The Critical First Step To Data Security

By Marianne Bradford, Ph.D.; Eileen Taylor, Ph.D., CPA, CFE; and Megan Seymore, Ph.D., CPA
December 1, 2021

Data security is one of the most important issues facing organizations today. A 2021 study conducted by IBM revealed that the average cost of a data breach in 2020 was $4.24 million. Additionally, 76% of respondents predicted that remote working, precipitated by COVID-19, would make responding to a data breach more difficult.


A critical first step to securing organizational data is classifying the data according to the level of sensitivity. Data classification is based on the extent of the impact to the organization if the data is compromised by individuals accessing, copying, altering, or destroying the data without authorization to do so. Although data classification is foundational to data security, it’s often an afterthought in IT planning and spending and doesn’t get the attention it deserves. Additionally, the details of how companies classify data are often a mystery. But finance professionals, with their knowledge of IT, accounting, controls, and risk, are keenly positioned to provide valuable input to this process.


With the goal of unpacking that mystery, we conducted in-depth interviews with 27 high-level information security (infosec) personnel, the majority having the title of chief information security officer (CISO). These CISOs represented 23 organizations across 10 different industries. Each of our interviews lasted between 45 and 60 minutes, and we asked the CISOs to elaborate on:

  • The process of data classification
  • Drivers to data classification
  • Benefits of data classification and outcome measurement
  • Challenges to data classification


With consent from the CISOs, we recorded the interviews using NoNotes software, which also transcribed the interviews. We then employed text-mining software to uncover important themes in each of the four areas of research.


Most interviewees had at least 10 years of data security experience. The top industries represented were higher education, manufacturing, software, and technology; organizations were predominantly large, with more than 5,000 employees.




There’s no set number or description for data classifications, so it’s up to the organization to define these based on its needs. Data valuation and classification will be different for each organization. As one hospital CISO put it, “What is this data? Is it diamonds, rubies, sapphires, iron, brass, or copper?” Most respondents stated that their organization uses three classifications with descriptive names. A few companies use colors (green, yellow, and red), numbers (one, two, and three), or risk levels (low, medium, and high) for descriptions. Figure 1 presents what we found to be the most common data classification names, along with their descriptions and types of data that fall within each category (public is added but isn’t a sensitivity classification).


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Restricted data is the most sensitive level, and organizations need the most control over their employees accessing, sharing, altering, and deleting this data. Confidential data is less sensitive but still needs a high level of protection and shouldn’t be freely shared, even within the organization. There’s a range of confidential data; some data needs stricter controls (e.g., encryption for personnel data), while other data such as work schedules and budgets needs less strict controls. Internal data is strictly accessible to internal employees who are granted access. Public data, such as press releases and contact information, can be freely shared outside of the organization. From our conversations, it appears that organizations take a “just right” approach with enough classifications to effectively manage the varying sensitivity of data, but not so many levels that employees are unable to easily and consistently apply the classification.


Overwhelmingly, organizations use a collaborative approach when determining how to classify data, with the process involving data owners, functional area representatives, legal departments, and internal audit staff. The CISO manages the process and is responsible for educating employees about the classification system and making them aware of their important role in securing data. Respondents mentioned two opportunities for employee education: for new employees during orientation and for existing employees throughout the year, noting that it was much more difficult to get data security on the schedule during orientation, as so many other topics vie for time. CISOs consistently talked about the need for continuous education as new data and data sources are added and as threats to data security persist and evolve.


Figure 2 presents the percentage of organizations measuring outcomes from data classification. Only 10% of our respondents stated that their organization uses formal metrics to evaluate the outcomes of data classification policies, although our respondents stated that this was becoming a priority. Examples of key performance indicators (KPIs) used by the organizations include average time to close an incident, click rate (how many people clicked on suspicious links), and how many threats to data security were blocked. Informal measures, such as determining the effectiveness of employee education on policies or meeting audit requirements, are used by 43% of our responding organizations. The remainder of our interviewees were either unaware of data classification outcome measures or knew their organization didn’t measure outcomes.





In addition to using data classification to underpin data security efforts, organizations also must classify data to comply with the plethora of regulations on data security and privacy, such as the regulation most-often mentioned by our respondents, the European Union’s General Data Protection Regulation. Some regulations are industry-specific, such as the Family Educational Rights and Privacy Act, which regulates the protection of student data in institutions of higher education in the United States. Other regulations mentioned were the Gramm-Leach-Bliley Act, the California Consumer Privacy Act, and the Payment Card Industry Data Security Standard. See “Major Data Security and Privacy Regulations” for more on some of the better-known regulations.


Another reason cited for using data classification is to comply with business partner requirements. Organizations often need to adopt specific policies and procedures to obtain and retain customers. They must also consider additional risks and implement specific security policies when business partners have access to their data. For example, a CISO at a technology company wrote, “One of our goals is to understand what data we have with third-party vendors. Do they understand the classification? Because…if they [get breached]…or if we lose our data, that will be a big risk. And it is our responsibility to educate them on our policies.” Another example is when hospitals share patient data with doctors, insurance companies, and other hospitals—all parties involved must be on the same page when it comes to data security. If there isn’t alignment, the company may suffer serious consequences or lose out on opportunities.


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According to our respondents, the main benefit of data classification is a greater awareness, by both management and employees, of the need for more stringent controls over more sensitive data. In many cases, this greater awareness has led to increased employee buy-in and participation in protecting company data. One software company CISO reported that, to ensure this buy-in, “if I decide I’m going to tweak the data classification policy, I will assemble the key stakeholders that need to be involved in that discussion and explain what it is I think needs to be changed and get their buy-in and approval for doing it, and then we would launch that.” Another respondent described the program as “generating a lot of excitement and changing the conversation.” Some respondents noted that decreased ambiguity about the level of sensitivity of data has resulted in increased employee compliance with data classification policies.


A secondary benefit from data classification is the implementation of more fine-grained controls around the areas of highest risk. Instead of a one-size-fits-all approach to controls, organizations can line up controls with the various classifications, bringing efficiency to security. So, the restricted data is protected with the most controls, but internal data may not have the same level of control.


Improved data hygiene, or “cleanliness of data,” is also a benefit from data classification as the policies allow companies to better understand what data is being stored, where it’s stored, and why it’s being stored. There’s also more focus now on the data life cycle. Specifically, organizations are scrutinizing data retention policies and making efforts to delete obsolete and unused data to reduce risk. Organizations are also evaluating why they’re capturing and storing certain data in the first place.


Another benefit of data classification is it “exposes data living in places” that employees weren’t aware of before. On the positive side, this data that product managers and engineers, for example, didn’t realize they had access to can open up new business opportunities across the organization. On the negative side, some of this data was being kept by employees in “shadow IT” systems with no controls over it. For example, a culture of academic freedom in the higher education institutions we spoke with, in which faculty aren’t “big on rules,” creates the potential for employees to store data unbeknownst to infosec. Rooting out that data allows infosec to properly classify and control it.




A key challenge to data classification cited by our respondents is user noncompliance with policies, whether unintentional or intentional. CISOs stated that even though policies were in place, they often aren’t read by employees, or if read, they’re quickly forgotten. For example, even though employees were trained to identify phishing attempts or ransomware, weeks later they reverted to previous “lax behaviors.” In some cases, lack of compliance was due to employees resisting the policies because the controls in place over the data were viewed as “interrupting people’s workflows.” An example given was the rollout of multifactor authentication at one organization and the complaints that ensued due to the extra authentication time involved.


Several CISOs mentioned that they have no recourse if employees fail to comply with the policies. But one company shut down internet access for those who didn’t complete security awareness training by a set deadline. If enforcement is in place, respondents were quick to say that a one-size-fits-all approach isn’t feasible. For example, cutting off the CEO’s access to data can have serious consequences. Overall, CISOs mentioned that they have to walk a “fine line” when enforcing compliance with data classification policies.


In regard to encouraging compliance, interviewees discussed innovations for educating employees on the importance of data security. These include peer-to-peer learning, where infosec selects ambassadors to provide role models and train other employees on good security behavior. One organization found that it was more effective to regularly distribute short videos through multiple channels rather than providing longer training only once or twice a year.


The complexity of the IT landscape is also a key challenge for data classification. The sheer volume of new data created every day, the speed at which it’s generated, and the multiple locations where data is stored (e.g., on premises or cloud) add to this complexity. Additionally, the various devices employees use (e.g., smartphones, tablets, and laptops) and diverse systems (e.g., legacy, enterprise resource planning (ERP), and third-party systems) make it difficult to impose one classification policy and consistent controls across the entire organization.


Another challenge to data classification is creating an accurate inventory of all the important information assets an organization owns. Of concern is knowing where data resides, where it flows, who is accessing and processing it, the rules for protecting it, and how the rules are being enforced. CISOs noted that there currently isn’t a tool on the market that can effectively keep track of all the data in all the different places that it might be stored.


Respondents also noted challenges in using automation to classify data and using data loss prevention (DLP) tools to prevent the sharing of data with unauthorized individuals. A CISO at a hospital wrote, “We have to be really careful in terms of tuning those DLP policies; usually the best practice [is] to do it in passive mode trying to understand what traffic is going in and out and then tweak them slowly so none of the business operations are impacted.” Consistently, respondents had the view that the tools currently on the market were imperfect, immature, and costly. Because they use pattern identification (i.e., credit card numbers and Social Security numbers), they’re limited in their ability to identify unstructured data.


Another issue with classification tools is their propensity to read files in a drive, detect a few that are highly confidential, and then classify the entire drive as confidential. When documents are classified higher up on the scale, more controls must be put in place, putting “handcuffs on business operations.” Security should be an enabler of business, not a barrier to doing business.


Along these same lines, DLP tools on the market have the propensity to “lock false positives.” This happens when a tool incorrectly prevents an employee from sharing information via email or loading it into a drive, for instance. DLP tools can also result in false negatives, where they fail to detect confidential information, allowing it to be shared externally and exposing the organization to risks.




There are several opportunities for management accountants and other finance professionals to get involved with data classification. These relate to collaborating with infosec to assess and improve current controls, identify shadow IT, assist with enhancing compliance, and develop metrics to evaluate outcomes associated with data classification. Because of their keen understanding of business processes, information systems, and IT governance, finance professionals are in a unique position to advise infosec about these issues.


First, finance professionals hold a central position in the organization; they understand the business processes and the information systems that support these processes. They’re also well-versed in identifying and evaluating risks and controls. This knowledge is critical in evaluating the sensitivity of data and assessing whether data is adequately protected based on levels of sensitivity.


Second, because they communicate regularly with all functional areas of an organization, accounting and finance professionals may be aware of the existence and location of shadow IT and can alert infosec to the existence of these systems that are outside the scope of the organization’s enterprise systems landscape. They can work with enterprise systems architects on whether the functionality that the shadow IT supports can be managed within the ERP system or other business system to which data classification policies have been applied. If not, they can work with infosec on securing these systems appropriately.


Third, given their expertise in compliance, finance professionals are valuable resources for infosec to consult with when developing data security and classification messaging and educational training programs. As a collaborative internal business partner, finance professionals can share best practices for improving compliance with organizational policies.


Fourth, finance professionals can work with infosec to develop metrics for measuring outcomes of data classification policies. Most of the CISOs that we interviewed for this study indicated that the lack of measurement for data classification policy outcomes was a weakness in their organizations. Finance professionals are astute at business performance measurement and can use these skills to identify KPIs for data security in general and for data classification specifically. They can also assist stakeholders in building dashboards for reporting on and monitoring data classification outcomes.


Data classification is a necessary and key first step in securing data, but its importance is often undervalued. In in-depth interviews with CISOs, we found that they struggle to implement data classification policies. Thoughtful data classification enables organizations to allocate resources strategically, implementing high-level and costly controls on only the most sensitive data.


Proper data classification results in a thorough data inventory that informs management decisions related to storage, access, and protection. Challenges to data classification will inevitably continue as companies create, collect, and store an increasing amount of data, and as cybercriminals find new ways to breach controls and evade detection. Data classification is required of all organizations and is a critical first step to a sound data security program.


Marianne Bradford, Ph.D., is a professor at North Carolina State ­University. She can be reached at
Eileen Taylor, Ph.D., CPA, CFE, is a professor at North Carolina State University. She can be reached at
Megan Seymore, Ph.D., CPA, is an assistant professor at Ohio University. She can be reached at    
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Advancing Digital Transformation

By Gregory Kogan, CPA; Nathan Myers, CPA; Daniel J. Gaydon, DBA; and Douglas M. Boyle, DBA, CMA, CPA

Data-driven companies are increasingly embracing analytics and automation technologies that streamline routine and repetitive processes in order to reap significant efficiency gains and improve process control in pursuit of competitive advantages. As a result, the process automation market is growing rapidly.


According to Gartner, by 2024 large organizations will triple their process automation capacity. According to a Business Wire report titled Global Robotic Process Automation Market Size, Share & Trends Analysis, the global market for process automation is expected to grow to $25.6 billion by 2027, increasing 40.6% per year.


The two most popular techniques to accelerate routine finance function processes are robotic process automation (RPA) and self-service data analytics. Organizations that strategically deploy both of these tools across their finance and accounting functions have an opportunity to better structure manual processes into more stable, accurate, repeatable, and readily auditable processes. Moreover, data-driven organizations that use process automation to improve efficiency can free up capacity to focus on more value-added analysis and innovation, thus providing them with a competitive advantage. Financial professionals, including management accountants, can benefit from embracing emergent capabilities to streamline their organization’s manual processing and realize control and efficiency benefits.



RPA utilizes software to automate repetitive, routine processes to increase operational efficiency. Self-service data analytics, by comparison, comprises a broad subset of analytics referring to any analytics solutions that are directly configurable by data workers. Commonly, such tools may integrate “extract, transform, and load” (ETL) capabilities and more advanced analytics and machine learning to assemble, scrub, and interrogate data; identify relationships; create visualizations; and automate spreadsheet-based processing.


While RPA has received considerable attention, organizations are increasingly deploying self-service data analytics due to its ease of configuration, packaged integration of multiple analytics technologies, and more advanced capabilities to implement process automation. According to a customer case report published by Alteryx on its website, Johnson & Johnson (J&J) integrated self-service data analytics into its compliance training program and achieved substantial results. As Adam Ehrenworth, J&J’s lead technology analyst, wrote, “We have eliminated the fragmented and manual process, which took days for the Health Care Compliance Office (HCCO) to produce a report. It is now a centralized, automated and instantly available reporting process.” As this testimonial implies, the new capabilities of analytics-assisted processing in the finance function have the broad-based attention of finance and accounting professionals—and executives alike—across many industries.




Accounting and financial professionals have relied on spreadsheets for decades, so it should come as no surprise that there’s a reluctance to adopt other analytics tools. As Pamela Schmidt, Kimberly Swanson Church, and Jennifer Riley wrote in “Breaking the Excel Routine” (Strategic Finance, March 2020), “a bias toward the status quo use of Excel has hampered widespread adoption of more advanced data analytics technology tools.” Furthermore, Molly Boyle points to a need for real change in “The Real Costs of Manual Accounting” (Strategic Finance, September 2020): “The way accounting has always been done isn’t sustainable—especially in the current environment. Manual processes tend to be chaotic and time-consuming, and the challenges are now even greater with so many companies—and their finance and accounting functions—working remotely during the pandemic.”


With businesses facing the impact and challenges of the COVID-19 pandemic—on operations as well as on employees—executives are changing their way of thinking. Some companies have turned to automation to deal with the increased demands on the finance function due to a geographically dispersed workforce, budget constraints, resource shortages, and other pressures facing management. The new environment has provided the impetus for executives to act on their long-standing automation plans and finally overcome the resistance to change.


A further driver for the adoption of cutting-edge analytics tools in the finance function is the wide availability of enterprise data, a concept known as data democratization. With vast quantities of enterprise data available directly to all within an organization, process owners are well-placed to adopt analytics tools to accelerate processing and deliver the best possible outcomes.


The most significant trend fueling the adoption of self-service data analytics has been the rise of easy-to-use analytics tools. Self-service data analytics platforms have become incredibly approachable, as they don’t require technology specialists or coding to develop and deploy. Instead, users can invoke “drag and drop” capabilities to configure analytics-assisted process automation, allowing “ordinary citizens” to directly develop solutions, without the involvement of the IT team.


The resulting direct and decentralized development model leads to expedited implementation time frames, measured in only hours or days. Armed with broad-based exposure to enterprise data—and equipped with a powerful suite of flexible, user-friendly, and efficient self-service data analytics tools—finance and accounting professionals are increasingly empowered and motivated to deploy analytics at the process level to generate value.


Driven by the converging trends of remote work, data democratization, and the wide availability of “no code” self-service data analytics tools, the evolution from manual spreadsheet-based processing to analytics-assisted automated processing will be the next critical waypoint as organizations progress along their digital transformation journey. As companies turn their focus to automating manual processes, they’re most likely to deploy RPA and self-service data analytics to improve efficiency and create a more reliable processing environment.


