Special Presentat

1. Identifying and Managing
Sources of Business
Growth
Arleen Thomas, CPA, CGMA
Senior Vice President, Management Accounting
American Institute of CPAs
Ashok Noah, CPA, FCMA, CGMA
Vice President, External Relations, Management Accounting
American Institute of CPAs

2. Time for a new
business paradigm?

3. What matters most in this
uncertain world?
 The Human Dimension, including:
 Customer and Supplier Relationships
 Talent Development
 Intellectual Capital
…………this represents a major shift

4. Greatest value coming from
non-financial sources*
* Extent of value provided - % of respondents selecting 8-10 on a scale of 10.

5. EFFECTIVE HUMAN CAPITAL =
COMPETITIVE ADVANTAGE
1/3+
 Over a third of respondents agree:
The ability to effectively attract, retain and deploy the right
talent is THE MAIN competitive advantage for their
organisation.
5

6. Focus on financial
versus non-financial value

7. INADEQUACIES IN HUMAN CAPITAL
DAMAGING THE GROWTH AGENDA
7

8. LACK OF CLARITY IN HUMAN CAPITAL
PERFORMANCE – A MANDATE FOR FINANCE?
8

9. Obstacles to measuring
non-financial value

10. LOTS OF DATA, LITTLE VALUE
 34% of CEOs, and 40% of CFOs, state their firm has a lot of
data in relation to human capital
BUT its usefulness is questioned:
 They also report they do not receive enough data based
insights or analysis to help their firm with human resource
planning.
10

11. HUMAN CAPITAL INSIGHT
Only 12% of CEOs are confident on the
quality of the metrics they receive on
human capital.
11

12. INFORMATION FOR INSIGHT –
BEING PART OF THE SOLUTION
Source: Leading through connections, IBM 12

13. Actions for the
growth agenda

14. 1 Embed human capital strategy within
the overall business strategy
 Develop relevant human capital metrics and KPIs aligned to
support and implement the wider strategy.
 The measurement and performance management of such
metrics to have same level of scrutiny, focus and controls as
other key data, e.g. financials.
14

15. 2 Get the right information and translate
it into actionable insight
Insight is essential for effective decision support
 Human capital data needs to be credible and accurate
 Data needs to be analysed and converted into relevant
management information
 Information needs to be translated to provide actionable
insight.
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16. 3 Leverage the relevant skills to bring credibility
to the data and subsequent actions
 Be clear on responsibility, accountability and ownership for
human capital performance management.
 Finance already has significant mandate to collaborate and
support in this area
 Use the CGMA’s unique skills in uniting financial facts and non-
financial information to provide insight from a base of
independence and objectivity.
16

17. 4 Structure the organisation to encourage
collaboration and partnering
 Foster closer collaboration and communication at the
executive and operation levels
 Structure for closer partnering, especially between finance
and HR
17

18. Working in collaboration to
connect the dots
 CEO’s want people with:
 Strong technical skills in their discipline
 Multi-disciplinary expertise and ability to collaborate
 Skills in management competencies
 Strong strategic understanding of the business as a whole

19. The Finance function –
remaining relevant in a complex
and changing world

20. The core competencies identified in Horizon 2025 remain relevant

21. The emerging gaps
84%
•Of the organizations translate
insights into action better than
industry peers. *
75%
c •Of the CEOs agree that there is a
need to put more emphasis on non-
financial measures.#
75%
•Of CEOs say collaboration is a key
skill for future success. *
67%
•Of CEOs surveyed identified
communication as key skill for
success. *
43%
•CEOs identify lack of management
of Human Capital is an impediment
to achieving financial targets.+
* IBM’s Leading through connections survey of global CEOs
# Rebooting Business: Valuing the human dimension
+ Talent pipeline draining growth – CGMA Report

22. ………………………..AICPAs response
84%
• Of the organizations translate insights into action
better than industry peers. *
75%
• Of the CEOs agree that there is a need to put more
emphasis on non-financial measures.#
75%
• Of CEOs say collaboration is a key skill for future
success. *
67%
• Of CEOs surveyed identified communication as key
skill for success. *
43%
• CEOs identify lack of management of Human Capital is
an impediment to achieving financial targets.+
– Provide qualifications that meet the needs of the business
– Raising finance knowledge for business managers
– Continuing development to provide skills and competencies
– Provide guidance and tools to members
– Ensuring the profession remains relevant to the future

23. Technology drives disruption
The position of a ‘Navigator’ is now redundant

24. The Navigator….
24

25. …………………………………is redundant today
25

26. …replaced by technology
26

27. However analytics still provide a rear view
image
Dashboards are backward looking and obstructs a clear view of the
road ahead

28. Finance function has delivered scale benefits
Shared
SCALE
Service Technology
BENEFITS
Centers
Focus on Process and Technology

29. There is potential to deliver greater business
benefits
REAL
INCREASED BUSINESS
BUSINESS
ANALYSIS SUPPORT
BENEFITS
Focus on People and Organization

30. Management accounting enables the delivery
of these benefits

31. The evidence
31

32. CGMA Report:
Fraud Risk
Management
A guide to good practice

33. Backdrop
 Organizations may be losing as much of 5% of their
annual revenues as a result of fraud.
 Small organizations are disproportionately affected by
fraud.
 A high percentage of frauds are committed by senior
management and executives.
 Fraud perpetrators often work in the finance function.
 Fraud losses are not restricted to a particular sector.
 The prevalence of fraud is increasing in emerging markets.
 Anti-fraud controls help to reduce the cost and duration of
frauds.
33

