'Future-Proofing' the CFO, Finance and Accounting

The big news last week was the implosion of the US$35-billion “merger of equals” between the world’s second- and third-largest advertising agencies, Omnicom of the US and Publicis of France. The sticking point: Neither company wanted to compromise on who will be the CFO of the combined entity, with each CEO insisting that his own finance chief become the CFO.
 
It’s just the latest example of how central the post of the CFO has become in today’s business world. Globally, the CFO’s remit has expanded far beyond financials to strategy, business partnering, risk and governance, says Helen Brand, Chief Executive of ACCA (the Association of Chartered Certified Accountants).
 
“There’s no doubt that there is more pressure to support that strategic piece, and to be the person providing the broad strategic information"
 
Brand discussed the on-going evolution of the finance function in Asia and elsewhere in the world, including the stronger emphasis on ethics and how professional qualifications like the ACCA are helping push the process forward. Edited excerpts:
 
In the West, the CFO has become a key player in the business for some time now, instead of just concerned with accounting and reporting. Is the same thing happening here in Asia?
The role of the CFO certainly is evolving. We do extensive research jointly with the Institute of Management Accountants (IMA) in the US, specifically on the CFO space. We look at what’s happening in Asia, we look at Europe, Africa, North America. The role of the CFO is changing.
 
There is still an expectation on the core function around the figures, finance and compliance. But there’s no doubt that there is more pressure to support that strategic piece, and be the person providing the broad strategic information, which may be financial and non-financial, in terms of the future of the organization.
 
Since the global financial crisis, there has also been an emphasis on being what you might call the ethical guardian of the organization – so risk, governance, ethics, those types of issues. The CEO will very often rely on the CFO to ensure that the organization is culturally aligning itself with those kinds of issues.
 
The 2008 global financial crisis is becoming a memory now. Won’t people forget about these ethical and governance issues?
There’s a danger of that. That’s why professional qualifications are so important, such as the ACCA, because that’s a lifelong commitment to an ethical code and you are bound by that in your daily work and life.
 
Our members are not there to serve merely the interest of their client or employer. There is also the public interest and that is what the ethical code tries to do. Ethics should become an embedded cultural aspect of an organization. That is why professionally qualified accountants are important in this process.
 
And there is an expectation that they can be held to account. We at the ACCA can take a complaint from any member of the public, any person in business, about the conduct of our members. That can relate to the ethical code; it doesn’t have to be a criminal act. It can be about the way they are conducting their business.
 
We can withdraw their membership. If your livelihood depends on your qualification, that’s a very big deal indeed.
 
Have there been many such withdrawals of membership?
It’s a small percentage of the total. We have 162,000 members and we work very hard to ensure that members uphold their competence, including their ethical competence, through continuing professional development. We ask them questions every year about their ethical understanding.
 
We’ve embedded in the ACCA qualification an ethics module. We have examinations, practical experience and ethics as the three pillars of our qualification. There is an interactive ethics module that everybody has to take; it’s very front and center of what we do.
 
It’s not a yes-or-no series of questions. You have to describe the action you will take. You have to relate it to your own work experience. You’re given ethical dilemmas and you have to describe how you would approach them.
 
And if you fail?
You take it again. It’s part of the education process.
 
Ethics is very much about thinking and practical application. The regulatory and disciplinary function that we undertake over all our members and students, that is a really important reassurance to the public. If there is any cheating in examinations or any of those kinds of issues, the ACCA will investigate and sanctions will be imposed, from small fines through to withdrawal of membership.
 
Technical skills are a given for CFOs, along with ethics, but other skills like leadership and communications are also increasingly important.
There are a lot of skills that the finance profession now needs, including what people call soft skills, which I think is a misnomer because those are very difficult skills. These skills are communications, leadership, all of those. When you are in a leadership position, your behavior around these things become more critical.
 
We’ve just introduced two soft skills online modules, which is one step forward in that direction. We also have a lot of post qualification courses around those soft skills, which become more and more important around managerial roles, around leadership roles, as you move up the organization.
These are voluntary modules. We say that if you want to improve your employment opportunities, if you want to perform best in the workplace, take these two modules. They’re free [for ACCA students and members].
 