While RPA and self-service data analytics are both indispensable utilities for employing intelligent analytics and automation capabilities to streamline processing, they aren’t directly interchangeable and must not be conflated. They represent distinct tools, which, as Table 1 details, are appropriate for specific use cases that operators encounter in their daily processing functions.





There are several key distinctions between RPA and self-service data analytics to keep in mind when evaluating which is the best one for a particular scenario. The primary determinants include the use cases represented by the projects, the project deployment timeline, recurring costs and return on investment (ROI) expectations, maintenance responsibilities, and training requirements. Finally, both solutions have unique governance requirements that must be considered in earnest to protect the value created.


While project ROIs for both RPA and self-service data analytics can be impressive, as evidenced by the case studies presented in Table 1, RPA projects present higher hurdle rates than do self-service data analytics projects because the recurring and significant bot maintenance costs in RPA projects must be surpassed by higher expected project benefits to realize equivalent ROI. Self-service data analytics deployments don’t require additional licensing fees for each marginal workflow developed, which may make them more desirable than RPA for smaller-scale automation projects due to per-bot maintenance cost considerations.


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RPA build monitoring and maintenance are ideally performed centrally through a purpose-built governance body, such as an automation center of excellence. (For more on RPA governance, see “Govern Your Bots!” by Loreal Jiles, Strategic Finance, January 2020) With self-service data analytics, users themselves deploy, monitor, and maintain automation configurations.


It’s essential that the individuals developing analytics capabilities—and using them—are adequately trained to do so. Meeting the training requirement is accomplished differently for RPA and self-service data analytics, respectively. RPA configurations are most often developed and maintained centrally by RPA developers within IT. Such specialists require significant RPA training and experience. Process owners require only minimal training to operate the bot, but as they design, build, and implement self-service solutions largely without IT involvement, they must not only have a detailed understanding of the longhand process being automated, but they also must ensure that solutions are fit for purpose, adequately controlled, and in line with organizational strategy. In both cases, the controlled introduction of RPA and self-service data analytics requires staff to be familiar with the analytics capabilities in use, the underlying business process flows, and how to deploy the tools in accordance with organization-wide development and control standards.


While both RPA and self-service data analytics require additional controls to mitigate the risks associated with their introduction, self-service data analytics requires an entirely new governance apparatus. As RPA solutions are likely to interact directly with systems and are typically developed and operated with the significant involvement of core IT, the legacy IT governance apparatus remains relevant. Self-service data analytics solutions are developed directly by process owners and operate outside of core systems, effectively sidestepping mature governance structures.


Accordingly, a comprehensive fit-for-purpose governance model must be forged to address project governance, investment governance, and risk governance in order to protect the value of the analytics program during the move to a decentralized application-development model where “ordinary citizens” are turning out applications at a feverish pace. Table 2 details the key differences between RPA and self-service data analytics.


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It sounds simple enough: Companies can use self-service data analytics to automate all of their manual and recurring spreadsheet-driven finance and accounting processes. But how?


Instead of performing processes such as manual reconciliations, process owners can themselves configure automated workflows to invoke as needed, in lieu of the manual processing steps performed in spreadsheets. Processes can be broken down into a sequence of individual steps, and then structured thoughtfully into process flows with a logical order. Each analytics-assisted automation step becomes one link in a chain of steps that were previously performed manually, resulting in a more efficient automated process.


Automation not only improves efficiency and hastens processing time but also improves process control and stability. Self-service data analytics eliminates process variability because once the workflow is configured, the precise processing steps will be carried out and in the same order, without exception. Those who perform manual spreadsheet processes are the first to acknowledge that structured and repeatable tool-assisted workflows result in better outcomes than error-prone manual spreadsheet work, where hard-to-detect human errors are frequently introduced with varying and unpredictable consequences. As depicted in Figure 1, the use of self-service data analytics can markedly improve the operational efficiency of finance and accounting processing by structuring legacy spreadsheet tasks in workflows, without incurring additional costs.





As companies continue to deploy automation and analytics programs to speed up their routine processes and create efficiencies, the biggest key to success is starting small and scoring quick wins. By optimally selecting and deploying analytics capabilities from the many tools available, you’ll secure senior management’s sponsorship for the analytics program while instituting a robust fit-for-purpose governance model to protect the value of the program at scale. With this as a framework, financial managers can drive digital transformation in their business units by focusing on the following four key strategies:


Become familiar with the technology. By better understanding the differences between RPA and self-service data analytics, financial managers can better evaluate problem statements and choose the best technology when matching use cases with available automation tooling.


Earlier, we outlined the key differences between RPA and self-service data analytics. By deploying RPA to automate work within enterprise resource planning (ERP) systems and deploying self-service data analytics around more customized spreadsheet processes, managers can use both technologies optimally to maximize their ROI for analytics projects.


Start small and “protect the baby.” If you’re a manager who wants to overcome resistance to analytics adoption, you should tread carefully and start small. Survey the processing plant for stable, routine manual processes that are performed widely across the organization and capture them in an opportunity inventory log. Assess the time spent performing each process manually, as well as the current failure rates, to document defensible benefits for each opportunity. Then estimate the costs to structure the manual work into a stable, repeatable, and automated flow. Remember that RPA often represents significant incremental bot maintenance costs, while self-service tools most often come only at the cost of individual licenses.


Once the benefits and the costs of automation are clear, it will become obvious which projects warrant prioritization. Of these, choose those that are most likely to be completed successfully. It will be important to paint the board with success to demonstrate the measurable benefits to sponsors and management, as a failure during the early stages can set the program back years.


Choose a program sponsor. The selection of an appropriate program sponsor is fundamental to a successful digital transformation. The key role of the program sponsor is to ensure that adequate funding is made available to successfully scale the program at a velocity that’s consistent with your organization’s stated goals and milestones.


A perfect candidate for program sponsor would be a senior employee in the processing plant—someone who would stand to gain from the success of data analytics, but also stand to lose, in the event of process instability. In this way, the sponsor has “skin in the game” and is most likely to promote significant opportunities to digitally advance the organization.


Be mindful of analytics governance. Sponsorship is but one pillar of governance. Governance must be stood up early in the digital transformation journey to maintain control and to protect the value created by analytics at scale. While RPA is often subject to legacy IT governance structures, self-service data analytics by definition is available to individual process owners, without the involvement of IT. Accordingly, absent specific action, there’s little to ensure that analytics is being introduced thoughtfully and consistently.


Governance is imperative to ensure that efforts have the right stakeholder support, that solutions satisfy requirements and are tested to a high standard, and that an adequate audit trail is maintained to enable process assurance capabilities. Importantly, governance helps to ensure that company resources and investment dollars flow logically to the best opportunities. Managers should consider governance as a necessary precursor to opening the door for the widespread adoption of analytics to avoid the painful exercise of retrofitting governance after the floodgates have opened.




So, there you have it. While the finance and accounting functions have been moving toward digital transformation over the last decade, there’s still significant resistance to change due to the traditional reliance on spreadsheets for processing financial data. The recent trends of remote work, data democratization, and the widespread availability of self-service data analytics tools have provided the motivation to overcome this resistance and have enabled the exponentially accelerated pace of digital transformation. Business professionals who spend their days assembling and enriching information from disparate sources in spreadsheets; performing routine formulaic processing steps, comparisons, and aggregations; doing data entry; and executing system commands now have data analytics tools at their disposal to rapidly automate the least value-added portions of their roles and limit the introduction of manual errors.


Perhaps most importantly, management accountants and other financial professionals can reclaim time to focus on higher-order data analysis, the implementation of improved controls, or other emerging business priorities. Taken together, these benefits represent a quantum leap forward for organizations intent on truly harnessing data capabilities and optimally deploying their human capital.


Gregory Kogan, CPA, is a doctoral student of accounting at the University of Scranton. He’s a member of IMA’s Long Island Chapter. You can contact Greg at
Nathan Myers, CPA, is a digital transformation consultant in the New York area. He’s a member of IMA’s New York Chapter. You can contact Nathan at
Daniel J. Gaydon, DBA, is the associate vice president of financial reporting at Geisinger Health and an adjunct accounting instructor at the University of Scranton. He’s a member of IMA’s Pennsylvania Northeast Chapter. Dan can be reached at
Douglas M. Boyle, DBA, CMA, CPA, is an associate professor and department chair in accounting in the Kania School of Management at the University of Scranton. Doug also serves as director of the ­Doctorate in Business Administration program. He’s a member of IMA’s Pennsylvania Northeast Chapter. You can contact Doug at (570) 941-5436 or
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Strategic Risk in the New Normal

By Harshini Siriwardane, Ph.D., CMA; Ella Mae Matsumura, Ph.D.; and Sridhar Ramamoorti, Ph.D., CPA, CIA, CFE, CGFM

With the COVID-19 pandemic testing the agility and resilience of all aspects of business, including strategy, there’s no better time to evaluate the tools and processes used to leverage and manage strategic risk. Failing to regularly review and revise strategy represents a significant risk for businesses.


History is replete with examples of once good and even great companies that were unable to keep up with the rapidly changing global business risk landscape and either disappeared or were diminished to a mere skeleton of their former selves. The stories of AOL, Blockbuster, BlackBerry, Borders, Cambridge Analytica, Kmart, Kodak, and Yahoo, for example, all include strategies that failed or backfired.


While a strategy can prove unsuccessful for a variety of reasons, neglecting the risks associated with its formulation and execution is a prominent reason for failure. Stakeholders want to see clearly defined strategic initiatives that drive long-term value. Long-term value creation is commonly measured using growth in share prices and profit, as this quantitatively measured information is readily available. Yet these are lagging indicators that don’t necessarily provide assurance regarding the sustainability of value creation. Stakeholders, therefore, demand evidence that organizations are evaluating risks associated with strategy formulation and execution, and appropriately responding to the need for strategic renewal.


There are a number of approaches to managing and evaluating risk, depending on the type of risk, industry, and organization type. Each has its own set of strengths and weaknesses. Without a complete, holistic approach to strategic risk, however, companies face gaps in their strategic risk management that could lead to failures in their business.


We propose an approach to strategic risk management that integrates the principles and components of the 2017 enterprise risk management (ERM) framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO), Enterprise Risk Management—Integrating with Strategy and Performance (COSO ERM), with the Levers of Control framework (LoC), a practice-oriented framework intended to achieve control over strategy introduced by Robert Simons based on his study of dozens of businesses (see Levers of Control, Harvard Business School Press, 1995).


While traditional frameworks intend to manage or mitigate risk, our proposed combined framework aims to optimize strategic risk—some risks must be avoided, some risks must be managed and mitigated, and some risks must be exploited. Companies that fail to do this won’t be resilient, will fail to create sustained value, and will fall prey to disruptors. We believe integrating LoC with COSO ERM will provide a comprehensive and robust framework for managing risk related to the formulation and execution of strategy.





The IMA® Statement on Management Accounting Enterprise Risk Management: Frameworks, Elements, and Integration separates total risk into hazard, financial, operational, and strategic. Risks that pose existential threats are generally regarded as strategic risks. Strategy has two stages: formulation (also known as strategy setting, strategy selection, or strategic planning) and execution (strategy implementation). We can separate strategic risk into three categories that span the formulation and execution stages (see Figure 1):


  1. Risks of strategy: At the strategy formulation stage, management should evaluate alternative strategies, considering whether the inherent risk of each alternative matches the risk appetite of the organization. Management, in consultation with the board and other stakeholders, must assess the implications of the chosen strategy on the risk profile of the organization. Failing to do so increases the risks of strategy. An example of a risk of strategy would be the COVID-19-related supply chain disruptions that companies faced (or are facing) due to the outsourcing strategies they chose.


  1. Risks from strategy: During strategy formulation and execution, management should assess whether the chosen strategy aligns with the organization’s vision, mission, and core values. A misaligned strategy threatens an organization’s very existence as well as its brand and reputation, i.e., risks from strategy. Wells Fargo’s growth strategy based on cross-selling, which backfired and led to fraudulent activities, is an example of a risk from strategy.


  1. Risks to strategy: During strategy execution, internal and external factors can affect the relevance and viability of an existing strategy. The sudden emergence of the COVID-19 global pandemic is a classic example of risks to strategy.

Thus, an effective approach to strategic risk management should aim to fully address all three categories, ensuring that there aren’t any gaps.





Since the early 2000s, most large public companies have embraced ERM, which at its best provides entity-level risk assessment and management via an integrated and holistic approach to identify, evaluate, and mitigate risks facing an organization.



Yet a review of recent surveys and research on ERM indicates that it hasn’t reached a mature state for most companies. For example, State of Enterprise Risk Management 2020 from ISACA, CMMI Institute, and Infosecurity Group found that only 7% of respondents reported having optimized risk management processes. Executive Perspectives on Top Risks 2020 from the Enterprise Risk Management Initiative of North Carolina State University and Protiviti found that respondents are mostly focused on operational risks (risks that might affect key operations in executing strategy), with six of the top 10 risks cited pertaining to operational issues. And Aon’s Global Risk Management Survey 2019 states that silo vision still exists and true integration into ERM is still lagging. This raises the question as to whether ERM comprehensively and sufficiently captures and mitigates strategic risks.


The COSO ERM framework is based on five interrelated components supported by 20 principles at a very granular level. The five components are: governance and culture; strategy and objective-setting; performance; review and revision; and information, communication, and reporting. To evaluate whether COSO ERM provides adequate guidance to manage entity-level risk related to strategy, we matched the three categories of strategic risks with the relevant COSO ERM principles and the five components. As Figure 2 shows, COSO ERM principles touch on all three categories of strategic risk. Given the formidable challenge of managing strategic risk in today’s volatile, uncertain, complex, and ambiguous (VUCA) business environment, it’s critically important for users of COSO ERM to be aware of any gaps that exist. So we looked closer to see if there are any strategic risks that aren’t fully addressed.


Click to enlarge.




The first gap pertains to the strategy and objective-setting component. Figure 2 shows that COSO ERM principles are heavily geared toward addressing the risks to strategy. Yet it appears that the COSO ERM framework doesn’t support risks from strategy and risks of strategy with the same intensity and emphasis as it supports risks to strategy.


Risks to strategy are generally addressed by risk-centric, informal ERM frameworks that existed even prior to the initial release of the COSO ERM framework in 2004. Because risks from and risks of strategy pertain to strategy formulation (in determining the path the organization takes), it’s critical that these two categories are prioritized. Generally, one reaps what is sown, and a flawed strategy formulation process will reveal itself in execution.


The second gap we identified pertains to the fourth COSO ERM component: review and revision. The COSO ERM framework states, “By reviewing enterprise risk management capabilities and practices, and the entity’s performance relative to its targets, an organization can consider how well the enterprise risk management capabilities and practices have increased value over time and will continue to drive value in light of substantial changes.” Given today’s fluid business environment, organizations must review and revise the methods used to identify, assess, and evaluate strategic risk; the controls used to mitigate strategic risk; and the strategies themselves. Because any strategy can be upended by a changing environment, the quality of environmental scanning and speed of anticipation of emerging risks are crucially important.


The global business experience in 2020 and 2021 in the wake of the COVID-19 pandemic clearly demonstrates the importance of an all-inclusive approach to reviewing and revising risk management. The pandemic has highlighted the importance of feedback loops, and the term “agility” has gained unprecedented importance. Agility, in the context of strategy, refers to the speed with which one can make changes to strategy to adapt to changed circumstances.


The World Economic Forum’s Global Risks Report 2020 predicted the likelihood of infectious disease risk (categorized as a societal risk) at less than 3 (5 being the highest) and impact from infectious disease slightly above 3.5. Almost all risk surveys indicated economic slowdown, cybersecurity, and regulatory changes as the top risks for 2020. COVID-19 was a total surprise, forcing companies into uncharted territories—some companies may have had their strategy slates wiped clean. Others, fighting to survive, were compelled to make an abrupt but complete overhaul of their strategy within a matter of days—involving changes that would normally take a few years.


The review and revision component of COSO ERM includes three principles that intend to provide guidance on risk management when there are major changes: assesses substantial change, reviews risk and performance, and pursues improvement in ERM. For some companies, a changing business environment poses risks; to others, the same changes may present opportunities. Let’s take a closer look at both of these aspects in relation to COSO ERM.




COSO ERM acknowledges that entities’ strategy, business objectives, ERM practices, and capabilities change with shifting business context. The “assesses substantial change principle” refers to internal and external environmental changes that may substantially affect strategy and business objectives. We would expect COSO ERM to provide guidance on what the organization should do when the strategy becomes irrelevant or goes awry because of changed or changing circumstances (when risks to strategy escalate).


The “reviews risk and performance principle” concentrates on assessing whether the entity performed as expected and achieved its targets as well as the appropriateness of the risk level. This involves taking another look at risks that may affect performance and achievability of targets. COSO ERM then provides a conditional statement: “If the performance variance exceeds the acceptable variance in performance or results in a different risk profile than what was expected, then there may be a need to review business objectives, strategy, culture, etc.”


