Where to Begin?

A Model for

CPAs in Business & Industry for

Alignment with the Vision

for the CPA Profession in 2011

The following excerpt from Fortune Magazine (November 13, 1995) article entitled, "Super CFOs: They Can’t Jump…" summarizes the emerging role of the CPA in Business & Industry as follows:

"Once glorified bookkeepers, the best chief financial officers are now rounded players who orchestrate mega-deals, fix troubled companies and hatch creative ideas. . . What most distinguishes the super-CFO from the mere scorekeeper is extraordinary versatility. In the past, CFOs were as narrow as the columns in a ledger. They counted the beans and raised the bread, issuing annual reports and crunching numbers on investments proposed by someone else. Today, the great ones are superb managers who, on top of strong financial and deal-making skills, often boast a grasp of operations or a keen sense of strategy. Instead of simply measuring value, today’s CFOs create it."

The July 1999 issue of CFO magazine reflects an attitude shift from CEO’s about the critical characteristics of the CFOs they are seeking. "I can find a financial mechanic anywhere. What I want is a financial ambassador," says Cotelligent’s Lavelle. "The CFO must be a ‘navigator of the business, not just a custodian.’ He or she must help the CEO ‘anticipate the icebergs ahead, and steer clear,’ says Gary Dacamillo." Leading business publications such as Harvard Business Review point to the demand for corporate leadership as a benchmark for management success ("What Makes a Leader?" November-December 1998, page 93). More non-traditional publications, focused on the emerging electronic business environment, are also promoting the changes necessary to meet the challenges of pace and innovation (Wired, "Zen and the Art of Org Charts", December 1998, page 209).

The CPA Vision challenges the CPA in Business & Industry to move up the economic value chain and provide higher value services as we move into the knowledge age. There is pressure to transform finance from the role of scorekeeper to business partner. The globalization of businesses and increasing competitive pressures are forcing CEOs to look to their internal CPAs to help them create economic value – not just calculate and report it. Yet, in spite of these opportunities, many CPAs in business and industry have refused to or are unable to stray from their traditional roles. According to a Business finance and Arthur Andersen Global Best Practices Survey in 1998, the majority of finance executives still spend most of their time directing and coordinating general accounting transactions, initiating and maintaining internal controls, preparing management reports, and managing accounting employees.

The fact is that many CPAs in Business & Industry are also operating under the severe pressures to leverage technology to reduce the costs of the corporate accounting function to their enterprise. This constant pressure to do more with less creates a downward spiral – the potential efficiencies often aren’t able to add enough value to the organization. The CPA Vision suggests that the CPA focus instead on the upper end of the value chain – developing non-financial performance metrics, developing shared services, outsourcing low-value functions, managing business and financial risk, and helping the business managers generate value and monitor performance. How do you make the transition from scorekeeper to business partner? This guide is intended to help you take this journey, to develop your own personal vision of how you can leverage the CPA Vision to transform your career.

CPAs must examine all aspects of their working lives to remove barriers that prevent change from being effective. To minimize the risk and stress of change, CPAs must actively manage the process of change. The Change Wheel identifies the key navigation points for aligning an organization to meet the demands of change and to successfully reach the Vision.

The finance department of the future must be focused on generating value and helping the business achieve its strategic business objectives. Instead of just being the recorder and reporter, The finance department of the future must become the natural leader in finding the key measures that drive strategic-decision making in their organizations. The CPA must be able to understand the broad business environment and the economics of the business unit, then work to develop systems that support the businesses objectives. The CPA in Business and Industry must be able to apply best practices to improve performance, understand the new management accounting theories and tools that can help the business (activity-based costing, economic value-added, balanced scorecard, etc.). For a more in-depth understanding see the Center for Excellence in Financial Management (http://www.aicpa.org/cefm/index.htm).

The value streams, culture, structures, people and systems for organizations must be aligned to produce efficiencies and generate economic value, and enable the business to meet its strategic business objectives.

