Change: As Necessary as it’s Inevitable

At a state society member event in El Paso, Texas, an older gentleman told me about his daddy that had passed away 53 years ago, and if he were to come back today, he wouldn’t understand very much about the modern world. He wouldn’t understand the phone he had in his pocket, the computer he used every day, or the car he drove. But, he went on to explain, he would understand that times change and we have to let them.

The profound respect this gentleman had for his father continues to resonate with me as does the lesson his father imparted: Change can be scary and intimidating, but it is necessary — and it’s inevitable.

Consider for a moment what happens if we don’t embrace change. Consider Kodak. It didn’t fail because it did not create a product for the digital age. In fact, Kodak invented the first digital camera in 1975. It failed because it didn’t embrace new technology and adapt to a marketplace with new consumer attitudes.

There are many other examples, of course. The point is flexibility and adaptability are integral to remaining relevant. You need to focus on your market, your surroundings, and what your customers need in order to succeed.

That’s what the AICPA and The Chartered Institute of Management Accountants (CIMA) have done with a proposal to create a new accounting association to represent and advocate for the entire accounting profession, while preserving the member bodies of both organizations. The AICPA Board of Directors, governing Council, Business and Industry Executive Committee and Government Performance and Accountability Committee have all endorsed the proposal and 52 state societies have passed resolutions of support. It also has broad support from finance and firm leaders across the profession. Now they’re asking for you to vote ‘yes.’

In the News: CPAs in the Corner Offices Increasingly Concerned about U.S. Economy

Business executives are increasingly less optimistic about the state of the U.S. economy. That’s according to the 3rd Quarter Economic Outlook Survey, a poll of AICPA members serving as CEOs, CFOs and other senior accounting positions.

The survey, which was released late last week, found that respondents who were optimistic dipped below 50 percent--to 48 percent--for the first time since early 2014. The impact of worldwide economic slowdown and domestic regulatory concerns helped fueled this slide.

The CPA Outlook Index -- a comprehensive gauge of executive sentiment within the AICPA survey -- fell one point in the third quarter to 71, the third consecutive drop from a post-recession high of 78 in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment. 

 

How Our Partnership with CIMA Challenged My Thinking and Changed My Perspective

In 2012, the AICPA partnered with the Chartered Institute of Management Accountants (CIMA) to develop the Chartered Global Management Accountant designation. Since launch, more than 150,000 individuals have obtained the designation, making it the most popular management accounting designation worldwide and setting the new standard for global recognition of management accounting.

The joint venture between the AICPA and CIMA provides our organizations, respective leadership teams and employees with a unique opportunity to learn and grow, develop and nurture relationships with interesting and inspiring colleagues, face challenges and step outside of comfort zones from time to time. Additionally, as the relationship between the AICPA and CIMA grows, I’m seeing directly how partnerships allow us to capitalize on each other’s strengths and combine them to serve members—or clients—with excellence.

Strategic Business Skills Are Not Just for the CFO Anymore

A new era of business is dawning as organizations look for finance staff—from the C-suite to entry-level—with a broader mix of competencies that include the application of financial disciplines in the management of the business. Employers are looking for finance professionals with management accounting skills, business skills and the potential to be strategic business partners.

CFOs have plenty to worry about these days—but the one issue that continues to arise is talent. “It’s all about people,” said Nick Araco, CEO of the CFO Alliance in a recent CGMA Magazine article. “Most of the dialogue we’re having is going back to talent, regardless of whether we’re talking about strategy, or capital structures, or regulatory environments, the people side pops into every conversation.” The fact is, there is a shortage of finance professionals with business-partnering skills.

The Secret to Retaining Top Talent? Development

What keeps CFOs up at night? Quite a few things, as it turns out. Increased global competition, the volatile economy, cybersecurity risks and an overwhelming amount of big data—to name a few topics. But it’s another subject which consistently comes up in my conversations with CFOs and other finance leaders, that hits even closer to home: talent. Today’s finance departments have a real need for the right team with the right mix of skills and competencies, not only in accounting, but in business, leadership, communications and other non-financial disciplines.

