Career developmentFinancial controllers

28 October 2016

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TAKING FULL CONTROL

The first project of its kind in Asia, the Institute’s Financial Controllership Programme was launched this year to provide practical training to members who are transitioning from practice to business or new to the post. Jemelyn Yadao talks to the people involved in the pilot programme to find out how financial controllers today are at the heart of an organization

Illustrations by Kouzou Sakai

Earlier this month, a com-pany in the car park floor-ing industry was preparing

to list on the Hong Kong stock exchange, placing a great amount of pressure on Yonnie Tse, its Financial Controller. It was time for her not only to strengthen her skillset as an accountant, but also step up and be a “value-added” business partner.

The Institute’s Financial Con-trollership Programme couldn’t have come at a better time. “The speaker shared valuable advice on how to best position myself in the initial public offering project to benefit the situation,” says Tse, Financial Controller and Compa-ny Secretary at Kwong Man Kee Group and a Hong Kong Institute of CPAs member. She took part in the 15-day pilot programme, which ended last month.

Financial controllers are, fundamentally, responsible for an organization’s accounting and record keeping, and must produce timely and accurate financial statements to assist the chief financial officer. Their role has broadened in recent years to be more forward-looking and concerned with the management of the whole business. According

to an Institute of Management Accountants survey last year, almost 80 percent of controllers were seeing increased demand for them to apply strategic, forward-thinking skills, while three-quarters said they were utilizing their knowledge to help the business.

“This has made it more challenging and, in my view, po-tentially more interesting. It also brings with it implications for skills, resources and priorities,” says Dennis Fullgrabe, former chief internal auditor of Hospital Authority, and a course director for the Institute’s programme.

However, many Hong Kong CPAs, especially professional ac-countants in practice who wish to switch to business, may lack the exposure to the proper training and expertise needed for them to readily adapt to this evolved role. As a result, the Financial Controllership Programme was created (see Financial control-lers feedback sidebar on page 32). Such a project has previ-ously never been offered by an accounting body in the Asia-Pacific region.

Raphael Ding, the Institute’s Chief Executive, highlights the

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important role played by financial con-trollers today in also setting the wider culture and code of ethics in a company. “Professional accountants are subject to all five threats to fundamental ethical principles every day: self-interest threat, self-review threat, advocacy threat, familiarity threat and intimation threat,” said Ding, also a course director for the programme’s module on business ethics. “In my view, the professional accoun-tants in business are the ones that need more help, guidance and encouragement from their professional bodies to meet all the ethical challenges and to do the right things. That’s why the Institute has included ‘business ethics’ as one of five modules in its Financial Controllership Programme to prepare our accountants when they move from the practising sec-tor into the business sector.”

Stay on strategyWith an increasing number of com-panies looking to innovate, financial controllers are expected to have the technical skills and practical knowledge to translate the company’s business strategy into a financial strategy. “That means ensuring the business is able to grow in a way that commensurates with the financial target of a company,” says Peter Wong, Director, Treasury Advisory Practice at PwC, and the programme’s course director of the strategic finance module.

Another primary factor driving the financial controller’s increased impor-tance is the number of new regulations put into place since the financial crisis.

For example, Basel III, which tight-ens the regulation of banks by increas-ing bank liquidity and decreasing bank leverage, is making it more difficult for financial controllers to secure funding.

“Banks are more selective in offering global notional cash pooling products forcing corporate to manage their own liquidity through an internal sweeping and netting procedure using the cor-porate treasury centre as the in-house bank,” says Wong.

He sees the financial controller’s role expanding from being the steward of statutory accounts to more strategic finance initiatives such as spin-offs, mergers and acquisitions and IPOs. Kwong Man Kee’s Tse, one of Wong’s students in the pilot programme, is a good example of this. “The CFO obvi-ously needs to set the financial strategy that aligns with the business strategy set by the CEO, but the financial controller will be responsible for the execution of the IPO strategy including, but not lim-ited to, preparation of the key financial information required in the prospectus, pre- and post-IPO financial impact analysis on profit and loss (e.g. return on investment), the balance sheet (e.g. lever-age ratio) and linking IPO price-setting with budget performance,” Wong says.

Reputation risk, financial risk, and threats to business continuity, among others, are also pushing controllers to the forefront as they are expected to include risk management performance as part of financial key performance indicators.

Indeed, corporate governance and risk management are two vital areas where a controller can add further value across the business – from advising on sound governance practices, including the requirements of the HKEX Cor-porate Governance Code, to working with other units within the business to improve enterprise risk management across the whole organization. “Some financial controllers have been early adopters, having taken up these new challenges that have opened up, and they are now seen as a business partner with an understanding of both internal and external risks. For many this means stepping out of their comfort zone. This is the real challenge,” says Fullgrabe, who taught the corporate governance and risk management module. “Par-ticipants will gain a strategic overview of corporate governance and develop the ability to recognize and assess risk: strategic, financial and operational.”

Make the decisionThe availability of masses of data means that financial controllers now have to consider far more information that has to be fed into reports and busi-ness models. They therefore have a role to play in analysing that information to support strategic decision-making.

“They have to have opinions, they have to be able to develop systems to capture data, to capture the right set of data, to convert that data into information, then to extract insights, if possible, from the data to advise. And when you’re a controller, you’re sharing like for like in all the important deci-sions and living with the outcomes,” says Aidan Goddard, Director, CFO and COO of L’Occitane en Provence, Asia Pacific.

“ They are now seen as a business partner with an understanding of both internal and external risks.”

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“Numbers become simply a way to communicate insights but the focus cer-tainly for a financial controller should be on the business model: How does the company continue to make money? How does the company survive as a commer-cial entity? How does it remain relevant? When you can answer those questions, you add value to a company,” he says.