There are a variety of issues that must be considered in order to bring the finance or accounting department into effective alignment with the vision for the profession’s future. Here are a few that need to be considered. The list is not comprehensive, but will give any organization some starting points to consider. Recognize that the CPA in Business & Industry will need to make an investment in "down time" to consider these issues. Initial efforts may be uncomfortable, but with practice will lead to geometric improvements in value-created by the finance department.

1. Chart the organization’s strategy against the economic platforms and identify their existing level of competition . (See sample attached). Does the organization have a strategy to move up to a higher economic platform (from value chain to market or from market to industry)?
2. What is the competitive landscape in which the organization is operating?

• How can the organization expand into new markets or new services and products?
• How does the organization create value for its customers?
• Who are the biggest competitors? Are there any non-traditional competitors on the horizon?
• What are the threats and opportunities within your current marketplace and the global marketplace, now and in the next five years?

3. Chart the finance/accounting department’s product and service mix against the economic platforms and decide how and who will move into the next level of service from their existing level of service delivery.
4. Are you meeting the needs of your internal customers?

• Identify the critical characteristics and issues for your internal customers. For example:
• Top issues facing them
• Most critical bench-marking data and statistics
• Most pressing problem (from their perspective)
• What information do they use to make decisions (non-financial and financial)?
• What value do you add to them and how can you add more value?

5. What is the language game currently being used with internal and external customers? For example, do you talk about "things" and "problems" rather than strategy and direction, current and historical problems or future goals? How can you shift the language and topic to more strategic directions, which will encourage strategic perspective to management and employees or customers?
6. What investment in technology will create a more strategic view of the business? Do existing legacy systems provide "early warning systems" or are they primarily historical?
7. Have you benchmarked your department against market and industry leaders? Are you a best of class finance department?
8. Does the management team consider you a business partner or scorekeeper? Why? (See CFO magazine, July 1999, "What CEOs Want", page 45).
9. Does the finance department view their jobs as customer service or just "support" or "overhead" functions? Have you ever surveyed your internal and external customers to rate their satisfaction with your services?
10. How would the CEO or line managers describe you and your department? Rigid or flexible? Historical or future-focused? Strategic or operational?

Remind yourself of what you LOVE doing with or for your organization and do more of it with real passion. Figure out how to eliminate or minimize things you don’t like to do. Creativity comes more naturally when you do what you LOVE to do.

1. Does the organization have a clear vision of what it is, where it is going, and how to get there? Could anyone besides the executives describe the plan or the vision? Ask these questions for the organization and for the finance function or department.
2. Does the organizational culture reward or penalize creativity and out-of-the-box thinking? Do employees think of their financial "products and services" as that, or simply as a function to be performed? Is there a budget for "research and development" of new markets and products or services for the organization and for the finance department? Once identified, is there reward or encouragement for the development and sharing of tools and techniques for providing new services and products to both internal and external customers?

• Acid test: Ask the employees how they perceive the "cultural support" for these new activities and responsibilities. Identify the problems they perceive and then determine how to eliminate the roadblocks.

3. Does the culture encourage the concept of exploring new products and services, or does it reward compliance with old scorekeeper, traffic cop paradigms?
4. Does the organization capitalize on the talents, skills and diversity of thought and perception represented within the range of employees, or are employees expected to perform and work "alike" – adapting to the organizational culture?
5. Does the culture nurture and support a clear set of values held by the organization? How are these values reinforced and transmitted to new employees? Can the employees articulate the value set of the organization? Ask these same questions in light of the CPA profession’s values. If there are variances, are they appropriate?