What if the entity performed as expected and achieved its target (a lagging indicator), but the external environment is showing signs of major changes that may make the existing targets irrelevant? Today’s business environment is highly fluid and full of disruptors. Whether due to technological advancement, regulatory changes, natural disasters, or infectious diseases, almost every target is a moving target. Examples in the business world where disruptive changes have doomed businesses include Kodak’s failure to understand and respond to digital photography, Blockbuster’s failure to understand and respond to streaming media, and Borders’s failure to understand and respond to e-books.


Therefore, an effective framework must highlight the need for reevaluating and modifying strategy based on identified risks. It should encompass an interactive, forward-looking control system—not a control system based on lagging indicators alone, but one informed by leading indicators as well.


When properly conceived and implemented, an interactive control system—one that provides feedback based on strategic uncertainties and therefore facilitates strategic renewal—will adhere to the logic that today’s controls must pave the way for tomorrow’s strategy. After all, organizations shouldn’t necessarily be chasing current best practices, but rather “next practices”—much like the advice from the legendary hockey player Wayne Gretzky: “Skate to where the puck is going, not where it has been.” In summary, COSO ERM discusses the need for organizational stability, resilience, and agility due to the change in the environment, yet the concepts of interactive controls and modification of strategy or emergent strategy aren’t mentioned.




Companies that successfully pursue new opportunities as they emerge become renowned disruptors. Therefore, in today’s environment, risk management frameworks must optimize risk, not just mitigate it. Optimizing risk involves balancing downside risk (threats) and upside risk (opportunities).


COSO ERM acknowledges the importance of exploiting opportunities: “For-profit entities create value by successfully implementing a strategy that balances market opportunities against the risks of pursuing those opportunities.” The framework distinguishes between positive outcomes and opportunities. A positive outcome occurs when performance exceeds the original target; opportunity occurs when an action alters goals or approaches for creating, preserving, and realizing value. The framework also emphasizes the importance of seizing opportunities, but it falls short on guiding the user as to how.


Specifically, COSO ERM could have added more value to users by providing more guidance (through principles) on how to identify risks that can be pursued as opportunities—not just during the strategy-setting process, but on a continuous basis—and how strategies should be modified. We therefore identify lack of guidance on exploiting opportunities and modifying strategies accordingly as a gap left unfilled by COSO ERM.





As mentioned earlier, LoC is a framework intended to achieve control over strategy—at formulation as well as during execution. LoC incorporates a dynamic view of controls over strategy, captures the two-way relationship between strategy and risk, and discusses controls that capture this reciprocal relationship. Key aspects of this framework can be used to fill the identified gaps in COSO ERM.


LoC identifies four constructs that managers must analyze and understand for the successful formulation and implementation of strategy: core values, risks to be avoided, critical performance variables, and strategic uncertainties. LoC then presents a system of controls (or levers), where each system is intended to control a single construct. Entity-level success is achieved by balancing the four levers: boundary, diagnostic, belief(s), and interactive. ­Figure 3 provides an overview of the levers and constructs.



The belief and interactive controls are positive and inspirational, whereas the other two are constraints and pertain to compliance. As such, boundary and diagnostic controls are risk-centric (pertaining to execution of strategy), while belief and interactive controls are objective-centric controls (pertaining to formulation and modification of strategy).


Belief control systems are the explicit set of organizational definitions that senior managers communicate formally and reinforce systematically to provide core values, purpose, and direction for the organization. In a broad sense, belief controls define and gain adherence to the organizational culture. Formulation of the organization’s mission, vision, and core values and aligning goals and strategies with mission, vision, and core values fall under belief controls.


Interactive control systems focus attention on strategic uncertainties and enable strategic renewal (with the intention of validating strategies). Strategic uncertainties may threaten or invalidate the current strategy of a business. Interactive controls help managers search for new ways to strategically position the organization in an evolving and dynamic business setting. The focus is on identifying “risks and opportunities” and on shaping emergent strategy as opposed to intended strategy.


In some situations, strategic uncertainties lead to new opportunities. To seize emerging opportunities, it isn’t sufficient for managers to ask, “What are the critical things that a business must do well to achieve its intended strategy?” They must also ask, “What assumptions or external factors could block the achievement of our vision in the future? What can we do to reap the optimal benefits in the new reality?”


Interactive controls force managers to collect information related to strategic uncertainties, especially by tapping into the information possessed by lower-level employees. Being in the trenches, they may have the best knowledge of the situation and valuable ideas on how to seize unexpected opportunities and deal with problems. Over time, the organization will adjust its strategies to capitalize on the learning, especially the learning that originated at lower levels (emergent, bottom-up strategy-setting process).


Boundary control systems define the acceptable domain of activity at the strategic level (e.g., what kinds of business opportunities shall be avoided or pursued), at the business level (e.g., the protocol followed in qualifying a supplier), and at the individual level (e.g., prohibited behaviors). Boundary controls exist both to exclude undesirable actions and to specify expected behavior (codes of conduct).


Diagnostic control systems are mostly applicable at the operational level and should motivate employees to execute their assigned responsibilities and to align individual and organizational goals. Performance measures often fall under the realm of diagnostic controls.


As you can see, LoC is at a broad conceptual level. In contrast, COSO ERM goes into more granular detail by specifying three to five principles for each of the five components. Therefore, to provide granularity and increase the practical usefulness of LoC as a framework, we expanded each lever into several action items (see Table 1). To be consistent with COSO ERM, and for comparison purposes, we label the action items as principles. (Note: An expansion of LoC was first published in Ramji Balakrishnan, Ella Mae Matsumura, and Sridhar Ramamoorti’s “Finding Common Ground: COSO’s Control Frameworks and the Levers of Control,” Journal of Management Accounting Research, Spring 2019. We modified the expansion to better fit strategic risk management.)





COSO ERM and LoC each have their own merits and drawbacks. Neither framework on its own is sufficient to handle all facets of strategic risk in the VUCA business environment. We therefore combine the principles of COSO ERM and granulized LoC to create an integrated framework that will better optimize strategic risk (see Table 2).


Click to enlarge.


Harvard Business School senior fellow Bill George suggests a fitting response to business environments where volatility, uncertainty, complexity, and ambiguity are certain: Leaders should possess commensurate vision, understanding, courage, and adaptability (VUCA 2.0). Others have underscored agility and resilience when confronting such environments. As COVID-19 demonstrated, some risks are unpredictable; even if the risk itself is conceivable, the likelihood and impact may be unpredictable.


Strategic risk may arise during the strategy formulation or execution stages, and it may appear in the form of risks of strategy, risks from strategy, and risks to strategy. We believe the suggested integrated strategic risk management framework provides practitioners with a more comprehensive and robust approach to managing risks during strategy formulation and execution in today’s volatile, uncertain, complex, and ambiguous business environment.


Harshini Siriwardane, Ph.D., CMA, is a visiting assistant professor at Miami University, Ohio, and a member of IMA. She can be reached at
Ella Mae Matsumura, Ph.D., is a professor emeritus of accounting at the University of Wisconsin—Madison and a member of IMA’s Madison Chapter. She can be reached at
Sridhar Ramamoorti, Ph.D., CPA, CIA, CFE, CGFM, is an associate professor of accounting at the University of Dayton and a member of IMA’s Dayton Chapter. He can be reached at
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From Controller to CFO

By Mike Whitmire, CPA; Razzak Jallow; and Greg Vecellio

The pandemic accelerated every successful organization’s need to be nimble and flexible. Companies that automated processes prior to COVID-19 were able to operate seamlessly, but other companies were forced to reinvent themselves without the benefit of timely information and insight. This sudden shift created new challenges and opportunities for corporate controllers and CFOs, who were expected to support the constant change and disruption that became the norm over the past two years.


Across industries, controllers and CFOs had to deal with higher demands and expanded responsibilities in shorter time frames. Controllers gain experience that’s necessary to become finance leaders, but those with aspirations to reach the CFO level must stretch themselves beyond their traditional role and skill set by becoming operational and strategic leaders as well. Some companies hire finance chiefs without an accounting background, so the competition is fiercer than ever before.




Traditionally, the controller role has been tactical, handling the day-to-day, behind-the-scenes activities of the finance function—processing the month-end financial close and only the close. Technology that enables automation provides much-needed relief for finance and accounting teams. By adopting technologies that eliminate manual processes and shorten financial close cycles, controllers and CFOs have more time to focus on strategic planning and providing insight beyond reporting the numbers in the profit and loss statement (P&L).


Controllers sit at a crucial juncture—between the C-suite and the accounting team—so it’s no surprise that the pandemic impacted them professionally and personally. Controllers don’t just pay attention to the numbers; they also have to become great leaders and monitor the well-being of the team.


In a recent FloQast report, which surveyed more than 250 controllers and upper-level finance professionals, it was clear that automating the monthly financial close process delivers huge benefits across the accounting and finance function by speeding up operations and ensuring the accuracy of the books. Accounting workflow automation solutions aimed at impacting the month-end close increase close visibility, accuracy, and speed across a remote or hybrid team. Automation is designed to help finance teams stay on track and become more efficient even while working remotely or being down team members during part of the year.


The tight labor market is making it difficult to find the talent that organizations need in their accounting department. Automation also allows organizations to scale without increasing head count. While the number of many companies’ job openings has grown, the college degree pipeline is in danger of not keeping pace with the demand for finance and information technology professionals.


This means that many controllers and accounting teams will need to do more with fewer people. One FloQast survey respondent recommended “…finding systems to automate as many of your accounting tasks as possible, freeing up your time to manage, make decisions, and train as top priorities. You can’t do it all, so relying on technology to free up your plate should be top of mind. Everything else will fall into place.”


Automation can’t do everything, though, and talented, experienced controllers are valuable even in a profession increasingly transformed by technological innovation. Survey respondents found that as organizations add automation and AI, making sure the finance function has the right team members is more important than any software or process.





The controller’s role is one of the most challenging in the company. The job of the controller is dynamic, with new and often unexpected issues occurring frequently. Having a strong team to share the workload is essential. Leading a team, however, also comes with the responsibility of hiring and firing.


A controller who responded to the survey advised that “…it’s better to switch out underperformers than to be concerned with transition and the impact on short-term workload.” Finding the right mix of talent and head count for a team means controllers shouldn’t “…underestimate staffing needs and the capabilities of current staff. Open conversations with leadership and staff are so important.” Hiring during a pandemic came with its own challenges, according to one respondent: “Onboarding and defining culture while working remotely was considerably harder than I had imagined.”


Not surprisingly, collaboration software platforms such as Zoom and Microsoft Teams came out on top when controllers were asked which tools were most critical to their team during the pandemic. With remote and hybrid work here to stay, 89% of controllers who responded to the survey ranked them as most important. According to one controller, “I know better now how to connect my team across continents, making the department feel as one.”




While the demands on controllers have been increasing for some time, successful organizational leaders understand that being a great management accountant and finance function leader requires more than just being good with numbers. The best management accountants understand the rules that govern what they do, guidance from the business, and how to apply technological innovations and better operational processes to make the organization run more efficiently.


Depending on the size of the company and its leadership structure, there are likely many opportunities to be more hands-on and evolve the role of the controller to become more involved in financial planning and analysis, treasury, tax management, and information systems, among other functions. See “How Controllers Provide Increased Value” for more on this.


The controller is a vital role that balances various responsibilities. As the role of the controller shifts from being a steward of resources to a contributor of strategic insights and a catalyst for change, technology is helping controllers embrace those bigger demands. One controller delighted in how dynamic the role has become: “I love the reach of this position and how many more resources are available today to effectively manage responsibilities than when I started!”


To lead such wide-ranging activities, controllers must have a growth mindset and focus on organizational strategy. While some controllers and enterprises are content to keep the controller role the same as it was pre-pandemic and before the era of digitization, organizations that adopt a new way of thinking about the controller role will likely see greater success in operations and their bottom line. Increasingly, organizations are filling CFO roles from nonaccounting backgrounds, which has created a much more competitive market for controllers looking to rise to the CFO level.





Just as the controller role is evolving, finance professionals must stay on top of the trends that are transforming the CFO role. Traditionally, the CFO’s primary roles were preserving the assets of the organization by minimizing risk, getting the books right, and running an efficient and effective finance operation.


The CFO role has really evolved over the last 20 to 30 years. Thirty years ago, the CFO and finance team were responsible for ensuring that the P&L was right and were viewed as “budget cops” from whom it’s necessary to seek approval. Twenty years ago, the CFO started to communicate the company’s value proposition and strategic vision to investors to raise money and rounds of financing. Ten years ago, CEOs looked for CFOs who could articulate the lifetime value of a customer and other metrics to forecast potential business outcomes 10 years out, but their role was still primarily limited to finance.


In the last five years or so, CFOs have become business partners with other senior executives, such as the chief information officer, chief marketing officer, chief operating officer, and other business unit leaders. This is due in part to the need to link nonfinancial metrics to the P&L and be able to pinpoint when the revenue will come in. Additionally, CFOs have had to shift their focus to enterprise-wide performance, growth initiatives, and business transformation, making it increasingly important for CFOs to be strategists.




A controller should strive to add to their skill set to make them a potential candidate to become a CFO. Once they’ve attained that promotion, in order to step up to the challenge of performing at a strategic level, CFOs have to reimagine how they view their role and their team. Even prior to the COVID-19 pandemic, CFOs could lag relative to other functional areas in terms of how they evaluated employees. CFOs judged their employees based on how long they were at the office or how hard they seemed to work. Now, especially since the pandemic forced many to work from home, CFOs have had to rely on performance data to evaluate their teams. Ensuring that their team consists of top talent, is productive, and feels valued at the organization will help today’s CFOs focus on new priorities.



To act as catalysts for change, CFOs must instill a financial approach and mindset throughout the organization to help other parts of the business perform better. The CFO needs to be viewed as an integral part of top management at the company, making an endorsement from the CEO crucial. Additionally, to make the shift from reporting to helping shape the overall strategy and direction of the enterprise, CFOs need the following skills, some of which aren’t necessarily finance-related:

  • Business perspective, change and conflict management, organizational agility, and facilitation
  • Strong communication and change management skills
  • Strong leadership and business partnering skills
  • An ability to create a culture of risk intelligence to manage risk while executing business strategies
  • Understanding of key performance measurements to measure the success of strategic and operating initiatives


Successful CFOs bring far more than financial expertise to their organization. They’re effective leaders, data analysts, and strategic planners.




Organizations are looking for the CFO to provide leadership based on the numbers, rather than focusing solely on the numbers. The ability to understand valuable, relevant data and provide guidance to the organization is imperative for a CFO. The result is increased efficiency, new ways to go to market that are aligned with customer needs, and an ability to make decisions and organizational changes quickly, rather than needing years to roll out a new initiative.


These aren’t skills that controllers have traditionally learned in their education or even on the job. While management accounting and finance professionals, including controllers, are used to ongoing education, in most cases, that education doesn’t include the nonfinance experience needed. By stretching themselves and taking on projects on the business side of the enterprise, controllers can gain the skill sets necessary to rise up in the organization. There are several ways to gain the experience, including:


Being proactive. Accounting can be very “in the weeds.” Leveraging insights into the numbers and looking beyond them to understand the bigger picture and the company’s business goals is imperative for anyone looking to take on the CFO role.


Listening. Having a great relationship with the sales department creates a powerful internal collaboration that results in better processes, more profitable deals, and compensation plans that align with business goals. Given finance’s historical role of being the “no” people in an organization, it’s even more important for CFOs to listen to the heads of other departments and be flexible, assuming that no ethical lines are being crossed and no unnecessary risks are being taken.


Engaging. Understanding how sales goes to market and working together with the business development team to create contracts that work for both the business and customers are key to long-term profitability. The finance and sales relationships should be isolated to the leadership level. Controllers and CFOs can provide immense value to sales executives down the line with customer profitability insights.




Gone are the days of the controller and CFO being the “no” people of the organization. The new environment of fast-paced change and unpredictable disruptions to business models make evolving the controller and CFO roles even more crucial to the organization’s success. By adopting technology that lightens the manual workload, today’s finance leaders can:

  • Provide business insight to sales and operations on customer profitability;
  • Predict the total value of each customer for the ­organization;
  • Assist product development based on customers’ desired features and capabilities;
  • Work with the chief information officer to determine if the current tech stack is the optimal one for the business;
  • Represent the company to the board of directors and investors; and
  • Act as a liaison between departments and operationalize processes to create desired results.


Having a system where personnel can have insights from multiple functions and teams in one place is critical. Adding financial data to other operational data can be particularly impactful when brought back to the business and contextualized. One example of the benefit derived from this kind of analysis is creating new compensation plans in order to change business behavior by sales and operations teams. In another example, CFOs and controllers work jointly with sales to redesign contracts to optimize profitability per customer.




Today, technology enables the close process to be dramatically shortened. In addition to speeding up the process and ensuring its accuracy, we’ve identified three additional benefits:


  1. Making people’s lives better. Anything that can be done to make the closing process easier, shorter, and less painful is a positive step.


  1. Allowing the finance team to spend more time on strategic projects, beyond the close. Controllers who want to make the leap to CFO have to demonstrate their ability to influence the business and have a great productive team. One definitive way to show that ability is to harness the power of technology to gain business insights beyond the raw numbers. By doing so, controllers can leverage that information to influence the business and how it performs. For instance, finance knows every customer’s contracts better than anyone else at the company. It can bring the insights that it’s seeing in its financial reporting and use them to operationalize for better revenue results.


