IMGCAP(1)]Finance is changing, and that much is clearly evident whether you are employed at a public firm, private industry or academia.
Forces including corporate governance, sustainability, increased risks linked to cyber security and analytics, as well as the increasing demand for information are driving changes in accounting profession. While these trends and changes are widely acknowledged and discussed, there appears to be an area that has yet to be impacted by these changes—the actual workflow and processes used by accountants working within organizations.
Since the majority of accounting professionals work, full-time or in a consultative capacity, for organizations, you would think that process improvement, standardization, and leveraging technology would be top priorities for accounting professionals. The reality of the situation, however, is far from that, and for a multitude of reasons, many of the functions performed by accounting are in dire need of standardization, automation and tightening up. Putting this sentiment into action will save time, money, and will increase productivity—all of which are essential in an increasingly competitive environment.
First, it is important to recognize the fact that, while every organization and industry is indeed unique and distinct, there are common problems and situations that are present in every organization. At the end of the day, the true value that an accounting or finance team brings to an organization is in the information and knowledge that is distributed and communicated from front-line operations to managerial decision makers.
Second, and arguably more important for CPAs and others working in the accounting and financial services fields, is the reality that demands for information are increasing. In addition to the sheer quantity of information requested, the variety of reports and metrics that must be generated is also increasing. Faced with this multipronged shift in the business environment, CPAs have to think outside the proverbial box and recognize the opportunities available. Adopting and integrating the concepts of business process management, process improvement and better managing the flow of information from one end of the organization to the other all represent areas that CPAs are uniquely positioned to take advantage of and use to the profession’s benefit.
Drilling down, there are two specific ways that CPAs can leverage advances in technology and take advantage of the external pressures from the broader business community to increase the value brought to both their organizations and the profession.
1) Reporting and analysis: Developing reports and delivering information to stakeholders are, arguably, the best ways for accounting professionals to deliver value to an organization and satisfy management requirements. While technology and reporting advances have made the collection and analysis of vast quantities of information much simpler and more cost-effective, the dissemination of this information is usually still error-prone and manually based. Using this three-step process, or a similar one depending on the unique characteristics of your organization, can help CPAs streamline this process and save time:
a. Who is getting the information? Who are the users, internal and external, that are going to be using this information? Analyzing this aspect of the process is often overlooked and might help eliminate unnecessary or redundant information that is currently distributed.
b. How often does the information go out? The frequency of the information being distributed will determine what types of drop-downs, queries and other tools should be utilized, and what type of information should be included. The realities of the situation might dictate what data is available, but if CPAs are aware of the distribution schedule, this can help prioritize processes for month-end.
c. What is the preferred format and method of distribution? The vast majority of the information is typically distributed via electronic distribution, but is it text, graphs or a mixture of both? If it is a mixture of both, or primarily graphical in nature, what types of graphs are preferred by the users? Giving the end users the information they need is only half the battle; giving it to them in a format they prefer is the other half.
2) What is the business question? Identifying the actual end purpose of the requested business information allows the CPAs preparing and analyzing the information to actually address the question at hand. Doing this is essential; performing analysis and distributing reports simply for the sake of distributing information and reports does not add value to the enterprise.
a. This requires accountants and CPAs to think outside the box and incorporate flexibility into the data gathering and analysis process. Much has been written and spoken about the CPA profession wishing to be more involved in the strategic decision-making process of the organization, and this is a real-world opportunity for CPAs to do just that.
b. Engage with other functional groups within the organization to understand what the stated goals of the organization are. By doing so, and understanding where the organization and management team want to end up, the CPA is better able to understand how the organization can get there. Identifying the end goal, the drivers by which information is obtained, and the ultimate goal of the organization are all places on the critical path for CPAs wishing to elevate themselves to the role of strategic partner and business decision maker.
The concept of accounting and finance, historically, has been focused almost entirely on the reporting of financial information and data to financial stakeholders. The business environment, however, has evolved and changed drastically, and CPAs must be able to keep pace with the multitude of changes that are impacting the profession. In essence, financial and accounting professionals must reinvent themselves alongside the organizations for which they work or consult. Asking the right questions, and understanding what the end users of organizational data require to make business decisions, are two critical steps in elevating the status and regard in which CPAs are held. While the concept and ideas themselves are relatively straightforward and simple, it lies with the practitioners to turn them into reality.
Sean Stein Smith is a Financial Analyst - Joint Venture Finance, at Hackensack University Medical Center.
