Accountants need to move up the value chain

The first session was by the CIMA President on the alliance between CIMA and the CPA. CIMA is the Chartered Insitute of  Management Accountants, and to be honest we had not heard of it. Its a global organisation and Aubrey Joachim, their global president was on hand to present.

The first 5 – 10mins was like ad for CIMA and the benefits for CPA’s for joining up. But after that, it got interesting because he spoke about where management accountants fit in the organisation and where he sees that role heading. The main points that were clear to us is that the role of management accountants is changing from transaction processing  to decision making. That is where management accounting needs to be  more involved.

This is because a lot of these tasks (transactions processing) are being automated and moving into shared service centres such as offshore into India and Philipines. Automation and globalisation is forcing management accountants to move up the value chain and not just provide data/information, but value and insight for decision making. They need to migrate to performance reporting and performance rating, business analytics and modelling for the future. There needs to be a shift from the mentality of “score keepers” on the sideline to “players” on the team. A move from finance competencies to businesss capabilities. An analogy that we really liked as well! These were similar sentiments expressed in an earlier session.

He stressed that this is the significant difference between organisations, given that they have the same resources it is decision making that really sets them apart. Management accountants must still retain the core technical skills and not move too far into strategic areas because this is the role of MBA’s.

One of the key differences between non qualified accountants, MBA’s and qualified accountants was strong ethical and professional standards. For qualified accountants (and we assume he means CPA, ICAA or CIMA qualified), there is recourse to disciplinary boards and members can be stood down.

Five Financial Must-Do’s

The next session we attended was by Don Graham of BusinessNAV. BusinessNAV specialises in providing management and accounting software that deal with sales, marketing, and cashflow metrics. This session was held in one of the smaller rooms and had a roundtable setup. There were like 5 roundtables, and the room had about 80 people.

This session focused on five financial must-do’s facing small to mid market companies. First, we looked at factors in the current environment:

1. Availability of cash – this has severely dried up

2. Credit Policy of financial institutions – which has dramatically changed due to GFC

3. Insolvency Practice – there is a soft underbelly in a lot of businesses which are reliant on the strength of economy.

It was designed to be more of a practical session and he ran through several case studies. The five issues that Business Nav looks at when analysing a business is:

1. Cash flow structure
2. Budgeting
3. Quality
4. Timely
5. Decision making

He mainly concentrated on an example of a services company to illustrate the first two points, which we later found out to be an law firm aggregation model. We were also provided some basic numbers in a cash flow statement and balance sheet. A lot of time went into this example and we simply ran out of time in this session.

So we only covered the first 2 points, the last 3 were rushed. We feel that the time restriction did not do it justice – his session is probably more suited to a few hours or a half day session. Most of the sessions at CPA Congress are meant to be 1 hour – which really is 50mins with 10mins for questions.

One of the examples we were really liked was Norm and his tomato business. Norm had $13million turnover for his tomatoes, as well as coffee and foods business. This business was employing 2,000 people. Norm brought in Don Graham as a financial controller. What set Norm apart from other business that he understood his balance sheet. He wasn’t an accountant but understood the important numbers. Once a week he would sit down with his accountant and ask for the following:

• A list of debtors (people owing money to him)
• Stock – he had a gut feel for how much the operations would cost (transportation, storage, growing, etc..)
• List of creditors (people who he owned money to)
• Bank statement

This would give him a good breakdown and also a top level view of where his business was at financially. If only more business owners did this! One of the biggest problems seems to be that businesses can’t keep control of their costs. They are selling a lot of stuff, but they don’t have a handle on how much it costs to sell that product or service, and how much each sale adds to the bottom line.

Gender Lunch

At lunch, we were treated to another great meal! Who said accountants don’t eat well? We will post up some pictures of the food later. The lunch sessions usually feature a bit of more light hearted topic. The last two were sports and motivation. Which is good, because we don’t think we could take another business or accounting session packed into the day. So its a great way to break up the day.

This particular session had Amanda Gore who spoke about bridging the communication gap between genders. It was very entertaining and interactive, and rather funny. She gave us an understanding how differently men and women think and how men can talk to women and vice versa.  We ended with some exercises where everyone on the table got to hold hands! It was rather strange to see 300+ accountants holding hands. Yes, we have some great pictures of this as well!

She drew up some examples on big notepads on some easels, but this was hard to see as we were sitting up the back. Perhaps this would have been aided by some larger diagrams on the tv screens. But overall, it was fun and it got everyone involved.

Please see our part two here

The Taxabull team is attending the CPA Congress as a guest of CPA Australia.

You can follow us on twitter: twitter.com/austax

Cheers,

Taxabull team

(Note: There were some minor corrections made to “Five Financial Must Do’s” after BusinessNAV contacted us. There were (1) 80 people registered (2) Business name is BusinessNAV and (3) Don Graham was FC not BusinessNAV)