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THE ICMA- The CFOs Organisation The Institute of Certified Management Accountants (ICMA) is becoming
recognised around the world as the CFO's organisation, due to the large number
of senior professionals that have undertaken its flagship CMA program. The
program is pitched at a master's degree level for senior professionals already
having a basic accounting qualification. The ICMA conducts research in a number
of 'hot topics' and bring members the results of such research via its research
Journal, JAMAR, and its newsletter, On Target. This research is also is
incorporated into its CMA program. The ICMA education committee chairman was
quoted as saying, "We don't teach 'standard costing'; we teach what's
wrong with it and how to fix it!"
Following are a few of the key research issues the ICMA has covered in the
recent past. We are happy to work with members to develop these issues further
:
Open-Book Management
"Open-Book Management" in simple terms is ensuring that all
participants know the "rules" of the game, and know how the
"score" is kept. In most companies, employees are likened to the poor
American who comes to watch an Australian Football ("Footy") game. He
or she is a participant in the overall atmosphere of the game, but his or her
own enjoyment and motivation to keep watching is significantly reduced by not
knowing the rules, what strategies the teams are employing, how to keep the
score, or for that matter, who is winning! Transferring this analogy to an
organisation, if employees do not know the organisation's strategies, or the
measures used to evaluate good and bad performance, then they would have no
idea if the organisation they belong to is doing well or not. The key aspects
of 'open-book management' therefore, is that it is a management approach that:
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Shares a broad array of financial and other information with employees
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Trains employees to become more business literate
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Empowers them to use the information in their work, trusting them as
partners, and
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Rewards them when the company is successful
Empowerment Accounting
Empowerment Accounting extends the philosophies of Open-book Management into
the non-financial arena, in order to empower employees into taking a holistic
approach in creating an "ownership culture". If it is expected that
employees take crucial decisions that affect the company in a "moment of
truth", then they should be made aware of not only the financial impact of
their decisions but also the non-financial, i.e. the overall picture. In order
to provide such information, organisations must provide both past and future
oriented information, both financial and non-financial information, and both
numeric and textual information, and also train their employees on analysing
and interpreting such information.
Jan Carlzon, the President of the Scandinavian Airline System, summarises this
approach excellently as follows:
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Everyone needs to know and feel that he (or she) is needed.
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Everyone wants to be treated as an individual.
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Giving someone the freedom to take responsibility releases resources that
would otherwise remain concealed.
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An individual without information cannot take responsibility; an individual
who is given responsibility cannot help but take responsibility.
(In the next two issues of On Target, we will cover Environmental Reporting;
The Strategic Audit; Fast Closing; Reputation Risk Management; Resource
Consumption Accounting; Throughput Accounting and Lean Accounting)
The Heart of Europe - A Management Accountant's Perspective
They say you can't learn a language properly until you live "in
country". Well having worked in Prague over the last year I am not sure
being "in country" makes any difference, this Western Slavic language is considered truly difficult with
grammar and rules that go well beyond painful and close to unbearable! My
standard excuse is that I have a numbers brain. Anyway, it is fortunate for me
that English is well spoken in the capital and is the language at work,
although my company is German owned, as is my boss.
My role here is "Global Investment Controller", and that mainly
entails all things to do with business cases. This specialist role has really
been one of the most interesting that I could have hoped for and was more good
fortune than good planning! From reviewing and making recommendations to the
CFO and senior management, I landed myself a job supporting the big decisions
that needed to be made. Without any prior experience in IT or with business
cases it was a sink or swim situation at the beginning. Considering I am still
here a year later I think things are going well.
It has been a real eye opener to learn about the Czech Tertiary education
system, which has a number of oddities. The most odd being that final exams can
be taken repeatedly if you are unfortunate enough to pick a hard question out
of the hat! As explained to me by colleagues there are about 20 or so questions
and you pick one at random, you then must orally give an answer to a panel of
Professors. If they don't like your answer then you are told that you should
come back another time. Strangely many of those in finance attend the same
tertiary school the VSE, or High School of Economics. On graduation they end up
being titled as Engineers, denoted with an 'Ing' in front of their names, by
virtue of a 5 year Masters in Economics. As for professional certification the
most popular with colleagues seems to be either CIMA (UK) or ACCA (UK) although
this rush to certification is relatively new. Partly due to the prospect of
earning higher wages as foreign companies recognise these bodies here, and the
ability to now enter the UK to work due to EU membership.
The influence of Communism is evident in business still. There seems to be a
lack of older mentors, bureaucracy is still a major impediment to getting
things done, and back scratching is an institution. A code of ethics as we have
in Australia seems to be lacking. However things are constantly changing and
improving as the transformation from Communism to free market continues. This
transformation is a long and slow process though, with Communism of the mind
hard to wash away. Interestingly, the Communist party here enjoys quite strong
support, around 20%.