  1. Enabling controllers to hire better talent. Given that talent is the critical component of any successful business, automating financial reporting results in greater retention rates. Arduous and painful close processes inhibit hiring top talent and cause burnout and turnover in the finance department.


Not only do these solutions boost productivity, but when leveraged properly, the insights from the finance function can also be applied to all functional areas of an organization. This creates a major opportunity for controllers and other management accountants and finance leadership to boost their existing skills and acquire new ones. In order to make the leap to CFO, controllers have to demonstrate the ability to influence the organization’s performance and strategy, and that depends greatly on having a stellar, productive team.




One startling result from the tumultuous year 2020 is that COVID-19 made us stronger. In fact, 40% of controllers surveyed said that they used their experiences working remotely to drive a faster close than before the pandemic. They’re quickly adopting a remote or hybrid model that allows for better work-life balance and higher productivity. Communication and collaboration tools have become essential for working with a remote or hybrid team, while close management tools make the all-important month-end process smoother.


The coming years will continue to redefine the controllership and CFO roles. We don’t know what unknowns are in store for business, but with the right people and information systems, organizations can predict and quickly respond to market changes. This is the best time in history to be a controller or CFO. Thanks to an explosion of technology available to finance and accounting professionals, the jobs are more challenging, dynamic, and strategic than ever.


The finance function will continue to be able to demonstrate its value in every organization by providing insights and guidance that go beyond the numbers. If you’re interested in impacting the business from within the finance organization, now is the time to take on new challenges and learn new skills. You’re in a unique position to drive real value and innovation for your organization, as well as further your own career.


Mike Whitmire, CPA, is the CEO of FloQast, an accounting software vendor specializing in close management. You can reach him at
Razzak Jallow is the CFO of FloQast. You can reach him at
Greg Vecellio is the controller of FloQast. You can reach him at  
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Taxes: 2021 Year-end Tax Issues

By Anthony P. Curatola, Ph.D., and James W. Rinier, CPA, EA

Federal tax changes and U.S. Department of the Treasury notices can impact 2021 taxes for individuals and businesses.


With 2021 drawing to a close, many tax advisors are gearing up for the upcoming 2021 tax filing season for individuals and businesses. The U.S. Department of the Treasury issued final regulations on taxpayers’ life expectancy, the Internal Revenue Service (IRS) expanded the Identity Protection (IP) PIN program to all taxpayers, and Congress made another change to the employee retention credit. Keeping informed on these changes is a full-time job. Here are some details on a few of the business and individual changes that might be overlooked that apply to the 2021 tax filings.




The Treasury Department had issued proposed regulations (REG-132210-18) that were due to impact all taxpayers taking required minimum distributions (RMDs) beginning with tax year 2021. These regulations updated the life expectancy tables to reflect longer life expectancies. Such a change would allow taxpayers to take smaller RMDs over time and thereby extend their available funds over a longer period. Of course, this assumes the taxpayer has adequate savings to take advantage of the smaller RMDs.


The Treasury Department, however, issued the final regulations in November 2020 (TD 9930) that delayed the effective date of the regulations to 2022 (instead of 2021). Consequently, taxpayers need to take their 2021 RMD based on the old life expectancy tables, which translates into a larger distribution amount. Thus, the smaller RMDs are coming, but not until 2022. The importance of this issue is to ensure that taxpayers took the correct RMD for 2021, which is a larger amount than it would have been under the updated tables.




The IRS has expanded its IP PIN opt-in program to all taxpayers who can pass a rigorous identity verification process (IRS News Release 2021-09). The IP PIN is a six-digit code that only the taxpayer and the IRS know to help prevent someone from filing fraudulent tax returns using a taxpayer’s personally identifiable information such as a Social Security number.


The IP PIN program isn’t new: It started about 10 years ago to protect confirmed victims of identity theft from ongoing tax fraud. The IRS expanded the program to specific states where taxpayers could voluntarily obtain the IP PIN, and now the program will be available nationwide. The IRS provides key information about the IP PIN opt-in program in News Release 2021-09:


  • The program is voluntary.
  • The taxpayer must pass a rigorous identity verification process, and spouses and dependents are eligible for an IP PIN if they can verify their identities. An IP PIN is valid for a calendar year, and a taxpayer must obtain a new IP PIN each filing season (yes, you need to get one every year).
  • The online IP PIN tool is unavailable between November and mid-January each year.
  • Correct IP PINs must be entered on electronic and paper tax returns to avoid rejections and delays.
  • Taxpayers should never share their IP PIN with anyone but their trusted tax provider. The IRS says it will never call, text, or email a taxpayer requesting their IP PIN and urges taxpayers to be aware of scams to steal their IP PIN.
  • Perhaps most importantly, there is currently no opt-out option for taxpayers once they opt in, but the IRS is working on one for 2022.


To obtain the IP PIN for 2021, a taxpayer should go to the IRS website and follow the instructions. If the taxpayer doesn’t have an IRS account, the online process will require the individual to verify their identity using the Secure Access authentication process. Once a taxpayer authenticates their identity, the 2021 IP PIN will be immediately available. The IP PIN must be used when prompted as the taxpayer prepares electronic tax returns, or it should be entered by hand near the signature line on paper tax returns.




Another important change applies to eligible employers who can take a 70% tax credit of wages paid after March 12, 2020, and before January 1, 2021, against applicable employment taxes for each calendar quarter. The American Rescue Plan Act of 2021 extended the employee retention credit for businesses through December 2021, so there’s still some time left to claim this credit for the third and fourth quarters of 2021.


The credit is available to businesses that have seen revenues decline or had to temporarily shut down operations due to government orders related to COVID-19. Businesses that qualify can take a 70% credit on $10,000 of an employee’s wages per quarter, which amounts to a credit of $7,000 ($10,000 x 70%).


In addition, a separate credit is provided to new start-up businesses that meet the criteria of a “recovery startup business” that began operations after February 15, 2020. These qualified businesses are eligible to claim up to $50,000 total credit for each of the third and fourth quarters of 2021.


Self-employed individuals may be able to claim the credit for the wages they paid to their employees, but they don’t qualify for their own self-employment earnings for this tax credit.


For guidance on the employee retention credit, consult Notice 2021-20, Notice 2021-23, Notice 2021-49, and Revenue Procedure 2021-33. The IRS also provides additional guidance on its website, but it may not be up to date.




The IRS issued its annual notice (Notice 2021-52) updating the special per diem rates for taxpayers to use in substantiating the amount of business expenses incurred while traveling away from home. The notice is applicable for the period October 1, 2021, to September 30, 2022, and thereby modifies the rates provided in Notice 2020-71 that were applicable for the period.


The new high-low substantiation per diem rates are $296 (previously $292) for travel to any high-cost locality (the key cities, counties, or other defined locations where costs are higher for per diem purposes) and $202 (previously $198) for travel to any other locality within the continental United States (CONUS). The new per diem rates for meals and incidental expenses only are $74 (previously $71) for travel to a high-cost locality and $64 (previously $60) for travel to any other locality within CONUS. There were a few changes in the high-cost locations. Hilton Head, S.C., was added; Rhode Island cities Jamestown, Middletown, and Newport were added for part of the year; and Gulf Breeze, Fla., was removed.


The 2021 tax year continues to be a challenging time for all taxpayers. It’s vital that taxpayers and tax preparers keep up with business and individual tax law changes, as the number of changes could lead to something being overlooked for 2021 tax filings. Being aware of some of these key announcements and notices should be helpful for taxpayers as they prepare for the 2021 tax season.


© 2021 A.P. Curatola


Anthony P. Curatola, Ph.D., is editor of the Taxes column for Strategic Finance, the Joseph F. Ford Professor of Accounting at Drexel University, and a member of IMA’s Greater Philadelphia Chapter. You can reach Tony at (215) 895-1453 or
James W. Rinier, CPA, EA, is the Vertex Fellow at Drexel University. He can be reached at  
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How Far Are the Mountains Now?

By Michael Castelluccio

When you review the progress made in various areas of quantum computing in 2021, you might detect a sense of inevitability that wasn’t evident last year.


Digital quantum hasn’t arrived yet, but we’re farther along the road; we’re now among the foothills on the way to its transformational power. Financial applications are already in development, so the time to investigate and prepare has arrived.


Quantum computing doesn’t look like it will be producing general computing machines. As Gartner analyst Chirag Dekate explained at the Xpo 2021 Americas, “Quantum computing is not a general-purpose technology—we cannot use quantum computing to address all the business problems that we currently experience.” For the near future, we can probably expect quantum machines to specialize, and the first fully functional quantum computers won’t replace but rather will work alongside classical computers and networks.





Advances in quantum this year were wide-ranging. Here’s just a sampling from various areas of development.


Volkswagen. The German automaker was involved early when in 2016 it created a quantum project for real-time traffic routing. Now, it’s introduced quantum computing in assembly-line paint shops to maximize efficiency, and Volkswagen uses it also to establish model pricing and to decide where best to install charging stations.


Diamonds. There were two especially interesting experiments with quantum hardware this year. Both involve the nanofabrication of unique materials—a synthetic diamond with an intentional flaw for manipulating photons and a two-dimensional superconductive material called graphene.


In May, an Australian research team created a diamond-based quantum photonic circuitry, explaining the challenge in a research paper: “For diamond to be used in quantum applications, we need to precisely engineer ‘optical defects’ in the diamond devices—cavities and waveguides—to control, manipulate and readout information in the form of qubits—the quantum version of classical computer bits.” Most difficult was creating the defects. “It’s akin to cutting holes or carving gullies in a super thin sheet of diamond, to ensure the light travels and bounces in the desired direction.”


Meanwhile, at about the same time, MIT researchers were experimenting with a “magic material” called graphene to build a better quantum computer. Graphene is a bizarre two-dimensional material that’s a one-atom-thick layer of carbon arranged in a honeycomb structure. So far, MIT researchers have designed three new quantum electric devices with it: a superconducting switch, a spectroscopic tunneling device, and a single-electron transistor.


Quantum AI. In May, Google unveiled its new Quantum AI campus in Santa Barbara, Calif. The press release explained, “This campus includes our first quantum data center, our quantum hardware research laboratories, and our own quantum processor chip fabrication facilities. Here, our team is working to build an error-corrected quantum computer for the world.”


Desktop quantum. In August, the Australian hardware manufacturer Quantum Brilliance announced its plan to deploy the world’s first room-temperature diamond computing system at the Pawsey Supercomputer Research Center in the first quarter of 2022. Mark Luo, the company’s cofounder and chief operating officer, explained, “We have a clear five-year roadmap to produce something we call quantum utility. Other systems can’t miniaturize, we can miniaturize. So for us it’s about producing a quantum computer or quantum accelerator that outperforms a classical computer of the same size, weight and power.”


Help on the road. In late September, IBM announced a program with resources for businesses at any point on their journey to quantum readiness. Called the IBM Quantum Accelerator, the mission is to help guide participants on to the road to quantum advantage, whether they are new and curious or have established quantum computing expertise.


Jiuzhang 2.0. In October, China Daily reported that “Chinese scientists have established a quantum computer prototype named ‘Jiuzhang 2.0’ with 113 detected photons.” (Photons are light particles that can function as qubits in photonic systems.) “With 113 photons,” the newspaper claimed, “‘Jiuzhang 2.0’ can implement large-scale GBS [Gaussian boson sampling; a series of tasks that measure speeds] septillion times faster than the world’s fastest existing supercomputers…. In a nutshell, it would take the fastest supercomputer about 30 trillion years to solve a problem that ‘Jiuzhang 2.0’ can solve in just one millisecond.”


As progress accelerates in different quantum sectors around the world, the goal of fully functioning quantum computing is coming into view and already available quantum services are multiplying.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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Relax and Recover

By J. Stephen McNally, CMA, CPA

There is a rhythm to rowing. When you row, you start by dropping your blade in the water at the catch, pulling, lifting it out, recovering while advancing back to the catch, and repeating.


The recovery is your opportunity to relax and breathe; otherwise you’ll stall mid-race. During the recovery, though, you need to remain steady and controlled, otherwise you’ll be out of sync with your crewmates and throw the boat off-kilter. Knowing this, many coaches continually remind their crews to “relax the shoulders and slow the recovery.”


This advice applies equally to management accounting and finance professionals like us. Many of us are type A personalities. We’re ambitious, competitive, and highly focused on our work and careers. We’re the first to arrive in the morning, and we turn out the lights at day’s end. We can be impatient, especially if (we think) our time is being wasted. Even during our free time, whether nights, weekends, or vacations,  we’re tempted to read emails and check in. We, like the rower, must be reminded to relax and recover.


As we approach year-end, I encourage you to strive for a degree of balance. After you’ve worked diligently all year, studying for exams, teaching tomorrow’s leaders, or driving your organization forward, December is a great time to slow down and catch your breath. Many will be celebrating holidays such as Christmas, Hanukkah, Kwanzaa, and New Year’s. Leverage these celebrations to spend quality time with family and friends. Take advantage of the opportunity to reconnect with those you’ve lost touch with (e.g., due to COVID-19) and to develop new relationships for your network.


I also encourage you to take time for yourself, prioritizing personal fitness, health, and mental well-being. For example, consider going for a run, playing in a game of pickup basketball, lifting weights at the gym, or, like me, going for a row. Enjoy a hobby you put aside while focusing on your career, such as reading a mystery novel by the fire, playing the guitar, or woodworking in the barn. Now is also the perfect season to give back to your community, serving at a soup kitchen, chaperoning at a shelter, reading to children at the library, or otherwise making a difference. The intangible reward from giving your time and talent is priceless.


Finally, it’s a great time to remember your many accomplishments throughout the year and to reflect on your goals and priorities going forward. For example, perhaps you want to give back to our profession, getting involved as an IMA® volunteer for the first time or in a new way. Or maybe you want to become a CMA® (Certified Management Accountant). Start planning to make it happen.


As 2021 draws to a close, I hope you find some of that elusive balance we should all strive for. And I wish you all the best in the New Year!


J. Stephen McNally, CMA, CPA, is CFO of Plastic Technologies Inc. (PTI) Group of Companies and Chair of the IMA Global Board of Directors. He’s also a member of IMA’s Toledo Chapter. Contact Steve at, or follow him on LinkedIn.
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Peer Performance and Budgetary Targets

By Martin Holzhacker, Ph.D.; Stephan Kramer, Ph.D.; and Michal Matejka, Ph.D.

Using past peer performance benchmarks can be an effective way to set annual performance targets, but it might discourage cooperation among business units.


A common approach for supervisors to set ambitious but achievable performance targets is to start with last year’s performance and adjust it for expected future growth. A downside of this approach is that it discourages managers from going above and beyond because good performance today raises the bar tomorrow, making future targets more difficult to achieve. We look at an alternative target-setting approach based on peer performance that retains incentives to perform well.




This alternative approach begins with identifying a peer group of managers who face a similar business environment. The average performance of this peer group then becomes a long-term benchmark for target setting. Managers with performance below the benchmark would see substantial target increases until they catch up with their peers. In contrast, managers with performance above the benchmark would only see modest increases or possibly even decreases in their targets.


Peer-based targets have two key advantages. First, to the extent that the peer group is exposed to similar economic fluctuations, peer-based targets are flexible and adjust upward as well as downward in response to changes in the business environment. This provides some reassurance that the best in a peer group will be rewarded even if adverse economic shocks reduce their performance. Second, best performers are less concerned about greatly outperforming their current target if targets depend more on peer performance than on their own past performance. Conversely, managers lagging behind their peers are under pressure to improve.


The obvious downside to peer-based targets is that there is no such thing as a perfect peer group. Even in homogeneous peer groups, each manager faces a slightly different business environment. Another, bigger downside of peer-based targets is that they could invite competition rather than cooperation among peers. If higher peer performance raises targets for everyone, it can hurt managers who make an effort to help others rather than trying to maximize their own performance.




Does the importance of cooperation affect how supervisors set targets? We conducted a study using data from a company where cooperation is important (for the full study, see Martin Holzhacker, Stephan Kramer, Michal Matejka, and Nick Hoffmeister, “Relative Target Setting and Cooperation,” Journal of Accounting Research, 2019, pp. 211-239). In what follows, we refer to the company as Gamma.


With annual revenues of around $1 billion, Gamma provides testing and certification services for oil wells, pipelines, refineries, and other energy infrastruc­ture. The worldwide operations are decentralized into seven business geographical regions containing 15 business groups, which in turn are comprised of many business units that operate as autonomous profit centers responsible for serving customers in a particular geographical area.


The primary resources used in Gamma’s testing and certification services are qualified technicians and specialized equipment, used in testing for defects such as cracks or corrosion, and certifications of safety and reliability. Gamma faces highly volatile demand, and business unit managers often deal with capacity bottlenecks that make managing capacity utilization critical for profitability.


