. American Institute of CPAsBath ResearchCIMA Centre of Excellence at the University of BathSchool of ManagementMore than 2,000 professionals surveyed• Broad range of industries• 1354 in finance function• 871 senior executives – non-financeBusiness demands and finance functionresponsibilitiesComparative analysis• Finance perceptions as providers vs. perceptions of internalcustomersSupplemental interviews25
    26. 26. American Institute of CPAsTop findingsBusiness needs for basic accounting informationbeing well met.However, there is an unmet need for betterinformationMandate exists for greater contribution from financeHowever, workloads limit capacity, and higher levelskills are needed26
    27. 27. American Institute of CPAsPerformance27
    28. 28. American Institute of CPAsAnd RewardThose who undertake management supportactivities are:• 67.1% better remunerated• 66.8% promoted faster• 53.3% more difficult to retain28
    29. 29. The finance functionjourney
    30. 30. American Institute of CPAsGetting a seat at the tableProviding reliable management informationis the basis for accountant’s place at thetable when it comes to performancemanagement and strategic decisions.CGMA Report -New Skills, Existing Talents30
    31. 31. American Institute of CPAsStep 1 - Increasing EfficienciesLeverage technology to reduce costs and free upresourcesStandardize systems and automate processesShared services – in-house or outsource• 49% of companies > 250 employees use shared services• Don’t outsource bad processes• Look for opportunities to task shared service centers with highervalue workFocus on quality and process improvement• Lean / Kaizen• Six Sigma31
    32. 32. American Institute of CPAsStep 2 – Focus on Non-financial value68% of business value is non-financial51% of CEOs said theirorganizations measured non-financial value wellFocus on drivers of:CostRiskValue32
    33. 33. American Institute of CPAsStep 3 – Provide support for operationsThe results do show, however*, that higherperforming organizations, on average placemore responsibility on finance to supportthese decisions.CGMA Report -New Skills, Existing Talents* Correlation evidence - causality is not clear from availabledata33
    34. 34. American Institute of CPAsOperational activities / decisionsSupporting risk and complexity managementContributing actively to operational / performancemanagement decisionsOffering advice and support to decision-makingthroughout the organizationActively developing financial awareness andexpertise where needed in the organizationContributing actively to business portfolio decisions34
    35. 35. Be proactiveProvide forward-lookinginformationHarness the potential ofbusiness intelligence(BI)Embrace greaterresponsibilities in “bigdata”Step 4 – Provide Insight and Foresight35
    36. 36. Step 5 – Influencing Strategy and OperationsAs organizations become bigger and morecomplex, management capabilities need toimprove in stride to ensure performancestandards are maintained and managed inthe best interests of the company.CGMA Report -New Skills, Existing Talents36
    37. 37. Driving cost reduction strategies within finance andthroughout the organizationSetting challenging objectives to ensure thebusiness is run in the long-term interests of itsownersDeveloping and implementing strategyInitiating and leading innovation and changeHelping to ensure remuneration policy supportslong-term value creationLeading the identification and assessment of newbusiness opportunitiesSix Key Strategic Activities37
    38. 38. American Institute of CPAsFacing constraints, finding solutionsMain constraints to finance function and financeprofessionals taking on a broader role:Capacity – current workloadMandate – sometimes not clearSkills Needed• Commercial awareness• Analysis tools• Management skills• Influencing skills38
    39. 39. American Institute of CPAsHow accountants say they should spendtheir time39
    40. 40. American Institute of CPAsAction Plan40
    41. 41. Additional CGMAResources
    42. 42. 424242
    43. 43. Thank you

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