CFO as a Change CatalystNeed Management Accounting Skills to Excel …

Mohammad Iqbal GhoriVice President ICMA Pakistan Chairman Examination Committee &Research & Publications CommitteeSAFA Committee on Public Sector Accounting Director Strategic Planning & CFO, Sadaqat Limited Chief Operating Officer, Sadaqat Power Limited

Presentation Sequence Evolution of Accounting and Finance Four Faces of CFOs IFAC’s Principles Future Role as Change Catalyst CFOs as Change Catalyst Role of CFO in Society Changing Role of CFOs in Pakistan What Pakistani CFOs should do? CFO and Management Accounting

Evolution of Accounting and Finance Book Keeper - Gathering & Recording Data Accountant - Analyzing & Interpreting Data Manager Accounting - Converting Data into Information Financial Manager - Utilizing Information for the benefits of

Stockholders/Owners Management Accountant - Involved in overall planning, decision

making and execution for the benefits of stakeholders Strategic Advisor - Concerned about overall strategic direction of an

Organization

Four Faces of CFOs

IFAC’s Principles

Principle A The CFO should be an effective organizational leader and a key member of senior management.

CFO as Steward

CFOs work to protect the vital assets of the company, ensure compliance with financial regulations, close the books correctly, and communicate value and risk issues to investors and boards.

CFO as Operator

CFOs have to operate an efficient and effective finance organization providing a variety of services to the business such as financial planning and analysis, treasury, tax, and other finance operations.

CFO as StrategistCFOs take a seat at the strategy planning table and help influence the future direction of the company. They are vital in providing financial leadership and aligning business and finance strategy to grow the business. In addition to M&A and capital market financing strategies, they can play an integral role in supporting other long-term investments of the company.

CFO as Catalyst

CFOs can stimulate and drive the timely execution of change in the finance function or the enterprise. Using the power of their purse strings, they can selectively drive business improvement initiatives

IFAC’s Principles

Principle BThe CFO should balance the responsibilities of stewardship with those of business partnership.

Catalyst Challenges Investment management

How do I ensure that our investments in innovation and growth yield the greatest returns? Strategy execution

How can I partner with other senior managers to drive strategy execution across the enterprise?

Thinking Beyond Numbers … Define your performance accountability and decision support framework Get your customer’s point of view Measure the economic performance that matters Partner with HR to develop a capabilities plan. Celebrate your high-performance moments

CFO in 2020 Ability to operationalize and execute company strategy based on data-driven insights Strategic Adviser Support in Business Transformation Multidisciplinary skill set Running a business unit including in-depth knowledge about sales and marketing and human resources Need to work more closely with regulators to help them prepare course of action in response to shifting economic, policy, market, and technology forces Setting a balanced pricing providing win-win situation to all stakeholders Global economy and geo-political risks

IFAC’s Principles

Principle CThe CFO should act as the integrator and navigator for the organization

Future Role as Change Catalyst

CFO – Catalyst Perspective Conventional Perspective Catalyst Perspective Detail-oriented Big-picture thinkerReserved OutspokenHands-on DelegateEmphasize how things are done Emphasize what gets doneUnilateral decisions Collaborative decisions Department’s Goals Organization’s Priorities Problem-solving Critical ThinkerReactive to Deficiencies Proactive to Manage Risk

IFAC’s Principles

Principle DThe CFO should be an effective leader of the F&A function.

Ways to High Performance Laggard Follower Competitor Innovator

Objectives • Become an effective steward• Focus on the financial operations• Producing inward facing financials• Limited communications of performance

• Effective steward• Efficient operator• Reactive financial advisor• Limited future focus

• Effective steward• Efficient operator• Influential strategist• Frequent performance communications• Forward-looking

• Effective steward• Efficient operator• Influential strategist• catalyst• Facilitator of deep business model understanding

Time Horizon Focus • Historic • Short-termFuture • Mid-term Future • Long-term Future

Ways to High Performance Laggard Follower Competitor Innovator

Business Partner Role and Influence• Routine single year financial accounting

• Financial accounting supplemented with limited operational knowledge

• Multi-year historic financial performance analysis• Forward looking planning based on operational value drivers

• Deep performance management expertise• Value measurement in economic (cash) terms

Measures • Tangible financial measures• Financial accounting measures• Semi-financial performance measures

• Financial Accounting measures• Economic (cash-based) measures

• Economic (cash-based) measures• Risk measures• Intangibles and Intellectual capital

Transition in Role Commitment to Uncertainty

Future Role as Change Catalyst

THE ROLE AND EXPECTATIONS OF A CFO A Global Debate on Preparing Accountants for Finance Leadership

IFAC’s Discussion Paper

CFOs as Change Catalyst https://www.youtube.com/watch?v=LwtF3xXxDUI

IFAC’s Principles

Principle EThe CFO should be a professional and bring professional qualities to the role and the organization.

Future Role as Change Catalyst Apply emerging technologies Ensure appropriate allocation of investment and resources Adopt a forward-looking approach More robust use of analytics towards strategic insight and decision support Using finance transformation as a tool to drive change in the business Collaborate with other functional areas, specially marketing and HR Explore integrated business services Shift the focus from maintenance of IT systems to technology innovation.

Role of CFO in Business Today’s CFOs are expected to be strategic thinkers who can deliver business results CFO aligns the strategy across the enterprise and transforms operating model CFOs help the CEOs to manage business, complement their skills and offer leadership; on top of their financial expertise

Role of CFO in Business Today’s CFOs are expected to be strategic thinkers who can deliver business results CFO aligns the strategy across the enterprise and transforms operating model CFOs help the CEOs to manage business, complement their skills and offer leadership; on top of their financial expertise CFO keep the Board and its sub-committees abreast with business and regulatory requirements and changes CFO play the lead role in keeping investors well informed about the company CFO ensures that the company maintains an open and transparent communication with its investors in order to build and enhance investor confidence.

Role of CFO in SocietyCFOs key areas in its role in sustainability are: Investors relations External reporting Operational control and Financial risk management.

Changing Role of CFOs in Pakistan CFO’s Role in Pakistan is changing from STEWARDSHIP to STRATEGIST In Pakistan, CFOs are now seen as organizational leaders and BUSINESS PARTNERS, in addition to their role as financial gatekeeper. CFOs are now an integral part of strategic business decision making in companies

What Pakistani CFOs should do? CFOs employed in Industries should play the role of ‘Chief Investment Officer’ for business growth and sustaining industry performance. CFOs should re-design financial and business models, products and services to attract investors CFOs should change their mind set from ‘Cost Saving’ to “INTELLIGENT SPENDING’

CFO and Management Accounting Cost management should be one of the top priorities of a CFO in addition to profitability, cash flow and working capital. Management Accountants are the best choice for CFO position because : They are trusted to guide critical business decisions and drive strong business performance. They combine financial expertise and business acumen to achieve sustainable success. They understand how the different parts of business need to come together