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— To comment on this episode or suggest an idea for another episode, contact Neil Amato at [email protected].


Neil Amato: What does CFO mean? As a listener to this podcast, you probably know the answer. But this next installment expands on the traditional meaning and role of the CFO. Here is Neil Amato with the Accounting review. After this brief sponsor message, you’ll hear a conversation about a financial leadership opportunity, a group of brand business leaders working together, and more.

Amato: Welcome to the accounting journal podcast. I’m joined again by Tom Hood, a name this audience most certainly knows. But for those who don’t, Tom is a CPA who holds the CGMA designation. He’s a colleague of mine, and he’s the executive vice president of business growth and engagement for AICPA and CIMA. Tom, as I said, you’re a regular guest on the podcast, and today we get a mid-summer update from you on a few of your areas of interest.

The first thing I want to touch on is the Financial Leadership Program and a webinar you have coming up. First, this webinar will take place on Thursday, July 28. We will include a link to this webinar in the show notes for this episode. But tell me something about this webinar, and for those who don’t know what the Financial Leadership Program or FLP is, what should they know?

Hood: We call it the 411 Financial Leadership Program. It’s with my colleague Barry Payne, and together we’re going to go through what I think is a great opportunity for CPAs to think about how they can earn that CGMA designation. But more importantly, the essential skills that come with it.

First, let me start for CPAs in the public. The FLP is our financial leadership program. It’s case-based online learning, which means it’s about scenarios and real-life things. Instead of being like a multiple choice test, it’s literally a case study test. You actually apply the learning to real scenarios. Here’s what that means. It’s in three tiers, and we’re going to go to the webinar to get it all.

But for a CPA who has the CPA license, he only has to do the higher level called the strategic level, and which covers certain essential skills in strategic finance, which all large companies tell us they need. Including things like project management, strategic thinking, scenario analysis, all the things that are really useful in today’s crazy environment. This will give them all the context on how to do it, and they can register and go straight to this strategic case study and take some of the learning, then take the exam and qualify.

Amato: Continuing on the theme of skills and strategy, I would say that one of the other things you emphasize is the future of finance group, in particular the future of finance leadership advisory group . Now, one of the members, I guess, of that group is Rita Karachun, who is CPA and CGMA, and senior vice president and global controller for Merck.

You recently had a video chat with her. She shared, I think, some of the key people in the group, which are accountants as valuable partners. First, explain what you might mean by valuable partners and some of the highlights of your recent conversation with Rita.

Hood: Yeah. Rita has been instrumental in this whole effort with our Future of Finance. We have about 40 CFOs from major companies, global controllers from well-known companies, including Merck where Rita is. We’ve got Nike, we’ve got Verizon, IBM, just a few extremely well-known brands, and this group has reinvented like, what does finance look like coming out of this pandemic? In fact, we have a name. We call him instead of CFO, think of it as the future CEO.

Neil, it’s this shift from what we would call a rear-view mirror to a windshield view, obviously accelerated by the pandemic. That’s when we saw the CFO and controllers really stepping into this high-value partnership role. Because instantly the company said what was going to happen next week? What is the impact of this pandemic? This kind of things. They had to switch to a mode of forecasting and projection like never before. In fact, one of the stats is 30 times higher than any time before the pandemic that they were actually indulging in it.

With Rita we started talking about what that means, then how important is a CPA/CGMA in a big company like Merck? I like what she said because she really underscored the importance of the CPA foundation in understanding accounting numbers at a very deep level. One of his statements is that a CPA can learn finance much better than a financier can learn accounting. Now what she means by that is that you have to understand where the numbers come from, good solid integrity and understand the reliability of those numbers.

A financial person understands concepts related to accounting, but the CPA accountant literally understands where they come from in the general ledger and the whole transaction layer. Although you don’t have to get into that transaction layer – it’s getting more automated – understanding the heart of it, and how to tell if the numbers are correct and what to do if you think there’s something wrong not. It’s a basic skill that she highlights in this interview.