I’ve spoken to many executives whose organizations don’t have the resources or funding (or neither) to provide the full range of learning opportunities to their employees. According to a study by Deloitte, “Leadership and learning have dramatically increased in importance, but companies seem less capable to address those challenges. While the importance of learning and development quadrupled compared with last year, companies have struggled to redesign the training environment, incorporate new technologies, or employ digital learning tools.”

Learning that’s Ready When You Are, Wherever You Are

Between the demands of the job I love, my travel schedule (hectic even when the flights are hassle-free and on time) and my family commitments, there’s just not much time left in the day. Sound familiar? In our profession, sometimes “free time” seems like a non-existent commodity.

On top of all of this, I’m always looking for opportunities for learning. But when? And with so many great options for CPE coming from so many varied sources, wading through it all can be both daunting and time prohibitive. 

At the airport recently, I had a little time to kill before my flight and thought it would be the perfect opportunity for some CPE. Instead of searching several different sources, I went straight to the new AICPA | CIMA Competency and Learning website.

CPA Outlook Index Finds Increased Optimism for US Economy, Lowered Expectations Elsewhere

The AICPA’s CPA Outlook Index (CPAOI) fell four points in the first quarter, the first time the Index has dropped in more than two years. The Index, which polls chief executive officers, chief financial officers and controllers, found these executives were tempering their expectations for profit, revenue and expansion in the coming year.

Optimism about those key performance indicators still remains high, but the survey found a decline in sentiment since last quarter. The one survey measure to rise from the previous quarter was sentiment about the US economy, which found that 68 percent of respondents are now optimistic about the U.S. economy, a new high for the survey.

Big Data = Big Opportunities

Did you see “Moneyball?” It was a fascinating look at how an underperforming professional baseball team used big data (player stats and figures) and computer-generated analytics to identify and hire high value players who were available at low salaries. To the surprise of everyone, it gave the once hapless team a decidedly competitive advantage on the playing field.

That’s the power of big data.

Today, big data is big news in the global marketplace, as organizations look for their own competitive advantages. Should we be surprised? Big data offers unlimited potential to change the way business is done, for almost any type of company. In a recent CGMA survey, almost nine out of 10 finance professionals agreed the revolution is not only coming, it’s already here.

The CFO Has to Be a Jack-of-All-Trades — and Master of Them, Too

How should up-and-coming CFOs regard their role in the corporate hierarchy? They might do well to think of themselves as “the voice of reason.”

There were many comments about the shifting role of the CFO at the recent World Congress of Accountants 2014. But to me, none rang truer than the quote above, expressed by Carol Calandra, CFO, Global Markets, EY Global.

World Congress of Accountants 2014: Grande Successo!

I’ve just returned from the World Congress of Accountants 2014 in Rome where the CGMA designation, powered by the AICPA and CIMA, served as the imperial and event app sponsor. I can tell you unequivocally, in English as well as Italian, that it was a great success!

WCOA is organized by the International Federation of Accountants and is held every four years. As lead sponsor, the event provided us the ultimate opportunity to showcase the CGMA designation, the US CPA credential, and the AICPA to an audience of nearly 4,000 professional accountants from around the globe.

At WCOA, we launched a series of reports and briefs that explore the latest trends shaping the future of business. Here’s a synopsis of those reports:

How to Pass the CGMA Exam? Practice, Practice, Practice

New Year’s Eve is one of the few holidays celebrated almost universally in countries around the world, with parties, champagne toasts, and fireworks. This year, December 31 will also be a key date for management accounting professionals. That’s because it marks the final day that AICPA voting members who meet relevant experience requirements are exempt from the upcoming CGMA exam.

The exam’s unique strategic case-study format is designed to assess problem-solving skills in real-world business situations and test a broad range of competencies defined as crucial by businesses around the world. Since the case study format is quite different from traditional exam techniques like multiple choice or fill-in-the-blanks, we recently released a practice exam that candidates can use to prepare for the exam.

Laying the Final Bricks of the CGMA Foundation

At launch in 2012, we promised our members and the global employer market that the Chartered Global Management Accountant designation would recognize and support accounting professionals who know how to connect finance to strategy. Backed by the combined resources and reputations of the AICPA and CIMA, CGMAs would be recognized as finance leaders who see across the entire organization to make better business decisions.

In the last few months of 2014 we’ll deliver the fundamental pieces that will help define the profession of management accounting and solidify the CGMA’s position as the premier global management accounting designation.