1. Does the organization’s structure support its strategic vision?
2. Does the organization’s structure allow for the involvement of support functions with the business or operations groups?
3. Does the structure encourage and support individual empowerment and cooperative teamwork to service internal and external customers?
4. Does the structure encourage and support good, smooth, and regular communication internally and externally?
5. Does the structure allow meaningful delegation of reasonable authority to those charged with delivery of the work product or service?
6. Does the structure encourage or discourage communication, dialogue, insight and sharing with all employees of the organization and division or department?
7. Does the structure support continuing education and training to deliver best practice level services? For example, are employees currently trained in the best communications, leadership, marketing and human relationship skills to accomplish the expectations of their position?
8. Would the structure allow for systemic, virtual systems and employment for service delivery? Does the finance department have the ability to deal with strategic alliances and non-traditional vendor relationships? What would have to change to allow these non-traditional arrangements and alliances?
9. Does the structure allow meaningful contributions from all levels to flow and be acted upon?
10. Is the structure designed to encourage measurement of performance against long-term vision and strategy goals of the organization, or is it focused on short-term and immediate results?

1. Does the finance/accounting department have the skill sets to deliver the competencies and services that the marketplace is demanding (See the New Finance, http://www.aicpa.org/cefm/finance.htm). Will the organization give permission for this expanded role? If not, what needs to be done to expand the awareness of the value of these new services, competencies and skills?
2. How will the organization re-train existing employees to deliver? Is there a plan to examine the existing balance, and then determine training needs for the organization as a whole? Has the organization developed a strategy for re-training versus recruiting? Has this been communicated to the individuals doing the actual hiring?
3. Are there opportunities for non-traditional employment arrangements that may fill needs within the department (virtual employees, strategic alliances, networking groups)?
4. What can the organization do to begin to demonstrate both internally and externally, the capabilities and unique talents of individual organization employees? Are there opportunities for cross-training from within the organization?
5. How can the organization train employees and set appropriate guidelines to deal with risk management and risk tolerance to meet the realities of today’s business environment?
6. What can the organization do to encourage leadership, individual empowerment, and decision making among its employees? How can you showcase these strengths to customers and internally to other employees?
7. What message and action can the organization take that encourages employees focus to "value-add", solutions and an out-come or results orientation rather than the "it isn’t my job" or "I’m too busy" perspectives?
8. What opportunities and education can management employees undertake that will encourage strategic thinking and strategic customer orientation rather than a procedural/production focus and orientation?
9. What does the organization do to encourage quality of life in the employees? What examples does the management set? What is the best activity to increase morale and instill a sense of passion, reward and even fun into daily working environments?

1. Do reward systems empower and reward in proportion to the contribution? Do they recognize complexity and value-add?
2. Are the financial, billing and collection systems benchmarked to produce the highest value and return for the organization’s invested resource (in both physical and human resources)?
3. Does the financial, billing and collection systems emphasize and "show-case" value-add to the customer?
4. Will the financial, billing and collection systems handle non-traditional sales or marketing arrangements?
5. Do the organizations systems encourage focus on value or production? What message does the financial measurement and reporting systems send to customers and employees? Is there an opportunity to reconsider additional or revised measurements that will reshape employee perceptions of their role in the organization’s success and strategic future?
6. Does the billing system connect the customer to any value beyond production (ease of use, satisfaction, warranty, etc.)?

1. Does the technology system support paperless efficiency, transportability, cross-application data interface, electronic communication and commerce, and good in-organization communication and collaboration?
2. Is new technology introduced regularly with appropriate training to maximize use?
3. Do the employees feel comfortable with "technology language" that customers or management may use?
4. Does technology encourage and support virtual work? For example: cell phones, voice mail, e-mail, dial-up networking, intra-nets, extra-nets, laptops, virtual assistants.
5. Is technology preventing the organization from competing in the marketplace? What does the organization need to do to overcome this?
6. Do all employees have effective and real-time access to the Web and e-mail?