34. What is fraud?
 Deception to make a personal gain dishonestly for
 oneself and/or create a loss for another
 Examples
 Crimes by individuals against consumers, clients or other
business people (e.g. pyramid trading schemes)
 Employee fraud against employers (payroll fraud)
 Crimes by businesses against investors (financial reporting
fraud)
 Crimes against financial institutions (fraudulent insurance
claims)
 Crimes by individuals or businesses against government (tax
evasion)
 Crimes by professional criminals (money laundering)
 E-crime (phishing, hacking)
34

35. Internal Fraud
35

36. AICPA Forensics and Valuation Services
(FVS) Trend Survey
36

37. Why do people commit fraud?
37

38. Who commits fraud?
38

39. An effective anti-fraud strategy has
four elements…
 Prevention
 Detection
 Response
 Deterrence
39

40. Fraud prevention
 Decrease motive
 Restrict opportunity
 Remove temptation
 Prevention techniques can include:
 Policies, procedures and controls
 Training and fraud awareness
40

41. Fraud prevention
41

42. Developing a sound ethical culture
Key actions that organizations can take to establish a
sound ethical culture are:
 A mission statement that refers to quality, ethics and how the
organization wishes to be seen externally
 Clear policy statements on business ethics and anti-fraud, with
explanations about acceptable behavior in risk prone
circumstances
 A route through which suspected fraud can be reported
 A process of reminders about ethical and fraud policies
 An aggressive risk-based audit process
 Management which is seen to be committed through its
actions
42

43. Key findings – Ethical Culture
Does your organization provide...
 Majority of
organizations have
codes and supporting
infrastructure
43

44. Key findings - Ethical Culture
Does your organization provide...
 There is still room for
improvement in the
infrastructure to
enforce the code of
ethics
44

45. Key findings – Ethical Culture
 The leadership team have a role – but not as high as we’d hope
Who (else) has formal responsibility for ethical standards across your organization?
45

46. Key findings- Ethical Dilemmas
 One third of respondents may feel under pressure from
colleagues or managers to compromise their organizations’
standards
Do you ever feel under pressure from your colleagues or manager to compromise your
organization’s standards of ethical business conduct?
46

47. Key findings – Ethical Dilemmas
Personal Observations
... approximately a quarter have
personally observed conduct that
has violated organizational ethics
standards, policy, or the law in the
last 12 months
47

48. Reporting mechanisms and
whistleblowing
 Reporting mechanisms are a key element of a
prevention program, as well as a detection program
 Organizations should encourage employees to speak
out
 Anti-fraud culture and reporting processes will be a
major influence on potential whistleblowers
 Very important for employers to follow up on all
disclosures
 Provisions should be made for anonymous reporting
 Whistle blowing legislation around the world is complex
and evolving
48

49. Other prevention measures
 Periodic assessment of fraud risk
 Fraud risks should be evaluated in all areas and processes of a
business
 Risks should be assessed in terms of impact and likelihood
 In addition to monetary impact, non-financial factors such as
reputation should be considered
 Fraud risk training and assessment
 Training methods can include formal training sessions, group
meetings, posters, newsletters and intranet content
 Communication should be ongoing
 A combination of methods is usually most successful
 Sound internal controls
 A sound system should address fraud red flag areas
 An ethical culture complements a system of controls
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50. Fraud Detection
 Key elements of a fraud detection system include:
 Exception reporting
 Data mining
 Trend analysis
 Ongoing risk assessments
50

51. Fraud detection methods
51

52. How fraud was uncovered
52

53. Fraud indicators
Warning signs -
Organizational
indicators of fraud risk
Fraud Alerts –
Specific events or red
flags, which may be
indicative of fraud
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54. Tools and Techniques
 Training and experience – the training received by a
management accountant is a very good basis for
implementing an anti-fraud program
 Mindset – that fraud is a possibility
 Analyzing anomalies - computer based controls as a
key area for improving both fraud prevention and
detection over the next two to five years.
54

55. Fraud Response Plan
• Provides procedures for evidence gathering
• Facilitates informed decision-making
• Helps ensure integrity of evidence, which needs to be
admissible in event of legal action
• Reduces tendency to panic
• Helps company maintain market confidence
• Restricts damage and minimize losses
• Adds a level of deterrence
• Lays out roles and responsibilities
55

56. Follow up action
 There are lessons to be learned from every identified
incident of fraud.
 The organization’s willingness to learn from experience is
as important as any other response.
 Large organizations may consider establishing a special
review to examine the fraud with a view to recommending
improvements to systems and procedures.
 Smaller organizations may consider discussing the issues
with some of its more experienced people, with the same
objectives in mind.
 It is important that recommended changes are
implemented promptly.
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57. 16 step fraud prevention plan
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58. CGMA Report Fraud Risk
Management – resources included in
the appendix
 Examples of common types of internal fraud
 Sample fraud policy
 Example fraud risk analysis
 Sample whistle-blowing policy
 16 step fraud prevention plan
 Examples of fraud indicators, risks and controls
 Outline of a fraud response plan
 Example of a fraud response plan
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59. Additional Resources
59

60. Questions

61. Thank You!