Business unit managers have some flexibility to adjust capacity through overtime or temporary employment contracts, but these alternatives are costly and only possible if additional demand can be predicted. Given these capacity bottlenecks, managers are very concerned about having to decline a surprise order, which could mean losing a longtime customer. To reduce this risk, business units invest in slack capacity both in terms of labor and equipment, even though it involves significant long-term cost commitments.


Slack capacity can also be shared among business units, and the benefits of such capacity pooling are widely recognized within Gamma. Cooperation via internal transfers is the least costly way to address bottlenecks because transfers are much cheaper than temporarily hiring qualified external personnel.


Cooperation is particularly desirable when, for example, travel distances between business units are small and capacity sharing is less costly, when offered services are similar so workers and equipment can be exchanged more easily between business units, or in situations where demand is predictably asynchronous—that is, when workers and equipment in one business unit are sitting idle while another business unit is scrambling for resources due to a high workload. Maintaining a norm of voluntary cooperation among its business unit managers is critical for Gamma.




Gamma follows a multistage process to set budgetary targets whereby business unit managers provide an initial estimate of next-year earnings and revenues and negotiate targets with business group managers. During these negotiations, business group managers extensively use a business intelligence tool that tracks sales growth and profit margins for each of their peer business units in their business group. The resulting targets are therefore generally based on past business unit performance as well as past performance of peer business units, although the weight placed on both varies from unit to unit.


Collecting multiple years of data on budget target revisions for business unit managers, we examined whether business unit targets are to a lesser extent based on past peer performance benchmarks when cooperation among managers is critical. Our analysis confirms that peer-based targets are used less when cooperation is most beneficial (i.e., travel distances are smaller, services are similar, and demand is asynchronous), resorting to setting targets based more on last year’s performance plus growth.


Yet we also found that cooperation wasn’t the only consideration when budgetary targets were set—for example, supervisors also refrained from setting peer-based targets if peers were relatively dissimilar to begin with.




Calibrating targets based on peer benchmarks can be an effective method to improve managers’ motivation and avoid strategic gaming of the target-setting process. It also encourages a culture that may be appealing to managers who enjoy competition.


On the other hand, using peer benchmarks in target setting may discourage cooperation because it can penalize managers who help others by granting them more difficult future performance targets. In practice, avoiding cooperation can come in various forms: silo thinking, lack of teamwork and knowledge sharing that impairs innovation, or even outright sabotage.


The way supervisors set targets can fundamentally affect workplace climate, so it’s important to be mindful of this impact the next time the annual planning cycle comes around.


Martin Holzhacker, Ph.D., is an associate professor of accounting at Eli Broad College of Business at Michigan State University. He can be reached at (517) 432-3035 or
Stephan Kramer, Ph.D., is an associate professor of accounting and control at Erasmus University Rotterdam. He can be reached at
Michal Matejka, Ph.D., is a professor of accounting at the W.P. Carey School of Business at Arizona State University. He can be reached at (480) 965-7984 or
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Securities Offerings for Capital Formation

By Mai Luu, CMA, CPA, CFE

Now a viable alternative for small businesses, securities offerings open up the possibility of raising significant amounts of capital.


One of the primary reasons that small start-up companies fail is the lack of sufficient capital to carry them through the financial hurdles during their early formation and development. As a start-up gets launched, reaches new milestones, and expands, it’s likely the small business will need several rounds of capital to stay competitive, hire top-notch professionals, realize the potential of the venture, and properly plan for an exit for its shareholders.


There are many reasons a small business may fail to raise capital. Leaders may lack the knowledge or fail to leave sufficient time to raise the capital.


The entrepreneurs may pitch to the wrong investors or fail to speak to the investors’ interests, or the company may lack sufficient human resources and corporate governance to ensure proper stewardship and deployment of the capital raised. Or, finally, the deal structure offered to investors may be too dilutive on investor capital, thereby deterring investor interest.


A Forbes article by Dileep Rao said the number of start-ups funded by venture capitalists (VCs) is about 300 out of 600,000 new businesses started in the United States each year. The odds of your start-up receiving VC investment are approximately 0.05%. So, it may be wise to plan to raise capital and grow your business without counting on VC money.


The good news is there is much more money than ever before in the hands of individual investors. On January 31, 2021, the amount of investor capital was more than $26.16 trillion (M1+M2, nonseasonally adjusted) compared to $17.57 trillion on May 7, 2018. M1 and M2 are monetary indicators published by the U.S. Federal Reserve Economic Data. M1 and M2 combined are considered “cash available for investment” on Wall Street. Small businesses can compete directly with VCs for individual as well as institutional investor capital by creating securities offerings with an attractive deal structure.




To further this effort and benefit start-up and early-stage companies, effective March 15, 2021, the U.S. Securities & Exchange Commission (SEC) published the Final Rules to modernize aspects of the private securities offering framework (click here for the summary table). These rule changes are extensive and will likely have a significant impact on the overall capital formation strategy of emerging companies across industries. Here are some key features:


  • Allows certain test the-waters communications between the issuer and investors prior to filing a Form C for Regulation Crowdfunding and Regulation D, Rule 506(c) offerings.
  • Revised accredited investor third-party verification under Regulation D, Rule 506(c).
  • Overhaul of Regulation Crowdfunding:

– The maximum offering amount has increased from $1.07 million to $5 million per raise per a 12-month period.

– For offerings up to $250,000, the SEC has extended the current temporary exemption from certain financial statement requirements for offerings until August 28, 2022.

– Individual investment limitations have been removed for accredited investors (other than the $5 million aggregate limit applicable to the offering) and revised for nonaccredited investors.

  • Offering limits have increased significantly in Regulation A, Tier 2, and Regulation D,Rule 504:

– Regulation A, Tier 2: The maximum offering amount has increased from $50 million to $75 million, and the secondary (or insider) sales have increased from $15 million to $22.5 million.

– Regulation D, Rule 504: The maximum offering amount has increased from $5 million to $10 million.


Crowdfunding has increasingly gained public awareness in the last few years, especially after the SEC’s Final Rules came into effect on March 15, 2021, which allows the increase of the maximum amount that can be raised through Regulation Crowdfunding offering by almost fivefold. This is a game changer for start-up and early-stage companies. Despite the initial optimism, caution is still warranted. For instance, on September 20, 2021, the SEC charged an issuer with committing fraud and conducting unregistered securities on a Regulated Crowdfunding portal. The SEC also charged the Crowdfunding portal and its CEO with failing to address red flags of the issuer and to reduce the risk of fraud to investors.


As the regulatory burdens of securities compliance have been considerably lifted for the issuer, Regulated Crowdfunding portals’ oversight roles seem to have taken on greater responsibilities to screen the deals that are raising capital through securities offerings on their online platforms. Of course, in the presence of violations of securities laws, rules, and regulations—whether discovered by the regulators or not—both the issuer and the Regulated Crowdfunding portal are at risk.




The regulatory amendments create a favorable landscape for small businesses seeking new ways to raise capital. These amendments significantly expand the investor pool for small securities offerings while lightening the compliance burdens for the issuer.


To legally raise capital through securities offerings, one must have the required securities-offering document in place in compliance with federal and state securities laws. To effectively raise capital through securities offerings, one is wise to provide an attractive deal structure that the investors find more appealing than other investment opportunities, relative to the risks involved. A securities offering is appealing when it maximizes investors’ return; maximizes investor safety by minimizing the operational, financial, and litigation risks of the business; and provides a clear exit strategy with available options for continued upside participation at the discretion of the investor.


There’s always a “sweet spot” between the entrepreneur’s goals and the investor’s goals when formulating a deal structure. Your job is to discover it. This means the investor is protected, to the highest degree possible given the risk involved, with the highest return potential, while the entrepreneur obtains the proper amount of capital without diluting their equity interests. This process can be further enhanced by engaging in a series of capital raises using hybrid securities, such as convertible notes and/or preferred stock.


A business plan or a pitch deck won’t comply with federal and state securities laws as these documents normally don’t provide sufficient disclosures required under securities laws, rules, and regulations. So, one would most likely violate securities laws when attempting to present a pitch deck to potential investors. Creating a marketable deal structure to attract individual investors requires the hard work of learning, planning, and producing pro forma financial projections to Generally Accepted Accounting Principles compliancy.


For a start-up or early-stage company, the burden of raising capital is mostly on you even when you pay professionals to handle the legal and accounting work. Done correctly, small securities offerings with marketable deal structures allow small businesses to raise substantial amounts of capital like never before.


NOTE: The article is in no way inclusive of all of the alternative ways to legally conduct an offering of securities.


Mai Luu, CMA, CPA, CFE, is the COO and managing director at Commonwealth Capital, LLC, and cofounder/CEO at White Mountain Medical Supplies. She serves on IMA’s Small Business Committee and is a member of IMA’s Chicago Chapter. Follow her on LinkedIn.
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Tools of the Trade: December 2021

By Michael Castelluccio

1. Google Pixel 6

The improvements in the Pixel 6, Google’s flagship phone, include high-megapixel cameras and a striking new styling. There are two rear cameras—a 50MP main camera and a 12MP ultrawide camera with a 114˚ wide-angle view and an f/2.2 aperture—along with excellent photo-editing features. The front camera is 8MP with an 84-degree field of view. The Pixel Pro model also has a telephoto with a 7x digital zoom. The new design features a two-tone color back and a horizontal camera block that’s across the entire back top. The back is Gorilla Glass 6 with a matte finished metal edge around the back and sides. It’s available in three colors—stormy black, sorta seafoam, and kinda coral. The Pixel 6 is heavier than the iPhone 13, weighing in at 7.3 oz. (207g). The screen is a 6.4″ OLED (2,340 5 1,080 pixels) with a refresh rate of 90Hz. The CPU is a Google Tensor with Titan M2 security coprocessor running on Android 12. Memory is 8GB, and storage is from 128GB to 256GB. The base price starts at $599 for the 128GB model and $699 for the 256GB from Google.


2. MacBook Pro

In a second fall preview of new Apple products this year, the MacBook Pro 14 debuted in the same week as the Google Pixel 6. It’s Apple’s first major redesign for the laptop in five years, and the bottom line with the new model is all about power. The MacBook Pro offers two new powerful chips and a 14.2″ 120Hz ProMotion Mini LED display featuring slimmer bezels. The basic M1 Pro chip has an 8-core CPU with a 14-core GPU and 16-core Neural Engine. It’s configurable to a 10-core CPU and 16-core GPU. The M1 Max chip is configurable up to a 10-core CPU and 32-core GPU. The Liquid Retina screen has a native resolution of 3,024 5 1,964 at 254 pixels per inch. The basic memory on the Pro 14 is 16GB, and it can be configured up to 32GB or 64GB. Internal storage is from 512GB to 1TB. It also contains more ports, including three Thunderbolt 4 (USB-C), one HDMI, and a SDXC card reader.


3. Fujifilm Instax Printer

The Instax Link Wide Printer can print 3.4″ 5 4.25″ photos from your smartphone using Bluetooth to connect to your phone. The Instax Link app has dozens of filters, along with frame templates, resizing, and contrast correction. The Instax app can also create collages and insert stickers and text for titles or comments. You can even record a sound and capture it in a QR code, and when you scan the photo’s QR code, the sound will play. The codes can also include links to websites. The printer runs on batteries and can print about 100 images on a charge. It’s available in ash white and mocha gray. The printer has a stand for shelf storage. It’s small enough to take with you, and it has a carrying strap for that.


4. Kobo Sage

The Sage is the latest e-reader from Rakuten. It has five new advantages that include increased power and storage, a note-taking functionality, Bluetooth for audiobooks support on external speakers and headphones, and the ComfortLight Pro color temperature adjustment for eliminating blue light. You can make handwritten notes on PDFs and e-books, and there’s an advanced notebook function for other note-taking that will even convert your handwriting to text. The 8″ touchscreen displays text in 300 ppi, and it has a dark mode. A single battery charge can last for weeks, and the 32GB storage holds hundreds of books and PDFs.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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Board Refreshment and Diversity Mandate

By Shelly Hogans, CMA, CPA

The business imperative for diversity is widely known and well documented but has yet to take hold in public company C-suites, much less the boardroom.


Nasdaq’s new listing rules surrounding board diversity composition were approved by the U.S. Securities & Exchange Commission on August 6, 2021. According to the board diversity rule, companies listed on Nasdaq’s U.S. stock exchange must “publicly disclose board-level diversity statistics using a standardized template; and have or explain why they do not have at least two diverse directors.” The rule requires at least one director on the board be a woman and at least one member be from an underrepresented group.


But it provides flexibility in compliance by smaller reporting companies and foreign issuers, which are granted the latitude to meet this mandate by including two female directors and allowing companies with five directors or fewer “to meet the diversity objective by including one diverse director.”


The time frame to comply is based on the company’s listing tier with Nasdaq and ranges between two and five years from August 2021. In addition, any special purpose acquisition company listed under Nasdaq Rule IM-5101-2 is exempt from the disclosure requirement until completion of its business combination. Although the board diversity rule is a well-intentioned rule, designed to promote inclusivity and advance diversity among the board, we’ve yet to see if it will be met with enthusiastic acceptance or if it will face executional resistance or, worse, performative implementation, meaning it will only be followed to meet the Nasdaq requirements, without any additional efforts for the overarching goal of diversity, equity, and inclusion.




How will companies comply with the rule given current board composition and board terms, as well as lack of information to “identify” the existing board relative to the new mandate? For companies without an existing board refreshment and succession planning process that addresses board tenure and retirement, implementation of the new rule may prove to be disruptive. In such scenarios, board refreshment could include an assessment of directors’ skills, gaps, tenure, anticipated time horizon for departures, succession plans, and candidate profiles, including a diversity component made evident in the board application process.


The 2020 proxy season provided an opportunity for companies to collect potentially sensitive diversity data from board members by altering directors’ and officers’ questionnaires, allowing board members to self-identify.




Will existing board members choose to give up seats to make room for more diverse representation, or will companies amend their bylaws or articles of incorporation to address board structure, perhaps through a board expansion? In cases of noncompliance, what reasons will companies cite in their human capital disclosures regarding their inability to fill board seats with diverse candidates? If the mandate isn’t met, will those from underrepresented populations continue to hear the all too familiar “We can’t find diverse talent”?


Herschel Frierson, chair of the board of directors of the National Association of Black Accountants (NABA) and principal at Crowe LLP, commented: “If you go to the same pond, you will get the same fish. Companies need to expand their outreach to organizations like ourselves, NABA. We have the talent in our membership who can meet the needs around the board table; we just need the opportunity. I encourage companies to reach out to NABA to help fill board positions and work with us to build a pipeline for the next generation of board members.” To boost company search efforts and enrich “the supply of diverse and qualified board candidates,” Nasdaq has also partnered with Athena Alliance, Equilar, and theBoardlist to provide complimentary tools to assist companies in sourcing board candidates.


Another way is for nominating and governance committees to focus on board competencies rather than just job titles to “find” the talent. That isn’t a lowering of standards or board qualifications. It is, however, an acknowledgment that diversity is similarly lacking among the population of individuals holding traditional C-suite titles, previously seen as the treasure trove for obtain­ing board talent. Nominating committees must expand their search and network to diverse populations. It’s important that companies comply with the rule as they would with any other corporate initiative—what gets measured and allocated resources simply gets done.




Will there be repercussions for companies that opt for explaining the lack of diversity on their boards? Some proxy advisory service firms, like Institutional Shareholder Services Inc., the Vanguard Group, and Glass Lewis, have signaled via their policies that they will recommend an “against” or “withhold” vote for the nominating committee chair for degrees of noncompliance with the diversity rule. Goldman Sachs announced in 2020 that it wouldn’t help a company go public unless the company’s board included at least one board member from an underrepresented group, and starting July 2021, the bank increased this requirement to two such board members, one of whom must be a woman.


Will shareholders, investors, or other third parties clamor for greater transparency? William Poudrier, president of The Proxy Advisory Group LLC, a corporate proxy advisory/solicitation firm, said, “For the 2022 proxy season, we anticipate that for the first time, several prominent institutional investors will be submitting protest votes against the reelection of those directors who chair nominating/governance committees at companies where the board lacks any racial or ethnic representation. This institutional stockholder protest trend seems bound to grow and extend for the foreseeable future.”


Egon Zehnder, a global leadership advisory, management consulting, and executive recruitment firm, states in its 2020 Global Board Diversity Tracker that it “takes three underrepresented voices in a boardroom to truly change internal dynamics.” Once these voices are included on the board, it isn’t just about having a seat at the table but also about being a valued member and being able to fully contribute and bring one’s authentic self to the boardroom. Moreover, the board diversity rule should also give a company’s board an impetus to hold its senior management accountable for diversity traction or lack thereof beyond board composition, as part of the company’s operations.


Until companies voluntarily choose to fill board seats in a manner that’s representative of the diversity of talent, the Nasdaq mandate is a step in the right direction. Hopefully, one day we won’t need a governing body like Nasdaq to mandate diversity in board composition, but rather, companies will voluntarily choose to fill board seats reflective of diverse talent everywhere.