Overall, the time spent here has been a great experience and continues to
be. I think there are good opportunities here if you have something to offer,
or invest. But beware the legal system is more complicated than the language,
along with a tax code which seems more complex than our own. When dealing with
the locals it is important to realize that Czechs have a strong and proud
economic history, Czechs are as quick to point out their industrial history as
they are to take you to see the many historical castles. For reasons such as
these it is considered borderline rude to refer to this place as Eastern
Europe, they consider themselves as having always being Central Europeans who
were unfortunately sold out by the British to the Nazi's under the Munich
Treaty in 1938. It took 50 years to get past the ramifications of that but they
seem to be on the rise as things stand.
Matthew Schott, AMA, BA (Adelaide), MCom (Deakin)
Book Shelf
Nobody has told me that they noticed a typographical error in the last
Bookshelf column. I wrote that the 25th percentile of CFO remuneration was over
$30,000 p.a. … Yes, well over $30,000 - that figure should have been
$300,000. Further data emerges in BRW for April 6-12, 2006 (p. 73) which
reports that bonuses in CFO pay packets have increased by 20% in the last 6
months. Importantly, however, the issue of BRW two weeks earlier (March 23-29,
2006) reports that "many CFOs are stuck in the role of number-cruncher.
… Of 60 Australian and N.Z. CFOs surveyed (by IBM Consulting - see below),
63% say they aspire to provide analysis that helps their companies to increase
revenue, but only 47% say they actually do that."
One explanation for this may be the perceptions by other managers of the
ability of CFOs to take a strategic view. In CFO magazine for April 2006, Mike
Hanley ("Losing Pace", pp. 16-28) reports research comparing CFO
remuneration with CEO remuneration: "compared with their CEO bosses, CFOs
are becoming relatively less valuable. … Undoubtedly … due to the short
term focus of CFOs." Indeed, Stephen Moir from Michael Page is quoted as
saying "The role of CFO has … become more compliance focused".
Another article in that issue of CFO supports this conclusion. Bernard
Kellerman ("Evolution of the Number Crunchers, pp. 10-11) reports other
details of the survey by IBM Consulting of 900 CFOs globally: supporting
continuous improvement strategies are seen as less important by the 60
Australian and N.Z. CFOs compared to the global response, while meeting
fiduciary and statutory requirements is seen as more important.
This evidence is consistent with the findings in a cover article of CFO
magazine from a year earlier ("Mahogany Ceiling", April, 2005, pp.
27-37) that CFOs are being excluded from boardrooms: "So many boards are
wanting their CFO to be a visionary person who understands, which is a real
problem."
Of course, another perspective of this problem is educational. Stephen
Dellaportas and others in Accounting & Finance for March 2006 report
research on students' moral reasoning that could explain other outcomes such as
those above. To the extent that accountants employ "rule-based
thinking" they may be unable to progress to higher levels of thinking.
"An increasing emphasis in accounting education on technical compliance or
rule-based learning and less concern with the broader questions … has
resulted in students being trained rather than educated".
For over 10 years, the professional bodies have said they want university
accounting programs to move beyond technical training, but I suspect that too
many accounting academics have, so far, failed to rise to this challenge.
Bill Richardson
What's On?
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April 28-30, 2006- Melbourne, Australia
Advanced Strategic Management Accounting intensive seminar (part 2) accredited
ICMA course at Monash University.
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May 6 to July 22, 2006- Manila, Philippines
CMA Philippines seminars on Advanced Management Accounting and Advanced
Strategic Management Accounting (Batch 7) conducted by Business Sense for ICMA.
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May 12- 16, 2006 - Hong Kong
Advanced Management Accounting seminars conducted by the Institute of
Professional Development for ICMA.
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May 26-28, 2006- Melbourne, Australia
Advanced Management Accounting 3-day seminar conducted by the Australian
Institute of Finance & Management for ICMA.
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May 26-June 5, 2006- Dubai, UAE
Advanced Management Accounting and Advanced Strategic Management Accounting
seminars conducted by cmalebanon for ICMA.
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June 3-10, 2006- Chennai, India
Advanced Management Accounting and Advanced Strategic Management Accounting
seminars conducted by cmaindia for ICMA
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June 8-13, 2006- Colombo, Sri Lanka
Advanced Strategic Management Accounting 4-day seminar conducted by the
Institute of Chartered Accountants of Sri Lanka for ICMA.
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June 17-24, 2006- New Delhi, India
Advanced Management Accounting and Advanced Strategic Management Accounting
seminars conducted by cmaindia for ICMA
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June 22-27, 2006 - Hong Kong
Advanced Strategic Management Accounting seminars conducted by the Institute of
Professional Development for ICMA.
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June 30, 2006
Proposed completion date of merger with IMA, USA.
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August 12 to October 28, 2006
CMA Philippines seminars on Advanced Management Accounting and Advanced
Strategic Management Accounting (Batch 8) conducted by Business Sense for ICMA.
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