Ethics, Legality and the Role of the Management Accountant

Ethics is on the agenda at the 2014 World Congress of Accountants this November, a good reminder of the global nature of this subject. Every day, accountants in both business and public practice face challenges that require ethical decision-making. At the same time, they must adapt to a changing regulatory landscape, cooperate with government agencies, and respond to legislation on fraud and corruption.

A solid foundation in ethics helps them prepare for the next critical decision. For AICPA and Chartered Institute of Management Accountants members, that foundation has several layers. Each organization’s members must abide by their respective codes of ethics, and, in many cases, licensed CPAs must also follow the ethical standards required by state boards of accountancy. Additionally, all professional accountants working in public practice or in business are required to follow the International Ethics Standards Board for Accountants’ Code of Ethics.

To help CGMA designation holders navigate ethical issues and respond in a manner that upholds their professional standards, a collection of ethics resources can be found on CGMA.org, including this CGMA video exploring ethical conduct.

Walk the Talk and Break the Desk-bound Habit

Chocolate is actually good for us? A glass of red wine per the doctor’s orders? These are just a few examples of seemingly incompatible matches that come together to deliver the most unexpected benefits. Balancing work commitments and a lifestyle that builds a healthy mind and body can be surprisingly symbiotic.  

There’s no shortage of research reports and studies advising us of the need to exercise regularly.  On the other hand, job responsibilities continue to broaden due to higher performance standards and greater unpredictability in the marketplace.

4 Career Resources for the Management Accountant

There’s no need for media reports to tell us that business has changed more in the last few years than we could ever have imagined. We’ve seen first-hand how our role has moved in new directions, markets have become more competitive and a commitment to learning has risen as a must-have for success. Ironically, along with these challenges are tremendous benefits that have brought us greater leadership opportunities and job satisfaction, stronger team and organizational performance, and the latest in professional development.      

As widespread as these benefits are, attaining them calls for resources designed for today’s business environment and the finance teams that drive it day after day, year after year. Yet, it can be overwhelming choosing from so many leadership and career resources on the market. To help ease the process, here are four recent CGMA releases:

5 Tips for a Culture of Inclusivity

When it comes to success, we often see and hear more well-intentioned plans and how-tos than we could ever use. Websites, blogs, consultants, colleagues and for many of us, our friends and family, all have opinions on what can help businesses stay on course. But what if one of today’s best resources for success is right inside our own companies and it just isn’t being developed as strongly as it needs to be?

I found some great insights into that issue recently when I attended Tomorrow’s Company’s launch of their report, Tomorrow’s Global Leaders: How to Build a Culture that Ensures Women Reach the Top.Tomorrow’s Company is a London-based global think tank that helps guide senior executives in leadership, talent, sustainability, governance and other top management areas.

How Can You Impact the Future of Global Finance?

That’s a question I am constantly asking myself and my staff. Management accounting is more relevant than ever. Forward-looking and externally-facing, it brings structured solutions to unstructured problems.

The AICPA and CIMA believe there is an unmet need for a set of global principles to help organizations gain an integrated view of the business environment. That is why we have developed the Global Management Accounting Principles©, which are open for public consultation until May 10, 2014.

Building a Foundation for the Future of Management Accounting

The strength of the tallest buildings lies within their foundations. As the CGMA designation continues to grow, I’d like to tell you a little about the foundation that makes it so strong. 

The CGMA designation was created to help people and businesses succeed. As we head towards 2015, there are a several major releases from the AICPA and CIMA, culminating in a universal exam in January 2015. These releases are the foundational building blocks of the designation.

Get “Unstuck” in 2014

Like so many of you, I am passionate about both leadership and learning. Recently, the thought struck me that on occasion, my desire for personal and professional growth might actually get in the way of my leadership and learning.

I’m sure you can relate to the feeling of “sprinting to the finish” on various projects. But how often do you really feel like you’ve reached the finish line? Instead, what if we’re actually like hamsters on a wheel, essentially stuck in one place? This was an “ah ha” moment for me—a realization that my logical mind had some trouble laying bare.

CPAs in Business and Industry Optimistic for 2014 Revenue Growth

The end of the year is always a good time to reflect on the past and consider the future. So perhaps it’s no surprise that the latest AICPA Business and Industry Economic Outlook Survey has inspired me to share some of my reflections and thoughts with you.