Shelly Hogans, CMA, CPA, is the managing consultant of Empowerment Financial Advisory Services, Inc. She is a member of IMA’s Diversity, Equity, and Inclusion Committee and IMA’s Pittsburgh Chapter. Shelly can be reached at or via LinkedIn.
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Ethics and Data Analytics Go Hand in Hand

By Fatema El-Wakeel, CMA

Data analytics requires professionals to scrutinize results, outputs, and recommendations from an ethical perspective.


Ethical decisions are important for everyone at all levels of the organization but especially for management accounting and finance professionals; it’s essential that we make the right moral decisions that will put the business in the right place ethically and benefit humanity. Putting an ethics lens on data analytics helps professionals find the right answers to the questions raised by digging into the data. Analytics can also be used to identify ethical issues and uncover fraud very early.


Having ethics and data analytics top of mind during decision making can support an organization’s strategic planning, compliance, and risk management, as well as safeguard its reputation. Thus, the leadership team should make an effort to link ethics to its organization’s data and all its systems and processes.


Data analytics is a broad term that covers data governance, data science, data visualization, AI, and more. This bird’s-eye view of the topic will break down the key areas with which finance professionals must familiarize themselves.




It’s essential that data is credible and reliable. Are your data sources trustworthy? Who owns the data? Having clear data fields, definitions, and owners isn’t something to be taken lightly. Many data management programs can be used to ensure proper data governance that takes into account the European Union’s General Data Protection Regulation (GDPR) and other rules. As much as we all want data democracy in organizations, to be able to do the correct analysis, data security and access control need to be prioritized for confidential or sensitive data.




AI and machine learning are complicated topics, and there are many concerns about the ethics of AI uses, quality of data, unconscious bias inadvertently programmed into algorithms, and more.


Evaluating data quality is paramount. Let’s assume that you need to build a model but know the data isn’t 100% trusted. In cases when incorrect data goes into the model, you can expect a poor outcome or misleading results. If we know that some data isn’t correct and we’re creating a model on which we’ll be basing our decision making, then imagine how difficult it will be to make good decisions based on bad data. This can break a company. Quality of data is key, and it needs to be shared with stakeholders. Further, the quality of data and its impact need to be measured.


Unconscious bias is another thorny issue. The AI algorithm doesn’t technically think the way humans do and doesn’t necessary share our values. It isn’t like AI will act with unethical intentions; it will do what we tell it to do based on what we share with it via coding. We need to make sure that we tell AI what we want it to do, share the organization’s values with it, and clearly define how it needs to work. If we don’t vet algorithms for encoded biases, then the AI system might inherit unconscious bias programmed into the model, skewing the results.




Professionals must ensure that data visualizations are created ethically. A common pitfall is omitting data. If a visualization doesn’t include all the necessary data to make the correct decision, then this is an ethical concern. Make sure you aren’t cherry-picking and sharing only the data points for the story you want to share but rather sharing all the relevant data points and walking the audience through your analysis, explaining why you think your recommendation is the correct one.


The scale on a graph can be another unconscious ethical challenge. When trying to make the graph clear, we can scale the graph’s x-axis and y-axis in ways that can affect decision making through increasing that scale and showing the impact to be very big, though it could actually be a minor difference.




In data analytics, communication is key. It’s important to keep all stakeholders updated and ensure that there’s transparency in terms of anticipated timeline, data quality, and other important aspects of the project. If the project uses data of questionable quality, then that needs to be highlighted for all decision makers.


We also need to analyze the potential impact of the data quality—or lack thereof. If we’re working on a project that’s expected to be done in six months, but we hit a challenging bottleneck, then this needs to be communicated. All stakeholders have the right to understand the status of the project and what has impacted the timeline. A best practice is to manage data analytics projects using Agile methodology.




Data analytics can be a powerful tool to highlight ethical issues early on, ideally before they blow up into a compliance breach or scandal. Through predictive analytics, fraud and other types of unethical behavior can be flagged before a crisis happens. Individuals who engage in unethical behavior may be identified, potentially saving organizations from financial and reputational harm.


Data analytics needs ethical consideration for organizations to avoid potential pitfalls. It has the power to alert management to potential red flags that could indicate ethical challenges or compliance breaches. Interpreting data through an ethical lens is a powerful process that can add value to strategic planning and oversight. Finance professionals should speak up and share their thoughts and experience on ethical issues related to data analytics with their organization’s leaders to ensure that they’re up to speed on this vital subject.


Fatema El-Wakeel, CMA, is an analytics strategy evangelist who leads the Global Data Platforms at Unilever and has worked in strategy development and data analytics roles at multinational corporations, including Jaguar Land Rover, HP, and Hilton, and in the public sector. She’s a member of IMA’s Global Board of Directors and Technology Solutions and Practices Committee. You can reach her on LinkedIn.
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Excel: Clipboard Tricks

By Bill Jelen

There are two obscure clipboard tricks available in Excel. The rarely used Office Clipboard task pane can keep a history of multiple ranges that are copied to the clipboard and then paste them using a single Paste All. Starting in Windows 10 and continuing in Windows 11, the Windows Clipboard can be configured to allow you to copy from one device and paste in another.




The Clipboard group on the Home tab of the ribbon offers icons for Paste, Cut, Copy, and Format Painter. Click the dialog launcher in the lower-right corner of the Clipboard group to open the Office Clipboard task pane. Unlike most Excel task panes, the Clipboard pane appears on the left side of the screen. If you drag the Clipboard title bar off the right side of the screen, you can dock the Clipboard pane on the right.


Once the Office Clipboard is visible, Excel will start collecting each item that’s copied or cut from Excel. New copied items are added to the top of
the list.



In Figure 1, the pane lists four separate Copy events. By clicking on the Paste All button, the rectangular data was arranged into a single column. Here are the events that lead to Figure 1:


  • A1:A6 was copied. The Clipboard pane showed Andy through Flo.
  • B1:B6 was copied. The newer copy of Gary through Lou is shown above Andy in the Clipboard pane.
  • C1:C6 was copied. The list of Mike through Robert appears above Gary in the Clipboard pane.
  • D1:D6 was copied. The list of Sam through Zeke is added to the top of the Clipboard pane.
  • Select A9 and click the Paste All button in the Clipboard pane. Excel pastes all 24 names in a vertical list. The paste happens starting from the oldest item to the newest, so the pasted data correctly shows Andy through Zeke in sequence.


If you need to paste or clear a single item, hover over the item to reveal a drop-down menu with Paste or Delete. To clear all clipboard history, use the Clear All button near the top of the Clipboard pane.


At the bottom of the Clipboard pane is an Options button, where you can change these settings:


  • Show Office Clipboard Automatically will make sure that the Clipboard pane appears every time Excel is opened.
  • Show Office Clipboard When Ctrl+C Pressed Twice is an optional setting that gives you a faster way to open the Office Clipboard. Note that this setting isn’t turned on by default, so you’ll need to use the dialog launcher to display the Office Clipboard the first time.
  • Collect Without Showing Office Clipboard allows Excel to keep the clipboard history without the Clipboard pane taking up any screen space.
  • Show Office Clipboard Icon on Taskbar will display a small clipboard icon in the Windows taskbar. Right-click this icon to open the Clipboard pane, to stop collecting, or to change options. The last option controls if the taskbar icon will display a status near the icon.




Windows 10 (and now Windows 11) offers a new clipboard that you can display using the Win+V keyboard shortcut. The amazing features of this clipboard are turned off by default. To enable them, go to Start, Settings, System, Clipboard. In the Clipboard settings, turn on Clipboard History and Sync Across Devices, as shown in Figure 2.



In order for the Sync Across Devices to work, you need to have multiple computers that are signed in with the same Windows account. You can also have a mobile phone where the Edge browser is signed into the same account. You should enable Sync Across Devices on each computer and phone.


With Sync Across Devices, you can copy some cells from one computer and then immediately move to the other computer. Press Win+V, and the range copied from the first computer is available on the second computer.


You can even see history of previous things copied to the clipboard. The Windows Clipboard isn’t limited to only Excel ranges. It also shows images, paragraphs from Word, and more.


The one disappointment here is that the Windows Clipboard doesn’t offer a Paste All button. If you have four separate items on the clipboard and want to paste them all, you would have to press Win+V four times, each time starting in a new cell and selecting a different item to paste.


It looks like the Office Clipboard in Excel might be getting ready to support Sync Across Devices, which would give us the best of both worlds: syncing across devices and the Paste All button. But the Paste All button currently isn’t reliable when the clipboard contains a mix of items from multiple devices.


Bill Jelen is the host of and the author of 61 books about Excel. He helped create IMA’s Excel courses on data analytics and the IMA Excel 365: Tips in Ten series of microlearning courses. Send questions for future articles to
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Facing the Fourth Industrial Revolution

By Aharon Yoki, DBA, CPA

The next industrial revolution will be one based on technological changes that present both risks to the profession and opportunities to increase the value we deliver.


The Fourth Industrial Revolution (FIR), as coined by Klaus Schwab, founder and executive chairman of the World Economic Forum, is the collective impact of technology, especially automation, that will shift the way we work. The FIR has been characterized as changing not only how we define work, but also how organizations assess their personnel needs.


Like prior industrial revolutions, the FIR has been praised for the potential impact on organizational productivity and shifting employees to higher value-added functions, but like the cautionary tales of the past, some have expressed concerns of dire impact on workers. This time, however, the change doesn’t reconfigure the factory floor. It more broadly impacts the labor market for management accounting and similar professions.




Technology expansion since the last major industrial revolution has presented examples of new technology that anticipated huge impacts in industry. As retail banking installed automated teller machines in the 1970s, for example, dire predictions were made of the limited future for bank employee careers. While the bank teller hasn’t vanished, online banking and money transfer tools such as Venmo have changed the way the public perceives their banking relationships.


One of the limiting factors in the prior revolution was the design and fabrication time and installation costs of the machines themselves. The expansion of subscription-based and cloud-based applications along with the ease of software replication and deployment in the cloud allow organizations to reduce time requirements to deploy new technology such as servers and new general ledger software. Cloud deployment doesn’t require the capital investment previously expended for local servers, network hardware, and large up-front costs of perpetual licenses for locally installed applications.


The subscription cost of cloud-based automation services may be more palatable than the up-front cash requirements of locally hosted server and software, and it reduces the barrier to entry for organizations that were limited by a large initial cash requirement.


Automation tools of the FIR promise to eliminate tasks that managers perceive as less value-added. Streamlining the time-consuming population of vendor invoices into the procure-to-pay module of the general ledger system is a common example. Take a look at a vendor invoice, and you will have the “you’ve seen one, you’ve seen them all” feeling. The vendor name is at the top left, invoice number on the right, goods in the center, and dollar amounts down the right side of the page. The consistent structure of a vendor invoice and the relatively consistent approach to recording the information in the general ledger purchases journal may highlight a process that an organization may automate, realizing cost savings in reduced human engagement and a diminished potential for human error.




We’re quick to recognize the value proposition; that’s human nature. But are organizations also prepared to ask if relocating the procure-to-pay process to an automated “bot” incurs a human cost?


Let’s consider the typical management accounting career progression: Early-career professionals graduate with a strong understanding of the individual attributes of accounting functions. Accounting students learn to prepare a bond amortization table and a trial balance, adjust journal entries, and draft financial statements. Each of those tasks are encapsulated within the framework of a curriculum designed to prepare students to enter the profession. Graduation isn’t the end of formal education in the profession; in fact, most of us are committed to lifelong learning through certification and conferences to continue to expand our skills and grow professionally.


The first few years in the management accounting profession is where we see the integration of the accounting functions within a working business five days a week and grow in our understanding of the flow of transactions and financial statements. During this time we not only learn the processes, but also hone our understanding of key controls and business risks. Ask a seasoned professional about how they developed the skills to better manage service providers, and they’ll likely tell you it started when they first started managing basic invoice processing. The CFO who guides an organization through a business merger and the vast array of associated challenges and risks first establishes a strong understanding of basic controls and business processes.




The FIR will require leadership to ensure members of the profession develop the skills necessary to grow into the next generation of accounting leaders. This is the opportunity to embrace the benefits of new technology and to step away from some of the early-career tedious mechanical tasks.


Organizations are making investments in the new technology, and it’s beginning to change the daily functions in accounting departments. As our profession begins to make a seismic shift, what will we need to do to ensure that our organizations recruit, upskill, and retain the best talent to continue to contribute as we span this chasm of change?


The profession recognizes that we have thrived through difficult shifts in the landscape before, and we thrive because of change. The Sarbanes-Oxley Act of 2002 (SOX) created short-term panic for the C-suite, and the professional services organizations charged to the rescue, with the expectation that the SOX challenges would be eternally de rigueur, and SOX was the full employment act for accounting organizations. The management accounting profession developed mechanisms to accommodate the new internal control standards, and we charged forward.


The availability of new technology, such as advanced data analytics tools, will continue to become more easily attainted with subscription services, opening those technologies to small and midsize organizations. Organizations that were previously limited from exploring their competitive opportunities in their market because of lack of data or analysis resources will now have those. This next shift is an opportunity for the profession to take the lead and coalesce the company in an invigorated spirit of risk management and growth to expand data-based decision making and to develop more comprehensive sensitivity analysis to guide future growth. To get there, we’ll need to continue to call for continued general technology knowledge, understanding of the business, and improving out communication skills for early-career professionals.


Aharon Yoki, DBA, CPA, is accounting faculty at Florida Gulf Coast University and an IMA member. He can be reached at or
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A Winning Combination

By Russell Stevens, Ph.D., CMA

Learning about the CMA® (Certified Management Accountant) began for me in 1981, when the manufacturing company for which I worked sent me to meetings of the National Association of Accountants (now IMA®) for professional development.


Besides enjoying the camaraderie, I found the topics interesting, particularly because my job was in management accounting. It also helped that the person I was dating at the time was in the process of earning her CMA. That piqued some interest. But I was still in school at California State University, Fullerton, working toward my bachelor’s degree, so the CMA was a little way off for me.


My girlfriend passed the exam and became a CMA. She and I also got married not long after. I continued my degree and certification process, sitting for the exam soon after I graduated with my B.A. in accounting. For me, the combination of work experience and having just finished my degree helped me pass the test. And to our knowledge, we were the first CMA couple in California.


My CMA certification facilitated a few job changes, and I found the subject matter valuable in my successive positions in government and nonprofit. I’ve always found it unfortunate when people think that the CMA is only about cost accounting. It is—and should be recognized as—so much more.


My most interesting career transition was when I moved into academia about 20 years ago. Between my CMA and MBA, plus excellent recommendations from my professors, I was offered a part-time teaching job at the school where I had earned my MBA, Hope International University. My new dean was impressed by my experience and the range of knowledge in the CMA program. Based on a broad background from school, the CMA, and some special training, I also created and had published an academic workbook to teach personal finance using principles gleaned from the Bible.


Most recently, I was asked by another dean to teach part-time in my university’s online MBA program. I accepted that move, earned my Ph.D., and later accepted offers from other schools to teach in their online programs as well. I have encouraged my students to pursue the CMA certification as a smart career choice.


As a teacher, I have been heartbroken to see the toll that student debt takes on students and their families. Drawing from my professional experience, schooling, and CMA, I published a book last year on avoiding college debt. The key principle in the book is that if you follow the crowd, you can expect to suffer the crowd’s consequences—like the crushing load of student debt. For me, earning the CMA was a way to stand out from the crowd, as the peer pressure when I was in business school was to go for the CPA (Certified Public Accountant).


As I look back, I see my CMA as a critical part of the mix of education and experience that has allowed me to be where I am today. And I love what I do now.


Russell Stevens, Ph.D., CMA, is an online professor for multiple colleges and universities. He is a member of IMA’s Charlotte Chapter. You can reach him at
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CFO to CFO: Budgeting to Fund Strategic Plans

By Daniel Butcher

The CFOs of CSX and ATI reveal best practices for finance to lead organizations’ strategic planning and budgeting processes.


With many companies experiencing enhanced challenges during the pandemic concurrent with the rise of robotic process automation and other technologies impacting the finance function, the role of management accountants and finance leaders in their organization’s strategic planning and budgeting has taken on even greater importance. In a conversation with Strategic Finance, Kevin Boone, senior vice president of sales and marketing and former CFO of CSX, and Don Newman, CFO of Allegheny Technologies Inc. (ATI), talked about the finance function’s role in setting the organization’s strategic planning and budgeting, as well as trends and best practices.


SF: How can the finance function inform decision-making processes for setting spending priorities?


Newman: It starts with finance being a business partner across the organization. For us, the finance organization isn’t on the sideline, waiting to be called in to the game; they’re on the field, part of running the plays that are called. And with that, there’s a clear partnership with our operations, commercial, and technical colleagues, which makes it a lot easier to inform the decision-making process. When it comes to making investment decisions, if you’re involved with the process, like our finance organization is, you’re part of developing the scenarios and understanding the benefits and the risks associated with different actions, and that usually means you’re developing a better outcome or answer.