1. What does the office space/location, furnishings, and technology interface (e-mail, web page, voice mail, virtual assistant) say about the organization and its capabilities and working style?
2. What does the organization’s letterhead, business cards and customer newsletter or other external communication say about the organization’s image, techno-savvy, business savvy, and business posture? Are all the options for communicating with the organization clearly identified (e-mail addresses, web page, cell phone numbers, etc.)?
3. Does the organization’s communication system position the organization to "sell" or "market" your services and organization (value-add components)?
4. What can or should you be saying about your capabilities that your customers and prospects don’t know, or would be surprised to know about you or your organization?
5. If you have a organization niche, how are you working and promoting the niche? Do you have a communication system that could provide a specialized newsletter? Does the communication system encourage marketing techniques such as an annual briefing on economic trends in the niche area, or even the economic environment of the state, region or country?
6. How are the organization’s internal communications encouraged, empowered, and supported?
7. What is the language of employees meetings? Does it center on details and problems or does it focus on strategies, solutions, networking opportunities and contributions?

1. Are reward, salary and benefits systems competitive for the marketplace environment and commensurate with the expectations for skills and productivity?
2. Are appropriate training and education systems in place to ensure that employees have the requisite skills to meet market demands and management expectations? Is there an overall review of the skill inventory of organization personnel to determine the need for expanded skills and to avoid duplication of training at an inappropriate level?
3. Is there a mentoring program available and functional that is producing good results for both the employees and the organization?
4. Are employees empowered with appropriate tools, training and authority to deliver on the expectations being made of them?

1. Is there a system or process to encourage introduction of new products or services in a way that ensures reasonable success? For example: checklists to determine best options for expanding products/services; trial of a new product/service, feedback loop and team evaluation to see why the introduction might have succeeded or failed, training and roll-out with additional employees to identify cross-selling opportunities and characteristics. Is there a clear and understood or communicated line to senior management responsible for development of new products and services?
2. Is there a system to eliminate or phase-out less profitable products and services, or automate them to lead to more profitable, higher value services? Who is responsible? Is there a regular timeframe for review against current and emerging global marketplace trends and competitors.
3. Is there a system that encourages regular review of product/service lines to determine where to focus organization resources for highest profit and best use of organization resources?
4. Is there an obvious and acknowledged system that employees can use to more effectively manage workload (additional staffing resources, technology solutions, etc.)?
5. Do you have an audit process to keep vendors on schedule with their portion of work-in-process? Are their penalties for vendor’s failure to perform and rewards for cooperation and timeliness?
6. If the vendor were a new employee, how would you "train" them to know how to work successfully with the organization? Have you given the vendor a reason to help you help them?
7. Do you have a work-in-process payment plan for vendors to encourage timely delivery and healthy competition? Consider building in bonuses for vendors and employees for exceptional performance.
8. Is the information technology system automated and integrated to create value and provide significant insight into customer needs and cross-selling opportunities? Is this available to those who are in touch with the customer at all levels?
9. Is the organization’s record retention system automated and electronic to allow easy and less costly retrieval and identification of customers with common problems or follow-up needs? Can this be used as an early warning system for potential recall issues or to provide warranty information?

Overall:

1. What are the bottlenecks and roadblocks in the systems from top to bottom that take more time and resource than they add value to the overall equation? Look carefully at systems, procedures and measure cost versus "value-add". Take into account what the measurement process is doing to shape employee and senior management focus and the perception of the corporate culture, value systems and strategic direction.
2. Are systems aligned with one another so that there is a cohesive result, or are systems "borrowed" and "patched" from other organizations or previous management?

This variation of the Virtual Consulting Inc.’s Economic Platforms model shows how work is performed by the level of difficulty of the task. The higher the level of work, the more sophistication, decision-making and strategic thinking is required. While focused on traditional roles, the model holds for finance department specialization in the non-practice environment.

The future of the profession rests in services from levels IV and above. Products and services in levels I-III become part of the commodity world and are ruled by "faster, better and cheaper". If CPAs provide services at levels I-III, they must be prepared to compete with automation, technology and other providers of services who are seeking to deliver in the "faster, better and cheaper" selling mode.

See Page 22, CPA Vision Project Final Report, 2011 and Beyond, "Moving Up the Economic Value Chain" for more information.

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