Thinking back to the fourth quarter of 2012, CPAs in industry were deeply concerned about the economy, especially with the “fiscal cliff” looming large. Fortunately, we had a last minute resolution to the dilemma on December 31, 2012 and concerns about the overall economy and politics abated somewhat in the first half of 2013. Optimism about the US economy improved, and the number of CPAs saying they were optimistic about their companies and having plans to expand also increased.

KC Chiefs’ CFO Has a Winning Game Plan for Management Accounting

I recently watched a new video featuring Dan Crumb, CPA, CGMA and CFO of the NFL Kansas City Chiefs. The video brings to life one of so many unique paths for CGMA designation holders. Dan says that he never thought he’d work for a football team. Now, as the Chiefs’ CFO, he leads finance, IT and the ticket office. His job is to make sure that all systems are functioning 100% of the time so that the Chiefs can focus on football.

Finance’s Vital Role in Managing Organizational Risk

“Accountants have a vital role in translating the impact on the financials in three metrics: operating performance, balance sheet strength, and volatility,” said Gregory Case, President and Chief Executive of Aon at a CGMA event held in partnership with the London think tank Tomorrow’s Company. “The whole role of the accounting profession, the language of finance, is absolutely essential and critical.”

According to a recent article in CGMA Magazine, “the aggregate level of risk to businesses is rising at an unprecedented pace. Cybersecurity challenges threaten businesses and even the stock exchanges where value is traded. Social media’s expanding influence can draw attention to risks, crush reputations and cause investors to flee.”

I’m continuously impressed by how CPA, CGMAs are applying their strengths and knowledge to help organizations adapt and embrace innovation. During our visits to large multi-nationals, we learn how the finance teams in highly successful companies are harnessing innovation. In addition, we invited senior executives to share their experiences at events in Asia, Europe and the Americas. Their insights and our research results are captured in the CGMA report, “Managing Innovation: Harnessing the power of finance.”

Lifelong Learning: The Fuel Driving Value Within an Organization

At the last meeting of the AICPA’s governing Council, I had the pleasure of moderating a panel discussion between three esteemed colleagues--all of whom are CGMA designation holders. Along with Bill Schneider, CPA, CGMA, Deirdre O’Connor, FCMA, CGMA and Ash Noah, CPA, FCMA, CGMA, I spoke about the latest issues affecting management accountants in business and industry--and how the education and experience that lead the earning the CGMA designation, and the continued learning that each of them do, helps them shape their unique, but equally phenomenal careers.

Finance Chiefs Require Broader Skillset for Their Teams

In a recent Financial Times article, Sally Fisher of Deloitte noted that while they are not new skills, “you rarely find in one individual strong technical skills, strong commercial acumen and strong behavioral skills.”

She’s right. Fortunately, CGMA designation holders are a step ahead in satisfying the ever-changing needs of their organizations. In the years of experience and education that led to earning their designations, they have worked to complement their financial skills with the business acumen needed to contribute fact-based analysis and recommendations on a range of topics critical to corporate operations and strategy.

Management accountants have a unique opportunity to step in and act as key advisers to their companies by looking at strategic and operational areas outside of finance.

Global Governments Waging War on Corporate Tax Avoidance

While reading through the Sunday New York Times, I stumbled across an opinion piece on corporate tax avoidance that I think is particularly relevant for business and industry CPAs. In today’s struggling economy, the corporate tax system is a hot button issue both in Washington and around the world. As companies become more global, we as CPAs in industry can continue to add value in this area.

The article, “Who Will Crack the Code?” by David Leonhardt, starts out by talking about the shift in the soda industry from domestic to foreign concentrate production—just one example of a thread that runs through many different industries. Leonhardt notes, “as a result [of moving manufacturing operations overseas], the industry paid a combined corporate income tax rate of only 19.2 percent over the past six years…the average rate for companies in the S&P 500 was 29.1 percent.”

SEC Using XBRL to Flag Reports for Review

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

Not too long ago, I heard Craig M. Lewis, Director and Chief Economist of the Securities and Exchange Commission’s Division of Risk, Strategy and Financial Innovation, give a presentation on the SEC’s new predictive accounting quality model, nicknamed “RoboCop” by the trade press, which will enable the SEC to monitor and flag reports for further review.