It seems ACCA is making full use of technology and the Internet.
We think that technology offers some very exciting solutions now. It’s now extremely interactive. You can do a lot of very interesting group work, where you don’t have to be sitting in the same room. You can run interactive courses, video content that we now produce from members.
 
We have 162,000 members and 400,000 students. We have to make use of technology to make sure they have the right support, networking and communications.
 
We constantly upgrade the ACCA qualifications to respond to market needs. We recently instituted new content for risk management. We’ve just announced we’re going to be examining on integrated reporting in December this year. We’re the first organization to embed that in our syllabus.
 
We’re always future-proofing our qualification for our members. One of the areas we’re currently looking is broadening the soft skills side. It’s really about equipping people with the right competencies.
 
Are you seeing that the new members are more persuasive, more communicative, exhibits more leadership qualities than their predecessors years ago?
I’m really always very impressed by our young members. They’re ambitious. They see ACCA as a building block for success in business. That can be in all sectors, including the public sector but particularly in commerce and industry.
 
When they qualify, they say that’s not the end of the story. It’s very much, ‘OK, now I’m on the way to achieving what I want to in business.’ They look to us for support along that way.  One of the ways they look for support this is through networking and peer-to-peer opportunities. They do get access to a well- established global network.
 
Are the expectations of ACCA members today different from the expectations of members, say, ten years ago?
The one thing I’d say is that now people want things more quickly. They want their career trajectory to be quite steep and quite rapid. That might not always be possible, but there’s certainly that ambition and need to get on with it now.
 
In some emerging markets I meet 18-year-olds saying they want to be the CEO when they’re 25. But they’re ambitious because they think they can do good things, they think they have a lot to contribute, and I think part of that is the qualification gives them that confidence.
 
In applying ACCA’s code of ethics in Asia, do you perhaps adjust some aspects of it to take into account business practices that may not be regarded as unethical here but may be seen as a gray area in the West? For example, giving gifts and tea money in China?
No, we have one code of ethics that we apply globally, and we think that is almost sacrosanct. It is in line with the International Federation of Accountants Code of Ethics, IFAC.
 
In China, what we do is work very closely with the CICPA and national accounting institutes, so  Beijing, Shanghai and Xiamen. A lot of the work we do with them is around courses and events focused on CFOs, talking about these challenges and issues and making sure people are properly equipped to handle them.
 
I admire the Chinese government in its leadership on this. It has placed a high priority on transforming the profession and understanding what professionalism encompasses including the ethics component. I think there was a recognition some time ago that it wasn’t part of the DNA of China a couple of decades ago, but there’s been a lot of work done to bring that around.
 
There are vast numbers of people performing accounting roles in China and some may not have had professional training. But there’s a lot of work being done to turn that around. We have over 12,000 members in China and around 40,000 students there, last time I looked.
 
How long does it take for someone to become an ACCA member? Two years?
No, you need a minimum of three years’ relevant experience. Normally in mainland China the examinations will take two years or so; you usually take the professional exams concurrently while working. You also need to pass the ethics module.
 
Is risk part of the syllabus?
It is part of the professional exams. We have a whole paper at the professional level called risk, governance and ethics. That’s been a necessary component both for the qualification and CPD in the last few years. There’s been a lot of demand for courses and information on risk and governance.
 
Is there a separate ACCA module for business partnering?
That’s part of the exams. We have the fundamental level of the qualification. We very much integrate the information they’ve learned. Business partnering pulls together a number of aspects of technical knowledge, and then it’s how you use that to drive the business and give the strategic advice that’s needed.
 
So there will be scenario-type questions where students have to demonstrate they know how to [be a business partner].
 
Strategy, leadership and management run throughout the professional level. These are master’s level examinations so they are complex and challenging. We are preparing people to be finance leaders of the future, so all those concepts about leadership and management are in the tests.
 
What would be the passing rate?
It’s tough and we make no apology for that. We’re holding these individuals out to the public as highly qualified professionals. At the final level, we’re looking at around 30% to 50% passing rate, depending on the markets. Passing rates in Asian countries tend to be ahead, not massively, but above the global average.
 
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