Amato: There are a few points of emphasis for the group in particular. What are some of the ones you would like to highlight from the work done by the Advisory Group on Leadership for the Future of Finance?

Hood: A number of things. First of all, we have always followed these main issues. The major new issues, Neil, at this point in the last two months are no surprise, inflation, the risk of recession and the war in Ukraine, and the impact on supply chains, and all of those things. These are the priorities.

What that means, by the way, is that all the projections that were going down when we were coming out of the pandemic are now coming back because now the CEO is saying, well, what’s up with the inflation in our balance sheet, our income statement and our cash flow? And after? We are now seeing CFOs and controllers being asked to do more cash flow projections. They are asked to look at the balance sheet much more than the income statement, looking at accounts receivable and inventory. This is a big thing coming out right now, everyone should pay attention to it.

But in addition, we are working on what we call the Financial Maturity Model to help them assess where their organization stands against best practices in financial transformation. It covers about six dimensions of financial operation and places it in about five levels to see where would you go to be absolutely the best practice and mark where you are at. This group has been working on it for a few months. We hope to have it probably next month, and we’ll post it for everyone to see. This is another big problem.

But probably the other important thing is that the band has been extremely generous with their time to tell all of our members about it. We made several presentations. [At] ENGAGE we had some of our future finance people there. We had Denise Dettingmeijer from Randstad, we had Joe Radziewicz from Stanley Black & Decker and Azhar Syed, former CFO of Tetra Pak.

These three helped us speak to this incredible group, which actually included many practitioners in client accounting services. This is the first time, Neil, that we’ve seen a crossover with public accounting and our CFO audience to talk about these fundamental issues. In fact, they are very similar, so the whole work on the future of finance resonated strongly with this audience.

We also had several of our members in Boston at a major CFO conference. We had Don Tomoff from Invenio Advisors and John Regan from Swiss Re on a panel there, again, talking to the middle market about what our job is, and all of those messages resonate. Surprising. Yelp’s James Miln joined a few of our other AICPA members at the ESG Symposium in New York.

What’s cool is thinking about those key things, value partners are working where we started. ESG – our group does not consider this to be compliance. Yes, it is essential. But as a step, wait for the CFO to add value to the organization. We really look at the levers of value creation. They think about it in a much larger context than just following the latest rules. This is another key theme that you see from our group.

Amato: Of course, this group will continue to meet as it continues to develop the financial maturity model. But I assume there is an in-person meeting plan for a tie-in with the Digital CPA event in Austin in early December?

Hood: To correct. This will be our second Future of Finance Summit, where we will bring this group together and continue to evolve, all the work necessary to really position ourselves as a director of value or director of the future. These are the big ideas that come out of it. The other part, say, so think about our themes. It will be the financial transformation that will clearly equip us with the skills we need for the future.

Then the third big theme is this idea of ​​value creation, the value partnership. ESG is a gateway to what we think of as the intangibles we have to deal with, and that’s largely the result of the work we’ve done at the AICPA with the Value Reporting Foundation. This is another example of the future of finance.

Then one last point that I would like the public to know is that if you think about ESG, our group took the S as social, which it is, and said what we’re trying to do in the initiatives DEI with finance around our Registered Learning Program. We will also put a link to this in the show notes. But we’re really excited about it, and you’ll hear more in the future as we move forward.

Amato: Yes exactly. We had Joanne Fiore on an episode earlier in the year to talk about this recorded learning program. I had planned to follow up with her for a future, and thank you for the update on that and how it all ties into some of the initiatives that are going on. Tom, do you have anything to say to wrap up this summer update?

Hood: I just have to continually thank our Leadership Advisory Group for the Future of Finance. Because not only do we stand on their shoulders to create all of this, but they actively help us get out to market, talk about it and participate in presentations. I just heard that they want us to come to the AICPA Board and present there in October, so some very exciting stuff.

Amato: Yeah. Again, FLP webinar Thursday July 28th. This episode will give you about two days notice to sign up and hear Tom give you the 411 on the Financial Leadership Program. Tom, thank you very much.