What makes AQM so useful, Mr. Lewis said in an interview with Merrill Compliance Solutions, is that, by using XBRL, the tool can be “applied broadly to the entire filer space.” Previous versions of the tool used Compustat data, which did not include all filing companies. With XBRL, 100 percent of filing companies will be analyzed by AQM.

Herz: Financial Reporting Triumphs and Challenges

Were there warning signs of the worldwide financial crisis and global recession?
Could the addiction to off-balance sheet accounting have been stopped?
How could contentious reporting issues have been better resolved?

From the reporting scandals of 2001 and 2002 to the recent global financial crisis and efforts at international convergence of accounting standards, former Financial Accounting Standards Board Chairman Robert Herz discusses critical issues and much more in his new book, Accounting Changes: Chronicles of Convergence, Crisis, and Complexity in Financial Reporting. Herz tells the story from the perspective of his front row seat on many of the major developments affecting accounting and financial reporting during his tenure.

Herz has had a long and distinguished career--as Chairman of FASB, a former senior partner at PricewaterhouseCoopers, a part-time member of the International Accounting Standards Board, an author and someone who has seen the accounting and financial reporting profession develop and grow over the past several decades. In his book, Herz shares his experiences and insight, including the importance of charting and setting a course to improve standard setting when he joined the FASB, making things simpler by rationalizing the structure of the U.S. accounting standard setting, and reorganizing and codifying U.S. GAAP. 

AICPA Insights interviewed Herz on financial reporting’s evolution and his role in it.

U.S. Employer Visits Underway to Promote the CGMA Designation

In his CGMA video interview, Chris Ling, Financial Controller of British Gas, explains well the increasing responsibilities of the finance department and why the function is evolving at such a rapid pace. “The rate at which the business world is changing is forcing everything to change faster,” Ling said. “So it’s our job as finance professionals to make sure we are supporting business as best as we can and as fast as we can.” As the external market drives the pace of change, and as that pace is ever-increasing, the finance function needs to continue to evolve to remain relevant.

Tomorrow's Company and the Ethics of Culture Change

Recently a colleague of mine attended a Tomorrow’s Company lecture in London as a guest of CIMA. Tomorrow’s Company is a London-based think tank that offers lectures and publications on issues like leadership and talent, sustainability and governance. CIMA, as a corporate member of Tomorrow’s Company, sponsors some lectures, as they did on this particular evening. The lecture she attended was given by Dick Olver, Chairman of BAE Systems, one of the world’s largest defense contractors.

Dick’s lecture was titled "A journey of culture change" and centered around his organization’s successful efforts in the area of ethics. With Dick’s appointment as chairman, he ushered in a complete overhaul of the company’s culture. He said, “The culture we’ve tried to develop is one in which our people take the company’s core ethical values into account in every decision they take. One where doing the right thing becomes an almost subconscious response.”

AICPA Advocates for CPAs with Mobile Workforce Legislation

Do you or your employees travel around the country, working in different states and jurisdictions? As I travel around the United States, I hear more and more management accountants lamenting the difficulties associated with interstate operations and the significant regulatory burden with regard to compliance with non-resident state income tax withholding laws.

Currently, there are 41 states that impose a personal income tax on wages and there are many different tax requirements regarding the withholding of income tax of non-residents among those 41 states. While some states offer de minimis thresholds or exemptions before taxes must be withheld and paid, others require only a work appearance in the state before imposing personal income taxes on the employee and withholding requirements on the employer—even for just one day.

CPAs Outlook on U.S. Economy Drops for Third Straight Quarter

Despite the traditional festive mood of the holidays and consumer confidence at a 6-month high, CPAs in business and industry are not impressed.

In fact, CPA financial executives reported their dimmest view of prospects for the U.S. economy since 2011 in the results of the AICPA’s fourth quarter Economic Outlook Survey. Why so sad? The main reasons cited for increased pessimism are the threat of the looming fiscal cliff, combined with concerns over future sales and profitability.

While optimism has declined over the past three quarters, the fourth quarter survey did not include any silver lining as every major measure of economic expectations fell, both quarter over quarter and year over year. 