We also seek to develop expertise in our finance organization beyond subject-matter expertise. A lot of our finance folks are very aware of and knowledgeable around operations and commercial initiatives. So it’s a part of our corporate management DNA when it comes to being cross-functional and business-savvy. Transparency and accountability are keys in becoming better, and we’ve been purposeful in creating a culture that supports transparency. The CFO plays a key role in terms of measuring the success and the failures of decisions in the organization. The goal of that is, if we’re transparent and we’re thoughtful as an organization, and we study our successes and our failures, we can become better the next time we make a decision.


Boone: Capital isn’t infinite, so the CFO is in a unique position. The finance organization gets to take a holistic view of all the needs of the business and help the CEO and the executive team prioritize what they believe are the most pressing needs for the organization and what projects ultimately will have the highest returns for the company. There’s a lot of decision making around “What should we do from a technology perspective today?” vs. waiting for the technology to evolve over time. Having those conversations is key.



Before I got into my role, a lot of the budgeting process was just a look back at the prior year and making a decision on how much of the budget should be up year over year in each part of our organization. And now it’s putting all the pieces together and looking at it holistically and making a decision: “This is a year where we’re going to invest in our sales and marketing organization at a heavier level, given our focus on growth.” And by doing that, where are we going to take capital from, or where does it make sense to potentially defer some investments, or where can we get more efficient possibly to pay for that additional investment in sales and marketing? So, that’s a unique perspective from a finance organization that we bring. We get to see all the pieces, bring them together, and analyze them holistically, and try to prioritize the projects that ultimately will deliver the most value to the company because capital isn’t unlimited. We all have to be as efficient as possible. It also creates the opportunity to question the return profiles on a project-level basis and make sure that you’re getting the most you can for each capital dollar you’re spending.


Newman: When considering finance’s part of strategic planning and running the business, I see an evolution in our profession. Finance has become a much more integrated part of decision making. This is healthy for the organization, and it’s healthy for our profession and for our roles. But it isn’t just finance where that’s happening: I see it in what digital technology is bringing to the table, our operations, and our technical R&D [research and development] people. I see an evolution to much more integrated teamwork occurring across businesses.


It’s speeding up decision making, and it’s making decisions that much better because it incorporates all important subject-matter experts, and it isn’t ad hoc inclusion. We need a finance answer, or we need a technical director answer to the question. We’re all together at the table.


Boone: Creating transparency and visibility for our business partners and what they do and letting them understand the levers they can pull that impact the business have been extremely helpful.


Probably five, 10, and 20 years ago in the traditional finance role, somebody would bring a project to us, and we would analyze if it had a return on investment and tell them the answer. Now, we have to be integrated in the organization and be partners, provide a lot of insight to them, and point the arrow to direct them to where they should be focused. It isn’t being behind a computer and doing spreadsheets necessarily; it’s digging in and understanding the business.


Whether it’s our finance team or the head of operations, technology, or other areas, they understand the business more and are bringing ideas rather than just checking the numbers on the back end. I challenge my organization to think of strategic initiatives that they can partner with various leaders in our organization to drive forward and not just be somebody that’s reporting out on the back end what the numbers look like.


SF: How should the CFO help to dictate strategic-planning priorities while weighing them against budget pressures?


Boone: Each year we put together a three-year strategic plan, and that informs a lot of our decision making going forward. So, what are we prioritizing? When you have budget pressures like we did last year [in 2020], you don’t want to lose sight of your three- and five-year plans and, ultimately, your long-term goals by doing that and really hurting your business in the long term. We made the strategic decision, given how things have slowed down during the pandemic, to accelerate some of our capital investment so we could be ready when growth returns. And under the perspective that you’d still have to make sure that you have a sound balance sheet, that you’re financially sound, that you’re mitigating any kind of risk, you’re assessing all of the scenarios that could occur to your business, but you’re also there to make sure that you remain on plan no matter what the environment is, and that ultimately, better days will come and you need to be prepared for it. In a lot of ways, we looked at the pandemic as a way to get ahead of our competition by making some incremental investments and trying to think ahead about what the environment could look like coming out of this because the world is changing so rapidly. What does that mean for our business? How can we take advantage of a difficult situation, and where can we create value and hopefully take more of a lead on our competitors long-term? So, that’s how we quickly pivoted to the question, “What does it look like on the other end?” I’m much more worried about how we’re going to handle the growth coming out of this than the downside scenario. And now, how can we take advantage of this? How can we work closer with our customers and capture market share coming out of this?


There are always going to be financial and budgeting pressures. But you want to make sure that the strategic vision isn’t lost in all of those conversations when you’re trying to cut budgets and trying to hit your cost numbers; ensure that those plans are still prioritized and you’re making the right strategic decisions long-term so that you aren’t hurting the business.


The more I can pull my most talented people away from having to do transactional things and think more strategically, that’s a lot of value to me. A lot of these [technology] tools allow that speed of decision making, which frees up their time to think more strategically about the business and drive growth and the things that we really want to do going forward.


Newman: Some of the things that a CFO brings to the table are guideposts and thresholds—establishing the financial performance targets that we need to shoot for as a company. That includes topline growth, cash generation, margin expansion, returns, etc. That’s a key contributor to making sure the plans are delivering the critical business outcomes by creating shareholder value. Also, being a voice of conscience through the process is critical. We remind the organization of the return hurdles that we’re shooting for or the margin targets that we want to achieve.



Ask the tough questions. A plan on paper is one thing, but it has to be an achievable, sensible plan. Asking how realistic the strategic plan is, or is it not aggressive enough? Is it delayed longer than it should be; can we accelerate it? Those are all critical things the CFO does, part and parcel of that strategic-planning process.


The CFO is in a unique position to facilitate the allocation of capital, making sure the entire organization understands the big picture of what we’re trying to achieve, with fierce competition for capital. It’s in all of our best interests to make sure the capital is deployed where collectively we’re going to get the greatest return. That’s a real challenge because we hire type A personalities.


Everybody wants to achieve. Everybody wants to fund their business and their growth plans. It’s critical to get the organization to the point of maturity where they recognize it isn’t about their team winning; it’s about the business winning. As CFO, we’re in a unique position to be able to do that. You can’t lose sight of the long-term plan just trying to hit short-term targets. The label we put on that in the COVID crisis is being recovery-ready. We attacked our cost structures, but we didn’t attack them in a way that would hamper our ability to perform in the upcycle. We managed down our capital spending in the short term, but we didn’t do that in a manner that would hamper our capabilities or our capacity to manage the upswing that we see coming our way. That’s another unique position the CFO is in—we can be the voice of reason when it comes to cost reductions and capital deployment. We make sure we’re looking not just in the short term, but also in the long term at what’s going to create the greatest value for this business and staying healthy in the meantime.


We’re using AI and digital analytics to find structural efficiencies that we can bring to our working capital management. We see literally hundreds of millions of dollars of free cash flow benefits by becoming better in that area. We’re excited about the value that can be created in our businesses by continuing to invest in this area.


Daniel Butcher is the finance editor at IMA and staff liaison to IMA’s Committee on Ethics. You can reach him at
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Books: Confidence Is Key To Success

By D. Holly Thomas

A new guide helps women tap into the Four R’s of Success to strengthen their confidence and stand out.



Grace Killelea, the founder and CEO of Half the Sky Leadership Institute, wrote The Confidence Effect: Every Woman’s Guide to the Attitude That Attracts Success, an excellent guide for women to stop selling themselves short and fully realize their confident voice, which is likely to contribute to achieving business success. She provides a thought-­provoking guide for women to tap into their confidence using what she describes as the “Four R’s of Success”—relationships, reputation, results, and resilience.


The Confidence Effect opens with a personal story from Killelea charting her professional climb up the ranks of Comcast Corporation that sets the tone for the book. The author advocates practically for women to identify opportunities and expand their influence. In order to be successful, you not only have to show up on time, but you also need to stand out and take charge, suggests Killelea. Within each section are chapters that identify a typical workplace situation that many women face, featuring personal stories illustrating how prominent businesswomen in varying fields met challenges with takeaways that anyone can use to build confidence and tackle difficult issues as they advance their career.


The personal stories and professional anecdotes within each chapter help to cement key concepts and highlight the feelings that the women whom the author interviewed were going through. Using these examples as illustrations for her arguments, Killelea discusses how to develop an executive presence, network effectively, gain power, and seize opportunities.


The Confidence Effect is an excellent tool kit for women to bolster their professional reputation. Killelea believes that many women are passed over for promotions due to lack of confidence. She differentiates between confidence and competence and argues that success is attained when these two characteristics are properly aligned. The tools provided within this book are helpful for women who are entering the workforce for the first time and for seasoned professionals.


This book provides an enjoyable vehicle for women to take an inventory of their current confidence level and then offers helpful ideas and tools that allow their confidence and competence to click. The recipe for this combination will help women at all levels of business to achieve more success.


D. Holly Thomas is senior plant controller of finance at Bristol Myers Squibb (formerly Celgene Corporation) and an IMA member. You can reach her at  
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By Christopher Dowsett, CAE

A report from Deloitte finds that more than half of audit committees surveyed worldwide don’t discuss climate on a regular basis and almost half don’t consider themselves “climate literate.”



of audit committee members said their committees weren’t “climate literate.”



said that their organization’s climate response is not as swift and robust as they would like.



said their audit committees don’t discuss climate change at all or as a fixed agenda item.


The report, titled The Audit Committee Frontier―addressing climate change, is available here.


Christopher Dowsett, CAE, is editor-in-chief/vice president, Publications, at IMA. You can reach him at
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IMA Task Force Issues Statement


The IMA® Sustainable Business Management Global Task Force recently issued a statement of position that poses nine principles for sustainable business management.


The press release describes the principles as “fundamental to building a successful and sustainable accounting ecosystem within an ever-changing landscape.” They tie directly into the core proficiencies and domains of the IMA Management Accounting Competency Framework.


The statement of position is the first output from this new task force, composed of IMA volunteers and chaired by Brigitte de Graaff, a member of the IMA Global Board of Directors.


IMA® (Institute of Management Accountants) is the worldwide association of accountants and financial professionals in business. Founded in 1919, we are one of the largest and most respected associations focused exclusively on advancing the management accounting profession.  We are committed to empowering our 140,000+ members—and those throughout the rest of the profession—to strengthen on-the-job skills, better manage companies, and accelerate careers.
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New IFAC Online Resource; Support for New ISSB

By Lori Parks

The International Federation of Accountants (IFAC) unveiled a new online resource in November 2021.


It provides access to the international accounting standards developed by the International Audit and Assurance Standards Board, the International Ethics Standards Board for Accountants, and the International Public Sector Accounting Standards Board.


The new resource, eIS (e-International Standards), not only offers direct access to the standards but also includes key support, reference, and guidance materials, including a seven-minute video tour about how to use the standards.


eIS features a responsive design that can be used on mobile, tablet, and desktop formats; advanced and intuitive search capabilities; version control functionality; and easy-to-navigate pages with multiple viewing modes, among other features. The resource is free, but a sign-in is required.


The same month, IFAC also pledged its support of the newly established International Sustainability Standards Board (ISSB) which will work in close cooperation with the International Accounting Standards Board. Among the ISSB’s primary purposes will be to build upon the high-quality work of existing sustainability-related initiatives and harmonize the standard-setting landscape. The goal will be to create a comprehensive global baseline of sustainability information that will be material to enterprise value, connected to financial reporting through fundamental concepts, and provide guiding principles of integrated reporting.


Lori Parks is a staff writer/editor at IMA. You can reach her at (201) 474-1536 or  
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Conflict over Potential FASB Changes

By Stephen Barlas

Some companies are in disagreement with a bevy of investor groups about whether the Financial Accounting Standards Board (FASB) should update its accounting standards for foreign income tax reporting.


The FASB suggested the update in its Invitation to Comment issued in June 2021 as part of its agenda consultation process to prioritize its projects for the next five years. But any FASB changes would have to take note of foreign tax payment and reporting changes currently being considered by Congress.


Lawmakers on both the U.S. House Committee on Ways and Means and the U.S. Senate Committee on Finance have proposed changes to the global intangible low-taxed income (GILTI) tax and foreign-derived intangible income regimes. The current provisions were established as part of the Tax Cuts and Jobs Act of 2017, which broadly reduced corporate taxes.


In comments to the FASB, groups such as the California Public Employees’ Retirement System, the Council of Institutional Investors, and the Financial Accountability and Corporate Transparency (FACT) Coalition called for increased tax transparency in line  with public country-by-country tax reporting information. The FACT Coalition, composed of unions and other trade groups and associations, recommended the FASB adjust its income tax accounting standard because congressional changes to GILTI “may also result in a global minimum tax regime that applies on a jurisdiction-by-jurisdiction basis, only increasing the relevance of related information to investors.”


Companies wrote to the FASB opposing more detailed reporting of foreign country income. In a typical example, Mary-Lee Stillwell, vice president of accounting and external reporting for Verizon Communications, said that Verizon supports the FASB’s ongoing initiative to reduce complexity in accounting standards, particularly in continuing to simplify the accounting for income taxes. She added, “However, we believe that the additional disclosures suggested by investors in the Invitation to Comment would not achieve this goal. The proposed additional disclosure would not provide decision useful information to investors, would likely result in additional confusion… and would result in additional burden on financial statement preparers.”


The U.S. House of Representatives has already passed a bill called the Disclosure of Tax Havens and Offshoring Act, which would require large corporations to disclose basic information on each of their subsidiaries and country-by-country financial information that sums together all of their subsidiaries in each country, including profits, taxes, employees, and tangible assets. The Senate hasn’t yet acted on that bill.


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at
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Welcome, New CMAs: December 2021

By Dennis Whitney, CMA, CFM, CAE

The following IMA members became CMAs between October 1 and October 31, 2021.


For more information on CMA certification, visit


Ahmed Shawky Abdelbary

Ahmed Mohamed Abdelmohsen

Steeve Mathew Abraham

Wouter Advocaat

Syed Faizan Ahmed

Chuanqing Ai

Jun Ai

Muhammed Shebeer Akaparambil

Maria Alexandrova

Abdulmohsen Saad Alfawzan

Fatima Al-Hashimi

Faseen Arshadh Ambali

Hephziba Ammini Joseph

Cheng An

Jing An

Nan An

Ajay Anil Kumar

Chariz Mae Liwag Arroyo

Sushma Atthota

Yang Bai

Yinjie Bai

Yuying Bai

David Bailey

Hongmei Bao

Dide Beijer

Brodie Bevans

Jing Bian

Longbao Bing

Yiqing Bing

Klaudia Boczova

Petronella Brink

Mitchell Brownlow

Guoxing Cai

Minghui Cai

Shuang Cai

Wanlu Cai

Wenbai Cai

Wensi Cai

Xi Cai

Yuanhua Cai

Yuanru Cai

Zhangying Cai

Zixia Cai

Pan Cao

Qing Cao

Wenhui Cao

Xiaoying Cao

Yan Cao

Yanqin Cao

Yiqian Cao

Armina Capili

Katheryn Sheena Tan Belda Casimiro

Koen Ceulemans

Qinghui Chai

Ruifang Chang

Maya Umesh Chauhan

Abdul Azzez Chelakkodan

Arun Chembra Manayamkote

Binshi Chen

Chanying Chen

Chen Chen

Fang Chen

Fei Chen

Feng Chen

Hanliu Chen

Hui Chen

Huiqin Chen

Jianhui Chen

Jiarong Chen

Jie Chen

Jiedi Chen

Jingjing Chen

Jingwen Chen

Jinping Chen

Juan Chen

Le Chen

Lin Chen

Lu Chen

Ming Chen

Qing Chen

Qinger Chen

Shasha Chen

Sheng Chen

Shuang Chen

Ting Chen

Tong Chen

Wenmei Chen

Wenting Chen

Xiaoyi Chen

Xiaoyong Chen

Xin Chen

Xingxing Chen

Yanying Chen

Yingshan Chen

Yuan Chen

Yuezhen Chen

Yufeng Chen

Yunping Chen

Jianhong Cheng

Jing Cheng

Liping Cheng

Yuntian Cheng

Rahul Chenicheri Valappil

Yingyi Chi

Jiaoying Chu

Xiaoling Chu

Shibin Muhammed Chundakkadan

Lina Marcela Clarke

Michael T. Coakley

Pingping Cong

Jili Cui

Lin Dai

Taochun Dai

Xinglian Dai

Xuecheng Dai

Zhenrong Dai

Huaxia Dang

Ruth Oremeyi Danimoh

Akshara Das

David den Besten

Chenyuan Deng

Chunyan Deng

Fangyuan Deng

Fei Deng

Fengjiao Deng

Lamei Deng

Lihua Deng

Ting Deng

Xueyan Deng

Xueying Deng

Dan Ding

Le Ding

Ling Ding

Mingjie Ding

Ying Ding

Zhenting Ding

Zhongna Ding

Mais Disi

Chunying Dong

Wu Dong

Xiaohong Dong

Xixi Dong

Yurong Dong

Suhong Dou

Xiuying Dou

Jianqiong Du

Juan Du

Lan Du

Qingjun Du

Tiantian Du

Xiaona Du

Kefei Duan

Wenjing Duan

Zheying Dugu

Mariam Hussein Mahmoud Elrimaly

Hady Farouk Abdelmagid Elsabagh

Salma Abdelhamid Eltanboly

Beibei Fan

Bo Fang

Cheng Fang

Fang Fang

Guanqi Fang

Ping Fang

Yingtao Fang

Qing Fei

Huiyun Feng

Jia Feng

Jinghua Feng

Jinlu Feng

Yang Feng

Yanran Feng

Yu Feng

Ningjuan Fu

Wenjie Fu

Rohan Shrinivas Gajendragadkar

Tian Gan

Anning Gao

Ge Gao

Huihui Gao

Jiajia Gao

Jiannan Gao

Leilei Gao

Pengyuan Gao

Shan Gao

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Yu Gao

Yuwei Gao

Yanting Ge

Dianli Gong

Guohui Gong

Jie Gong

Jing Gong

Lingsen Gong

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Tian Gong

Ying Gong

Chengwen Gu

Feng Gu

Jiawen Gu

Jiaying Gu

Peihong Gu

Qinfang Gu

Yingyan Gu

Yuwei Gu

Chaorong Guan

Yanhong Guan

Yuqi Guan

Christina Rose Gunter

Biao Guo

Fang Guo

Fei Guo

Hongyan Guo

Jiaqi Guo

Jiaxin Guo

Miao Guo

Pan Guo

Peng Guo

Shaolin Guo

Yadi Guo

Yaping Guo

Mahmoud Aly Abdelgawad Hafez

Fang Han

Jianhui Han

Ruimeng Han

Sijia Han

Wenqing Han

Yumei Han

Guilan Hang

Jing Hao

Xiaonan Hao

Xiuting Hao

Ahamad Hashir

Jianhong He

Jie He

Lian Pei Yan He

Linjun He

Min He

Rujing He

Xianjing He

Xing He

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Zhuang He

Jiami Hong

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Yuyan Hong

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Jiuxiang Hu

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Wei Hu

Xi Hu

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Yanyan Hu

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Chunhong Huang

Chunlei Huang

Gangting Huang

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Shunhao Huang

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Yong Huang

Yu Huang

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Renfei Hui

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Madhu Sudana Rao Idavalapati