Goddard, a fellow of the Chartered Institute of Management Accountants, teaches the accounting for performance

and decision-making module. Making decisions on a regular basis and dealing with ambiguity is something people in the commercial sphere will have to get used to, he notes. “You have to look a year ahead, two years ahead, four years ahead and say: What would I do in that situation? What do I think is the right decision to make? That requires a level of confidence, a level of maturity and a level of courage to make a decision, especially with incomplete information.”

He is concerned, however, that many young people wanting a successful career in business finance do not under-stand what a business model is. “They probably won’t be able to distinguish what is a business model and a strat-egy,” he says. “You’ve got to start with understanding business models, and once you have your business model then you’ll need a strategy to implement your model and this strategy may require you to look years into the future. For young people, I think the course module should be an insight into how businesses work and how a successful financial controller can be more than that and be a business controller.”

Be influential Accounting tasks such as monthly reporting, occupy only a small part of Charlie Yeung’s work duties at one of Hong Kong’s top fitness companies. The Financial Controller of the Pure Group, and an Institute member, has had to develop legal knowledge and strong management skills. “Other than ac-counting issues, I am also working with my customer services manager to handle member complaints particularly when the complaint is escalated and legal advice is needed. I also review all impor-tant agreements such as club leases and vendor contracts for the company before signing, and provide preliminary legal comments,” says Yeung.

Many agree that being able to skil-fully communicate with people inside and outside the organization is crucial for today’s financial controllers, who are working increasingly more with non-finance colleagues in the analysis and development of management solutions. “Nowadays, the financial controller needs to be equipped with the mindsets

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Financial controllersfeedback

Targeted at aspiring and recently appointed financial controllers; existing financial controllers who wish to refresh their skills; and members preparing to move from practice into business, the Institute's Financial Controller-ship Programme aims to develop core technical knowledge and skills expected of a financial controller in a modern business environment.

“We looked at similar courses offered by other organiza-tions but we felt they didn't have enough practical learning and also not enough local content,” says Raphael Ding, the Institute's Chief Executive.

A combination of face-to-face learning, experience sharing and case studies, the pilot programme consisted of five modules: Management Competency Development; Accounting for Performance and Decision Making; Strate-gic Finance; Risk Management and Corporate Governance; and Business Ethics.

For some participants, the course gave them the oppor-tunity to gain insights into the work involved as a financial controller, some more eye-opening than others. “Negotia-tion skills among business partners and working partners is a new idea to me and I think I could develop this aspect in my role as a financial controller in order to make tasks easier and to ensure my team doesn't take up more work than they can handle,” says Yonnie Tse, Financial Controller and Company Secretary at Kwong Man Kee Group and a Hong Kong Institute of CPAs member.

“The course also introduced me to the role of a treasurer. Cash and liquidity management is arising due to the ever changing business environment. As a financial controller, I not only need to manage the financial reporting part but also be sensitive to the business world to make

prompt reactions. For example, we have to react promptly after the withdrawal of the United Kingdom from the Euro-pean Union in order to safeguard the group's assets.”

For some participants, the focus on both technical aspects and topics such as how financial controllers can effectively take on a leadership role, not just leaving that to the chief financial officer, is highly valuable. “For me, the most unexpected module is management competency development. All the soft skills taught in this module are very useful, especially skills on coaching, mentoring and how to effectively be a leader,” says Institute member Jacky Li, who works at VF Corporation, mainly on financial report-ing with a team of 13 subordinates. “This module gave a lot of useful insight in helping me set up a development plan for my team and also on how to deal with conflict, job alloca-tion, feedback giving and performance appraisal.”

Sharon Xiong, Financial Controller at Brunswick Group, and an Institute member, agrees. “Our people are our assets, and they have different abilities, strengths and weaknesses. It is always very challenging using different leadership styles to improve the overall team performance,” she recalls. “Peter [Nixon] shared lots of techniques and tips with us.”

Toni Chan, an Institute member working in advisory at PwC, considers the strategic finance module a highlight. “It reinforced a lot of corporate finance ideas which I have come across in my work. Besides theoretical sharing, the lecturers also gave us a lot of real life examples – some of them have been widely reported in newspapers – which were very insightful."

For Chan, as well as other participants, the course allowed them to gain relevant expertise from both the speakers and fellow classmates. “I think the diversity of the backgrounds of the lecturers and classmates contributed to the success of the class. The sharing by classmates provided me with a lot of insights into the actual work of a financial controller.”

and business knowledge across other departments. This is not difficult for a finance person to do as long as you have good learning capabilities,” says Canary Tang, CEO of YST Cannary Trading, an Australia-based gourmet food and luxury merchandise specialist and an Institute member with financial control-lership experience.

Indeed, it is important for financial controllers today to be conversant, particularly on how key performance indicators and budgets positively or negatively link to the strategic and commercial priorities of a company,

says Peter Nixon, Founder and Manag-ing Director of Potential Dialogue. He highlighted this message to members as the course director of the management competency development module, which kickstarted the whole programme.

The pilot participants were able to find the time to complete a demanding programme. Now, more than ever, it is important for members to be proactive in developing their careers, and staying relevant. “The typical senior accountant in Hong Kong is eager to learn, very hardworking and doing their best.Accountants are typically very talented

but limited in their exposure during working hours to international best prac-tices either through training or bosses who themselves have had a chance to learn how to lead and manage in ways that optimize results and relationships at the same time,” says Nixon, an Institute member.

“I believe many more companies in Hong Kong should take advantage of this opportunity to sponsor and grow their accounting talent. I would not be sur-prised, given the success of our pilot programme, to see multiple cohorts running in the future.”

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