Does Your Organization Invest in its Employees’ Training and Skills Development?

Organizations around the globe face extraordinary challenges when navigating through the current global economy. To thrive in the long-term, organizations must constantly innovate, evolve and transform.

One of the most critical factors that determines an organization's fate in this environment is the quality of its human capital and the way it manages its talent pipeline.

A recent report from the AICPA and CIMA showed that while most companies understand the importance of human capital, they do not appear to have the right systems, processes and information in place to manage talent effectively. Think about your organization for a minute. Does it invest in training and the development of talent and skills? Or does it view training as a compliance tool?

In the News: CGMAs Can Bridge the Gap in Human Capital Management

David McCann at CFO.com spoke with Arleen Thomas, CPA, CGMA, AICPA SVP of management accounting, about a recent talent management survey for Chartered Global Management Accountants conducted jointly between the AICPA and the Chartered Institute of Management Accountants by the Economist Intelligence Unit. The report found that 43 percent of the CEOs, CFOs and human resource directors surveyed said their companies have missed financial goals in the past 18 months because of inadequacies in human capital management. Almost the same number, 40 percent, indicated that such shortcomings—which could include insufficient systems, processes or management information—have hindered their ability to innovate. “We believe that talent and the human dimension drive business growth and companies haven’t focused enough on that,” said Thomas. “Too many companies look at talent in terms of what they have to do to comply with labor laws and regulations, rather than understanding that it can be a competitive differential.”

In the News: Executives Pessimism Towards Economy Erodes Confidence in Own Organizations

With the announcement yesterday that the Federal Reserve is launching a third quantitative easing in an attempt to generate momentum for the stalling recovery, the economy—and unemployment—are back in the spotlight.

The AICPA’s 3rd quarter Economic Outlook Survey results were released last week, which provided insights into the direction of the economy from 1,365 qualified CPAs who hold leadership positions, such as chief financial officer or controller, in their companies. Their gloom was reflected in last week’s jobs report, which showed the labor market continuing to stagnate and served as one of the reasons behind the Fed’s actions yesterday.

Outlook for the Global Economy Declines in Latest CGMA Forecast

On July 10, the AICPA and CIMA released the results of the most recent CGMA Global Economic Forecast, which showed the world’s CEOs, CFOs and senior management accountants hold an increasingly pessimistic outlook for the global economy over the next 12 months. The shift to a more negative sentiment appears to reflect the worsening of the sovereign and financial crisis in Europe and its effects on other regions, as well as slower growth in China and political and fiscal uncertainty in the U.S.

The CGMA Global Economic Index – a comprehensive gauge of executive sentiment within the Forecast – declined 7 points to 58 from the first quarter 2012 reading of 65. The Index is a composite of 10 equally weighted survey measures on a scale from 0 to 100, with 50 considered neutral and numbers above that signifying positive sentiment.

CPAs: The Startup Community Needs You

There is a joke in Hollywood that no matter what one’s day job is, everyone has a headshot in their back pocket. In business, the back pocket accessory isn’t the headshot—it’s the business plan. The startup community is exploding across the U.S. Whether it’s Silicon Valley, New York City or Detroit, state and local governments are embracing startups and encouraging talent to call their fair city home. According to the Global Entrepreneurship Monitor, there was a 60% increase in startups from 2010 to 2011. But there is one important thing most startups are missing: financial guidance.

You and I know the value a CPA brings to any organization. But many startups don’t. The qualities a CPA possesses—integrity, competence and objectivity—are needed and missing from some startups. Not to mention the financial and business knowledge that makes CPAs trusted business advisers. Recently, a report was released that examined the appointments of accounting and financial experts to audit committees, exploring whether concerns about the status of these experts discouraged companies from appointing them.

Case in point: Groupon.

Creating Social Capital for Not-for-Profit Support

Ask any non-for-profit development director and they will tell you there are two ways to fundraise: 

• Ask 1000 people for $10
• Ask 10 people for $1000

Which is the easier task? In terms of time and resources spent, certainly option B is the easier option. But in terms of broader reach and influence over a large audience, option A is a formidable contender because of something called social capital. Social capital is a concept that points to the power of networks to build a powerful entity, such as support for a cause, political candidate or even a corporate brand.