Maria Ar-Jane Paquilit Ilagan

Jisha Susanna Jacob

Nikita Anil Jain

Aljo James

Yan Ji

Chenggang Jia

Bin Jiang

Lili Jiang

Lin Jiang

Qianyu Jiang

Qiong Jiang

Yulu Jiang

Zhixian Jiang

Jian Jiao

Menglu Jin

Qi Jin

Qiaowei Jin

Xin Jin

Xingyu Jin

Yi Jing

Sibin Mathew Jose

Candia Joseph

Soo Youn Jung

Rohit K.G

Jing Kang

Lingjuan Kang

Min Kang

Shuhaib Karimeni Peedikayil

Abubkr Gmaleldeen Mohammed Khaleel

Parnika Khandelwal

Amro M. Khdour

Min Jung Kim

Muhammed Rashid Kodalil

Xiangyu Kong

Remco Koolhaas

Mahmoud Moustafa Kourany

Anandhu Krishnakumar

Jialin Kuang

Shuli Kuang

Meenal Kumar

Kangkang Lei

Yang Lei

Yuhua Lei

Xueyan Leng

Baoyan Li

Chunjuan Li

Ding Li

Donghui Li

Dongxia Li

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Tengyin Liang

Tonghua Liang

Wenan Liang

Xiao Liang

Yongjun Liang

Hongjuan Liao

Jiangping Liao

Xiaohua Liao

James Andrew Hernandez Licaros

Hanzhang Lin

Jie Lin

Li Lin

Lijian Lin

Qiuling Lin

Weilan Lin

Xiangxia Lin

Xiaozhu Lin

Yanlin Lin

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Changping Liu

Chenglong Liu

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Yuqi Shi

Zhangyin Shi

Jell Chua Sia

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Jingfang Song

Tian Song

Xiaorong Song

Yang Song

Faye Divine David Soria

Shihuang Su

Weiting Su

Yuting Su

Chengyun Sun

Gaobo Sun

Jiyu Sun

Liyong Sun

Ruifang Sun

Shaofei Sun

Wei Sun

Xiaoying Sun

Ye Sun

Yue Sun

Zhizhen Sun

Yinghua Suo

Hongpan Tan

Huiqiong Tan

Junmei Tan

Lingli Tan

Mingming Tan

Xin Tan

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Fengjiao Tang

Jingxi Tang

Junfeng Tang

Junli Tang

Mingyan Tang

Qiuyu Tang

Zetian Tang

Ziwei Tang

Fangfang Tao

Haixia Tao

Li Tao

Xia Tao

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Shweta Chand Thakur

Karim Tarek Abdelkhalek Tharwat Nassar

Arun Thevar

Juan Tian

Jun Tian

Leiping Tian

Yuan Tian

Fengge Tong

Jingjing Tong

Jingni Tong

Xiping Tong

Zhangyong Tu

Andrea Elizabeth Uquillas

Bincy Varghese

Kapil Vyas

Fengjuan Wan

Mengting Wan

Tingyu Wan

Yu Wan

Anran Wang

Changle Wang

Chen Wang

Chengren Wang

Chenyang Wang

Chong Wang

Chuan Wang

Chunying Wang

Chuyao Wang

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Fang Wang

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Na Wang

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Ting Wang

Weiling Wang

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Xi Wang

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Dennis Whitney, CMA, CFM, CAE, is senior VP, certification, exams, and content integration at ICMA® (Institute of Certified Management Accountants). You can reach him at
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Selecting the Right Audit Partner

By Melissa Carlisle, Ph.D., CPA; Candice Hux, Ph.D., CPA; and Aleksandra “Ally” B. Zimmerman, Ph.D., CMA, CPA
November 1, 2021

Just as each company is unique, so are audit partners. Individual audit partners have diverse backgrounds, which enable them to bring relevant business insights and unique skills to an audit engagement. In fact, many public accounting firms market the additional value their audit partners can bring to a client’s business.

This article is based on research funded by a grant from the IMA® Research Foundation.

Academic research has shown that individual audit partners can have a more significant impact on the client’s financial reporting quality than the audit firm (see, for instance, Daniel Aobdia, Chan-Jane Lin, and Reining Petacchi, “Capital market consequences of audit partner quality,” The Accounting Review, November 2015). Therefore, leaders must be prepared to evaluate partner characteristics to determine the fit for the company. With a grant from the IMA® (Institute of Management Accountants) Research Foundation, we surveyed more than 100 accounting managers and executives to shed light on those audit partner traits that management most values.




Depending on the organization, management may have a formal or informal role in selecting an auditor. Either way, management’s unique perspectives and insights are essential to the audit partner selection process. This includes management’s expertise and intimate knowledge of the company’s financial goals and operations (including its risks and strategies). In addition, management should expect to have interactions with the audit engagement team, especially the lead audit engagement partner. By actively participating in the auditor selection process, management can help the organization make an informed assessment of each potential audit partner’s knowledge, competence, and integrity.


The managers and executives who participated in our survey work in various industries and organizations of different sizes, and their responses cover public accounting firms of all sizes. The results reveal several important audit partner characteristics, discussed here along with excerpts that reflect why these managers and executives believe these specific audit partner characteristics are important in the auditor selection process.





As shown in Figure 1, 61% of participants selected the audit partner’s technical expertise and knowledge as the most important audit partner characteristic. Respondents also stated that they value an understanding of the business, the industry, and current market trends as well as experience and background (the third and fourth most important factors). This understanding of the economic landscape and factors unique to that company, coupled with technical accounting expertise, can help management meet the company’s objectives.


Click to enlarge.


Importantly, this knowledge is often shaped by the partner’s background and experiences (e.g., serving certain clients). Therefore, an assessment of the audit partner’s knowledge can help align the fit between the partner’s abilities and management’s needs and preferences. The following quotations from participant responses illustrate what managers look for when evaluating various aspects of an audit partner’s knowledge and experience:


Technical expertise and knowledge


“For us, technical experience and industry experience in a global environment [are] a necessity to ensure proper tax guidance and communication and relevant explanation of any new U.S. GAAP [Generally Accepted Accounting Principles] and IFRS [International Financial Reporting Standards] developments.”—a CFO


“I look for technical expertise as well as coordination with tax and compliance members of the firm. I tend to lean toward an audit partner who specializes in specific fields (i.e., software as a service). I look for these qualities because I want someone to bring forward areas of risk that I may not see myself.”—a controller


“Technical experience to match or exceed my own.”—a director of accounting


“Technical expertise is critical because it can help make us better.”—a retired CEO


Understanding the business and industry


“I look for a partner that understands the industry that I’m in. I don’t want to have to teach my partner about the general industry, and I prefer someone that understands the nuances of our business needs.”—a CFO


“Industry knowledge. I work in a specialized, heavily controlled industry with specialized controls and accounting. Knowledge of these from an operations standpoint is crucial in audits to identify risks.”—a vice president of finance


“I look for an audit partner who understands the industry my company is in. It is good if he/she has a number of clients in the industry. I also look for an audit partner who has good technical expertise. It is important that the partner is not spread too thin with too many clients. His or her communications ability is important too.”—a managing director


Experience and background


“Years of experience, years with firm, experience with similar organization.”—a controller


“Experience and knowledge that I do not have. I try to surround myself with people who are smarter than I am.”—a CFO


“Nobody knows everything, but if you are working with someone with significant experience you will most likely be exposed to something new.”—a controller




Many participants stated that strong technical expertise is a necessity for an audit partner but not sufficient on its own to win them over. They also recognized the importance of the accessibility of the partner and the partner’s interpersonal skills. Forty-two percent of participants mentioned partners’ communication (such as being a clear and timely communicator) and availability as important to their auditor choice.


Almost half of our participants indicated they’re looking for a partner with whom they can form a good working relationship, including a partner who is reliable and works well with management. The following quotations illustrate managers’ desire for a partner who is easily accessible, has a manageable workload, and possesses the necessary interpersonal skills:


Availability and workload


“We look to be sure we are able to communicate and get information as needed. If we are unable to reach an audit partner when needed, why have one?”—a director of finance


“Workload…how much time can the audit partner allocate to our engagement.”—a controller


“Response time and effectiveness. Waiting on responses from audit partners can bring things unnecessarily to a halt. Combining that with an effective audit are the main things I look for.”—an accounting manager


Interpersonal skills and personal fit


“Someone who is technically competent but can communicate clearly. I always look for someone who is eager to work with us and not against us.”—a CFO


“If there is a communication barrier, you have thrown an unnecessary obstacle in the path to getting your audit completed timely.”—a controller


“Someone who I can like as a person, not just their technical expertise. I don’t want to work with someone who is arrogant.”—a controller




Further, 23% of participants discussed the integrity of the partner, and 15% mentioned independence and objectivity when selecting an audit partner. These considerations are enlightening, given that the U.S. Securities & Exchange Commission (SEC) is loosening auditor independence standards. The following comments illustrate that technical competence and expertise are necessary, but managers are also looking for a partner with strong integrity and objectivity:


Integrity and ethics


“Expertise, history, and ethics: I need to trust them above all to provide honest expertise in areas that I lack, and not be on the questionable side of ethics.”—a controller


“The relationship needs to be honest and have the highest integrity.”—a CFO


“Professional, trustworthy, and outstanding communication skills: I am looking for someone I can have a respectful conversation with should difficult topics arise.”—a vice ­president


Objectivity and independence


“They need to be objective and add value. Understanding how effective we are as management is important.”—an associate vice president of finance—controller


“Independent (neither advocate nor adversary) but at the same time easy to work with.”—a comptroller




Lastly, 13% of participants indicated that they look for an audit partner who will add value to the organization while still maintaining independence. Specifically, managers want to leverage the audit partner’s expertise and experience to help improve the organization (e.g., identify weaknesses and opportunities for improvements) and share best practices. The following quotations illustrate these perspectives:


“I would want the audit partner to be independent and push our organization to do better each year. I would want them to provide best practices with a matrix of cost-benefit for improvements. Also, to call out deficiencies and provide options for solutions to correct…again providing the cost-benefit for each option.”—a COO


“Diligence…ability to find undiscovered SWOT [strengths, weaknesses, opportunities, and threats] items.”—a business manager


“Looking for a partner to be a value-add to our organization.”—a vice president




Depending on your company type (e.g., public vs. private or not-for-profit), certain partner characteristics may be a better fit for your company’s needs. The survey responses reveal that managers of private companies value audit partners’ communication skills and their understanding of the business to a greater extent and value objectivity to a lesser extent, than managers of public companies. This latter result is consistent with the stringent Public Company Accounting Oversight Board (PCAOB) and SEC independence rules with which public companies and their auditors must comply.


Because they’re faced with fewer regulatory restrictions, managers at private companies likely place more importance on the additional value-add that audit partners can provide, including providing permitted advisory services related to the risks and opportunities of the company. While managers of public companies also desire a partner who can add value, there’s likely more concern about a potential independence impairment. Nevertheless, auditors could provide value to public companies through internal control reviews and recommendations and the identification of fraud risks. Overall, managers value an audit partner who is accessible and can serve as a trusted business advisor within the applicable independence rule framework.




Because audit partners can be business advisors, you might also seek to identify partners that complement your specific responsibilities and expertise. On one hand, the survey finds that more experienced managers (such as those in C-suite and vice president, director, or partner positions) list more factors as important to their audit partner selection decision than managers with less experience (such as accounting managers and controllers). Specifically, more experienced managers list ethics, understanding the business, and communication as important characteristics for an audit partner more frequently than less experienced managers. On the other hand, although technical expertise was an important factor mentioned by most participants, we find that less experienced managers list technical expertise and knowledge more frequently than more experienced managers.


The difference in the audit partner characteristics considered most important to different experience levels illustrates the importance of considering the needs of various stakeholders and that a “one-size-fits-all” mentality may be detrimental if used in the audit partner selection process. Accounting managers and controllers are directly involved in the audit process (e.g., in answering audit inquiries and providing audit evidence). As such, it’s important that the parties responsible for making the audit partner selection decision (e.g., audit committee, board of directors, C-suite) consider the unique audit partner characteristics desired by management.


The Role of Social Relationships


We also asked survey participants how a social relationship with the audit partner would affect their assessment of the partner, and the trade-offs between the relationship and potential independence impairments on their assessment. More than half of our participants said they would be more likely to recommend an audit partner with whom they have a personal relationship. The following quotations illustrate participant considerations regarding personal and professional relationships with the audit partner, both before and after the selection process. In general, participants perceive that having a social relationship with the audit partner improves their working relationship through greater trust.


“A personal knowledge may assist in judging the character and expertise of the audit partner.”—a financial planning and analysis manager


“Personally knowing the partner provides knowledge of character traits that may not otherwise be easy to detect.” —a vice president of finance


“Personal relationship creates open, honest dialogue to achieve correct and fair results.”—a controller


“I would have to look objectively at the relationship to ensure it didn’t skew my judgment. Assuming it was a surface-level social tie, I would look for strong moral standards in their personal life and note the ability to work/interact with others (the employees they will engage during the course of the audit). These aren’t critical factors but could be helpful with a personal knowledge of the individual.”—a CFO


“They still need to have the résumé and technical experience. If so, there should be a greater degree of trust based on the personal relationship.”—a retired CEO




In 2017, the PCAOB began requiring audit firms to disclose the identities of the lead engagement partners of all issuer, issuer employee benefit plan, and investment company (i.e., mutual funds and broker dealer) audits in Form AP, Auditor Reporting of Certain Audit Participants. Form AP information can be accessed on the PCAOB website under the AuditorSearch, which is a public database of engagement partners and audit firms participating in audits of U.S. public companies.


As shown in Figure 2, you can enter an audit partner’s name, an issuer, a company, or an audit firm into AuditorSearch to find all of the filings related to that person or entity, or easily download an Excel file of the entire database. The database is updated daily, so information is timely. Consequently, information on the experience of all audit partners participating in public company audits can now be gleaned by reviewing the current and former partners’ audit engagements from this publicly available data.



Using information gathered from the Form AP database on the AuditorSearch website, you can learn about the audit partner’s recent experience, effectiveness, collaboration with other cultures, and workload. Specifically, Form AP provides information about audit partners’ public client experiences since fiscal year 2016, which can help you assess partner characteristics, such as industry knowledge/ experience and experience on global clients, based on the types of clients served.


By knowing who the lead engagement partner was for a given issuer, investment company, or issuer employee benefit plan audit, management can also review the related audit opinion to potentially assess the partner’s independence/objectivity and audit effectiveness (e.g., based on internal control weaknesses identified and reported in the audit opinion and/or restatements of previously audited financial statements). Form AP also includes information about other auditing firms that participated in the audit, which oftentimes are from other geographical jurisdictions.


This could provide information regarding the partner’s collaboration with other firms and their experience with other countries and cultures. It may also reveal some insights about partner workload and availability based on the number of public clients a partner serves in a year. But Form AP can only provide partial insight about partner availability and the extent of their workload because private companies aren’t required to report this information.


Using the download of the entire AuditorSearch database, you can also easily filter the downloaded Excel data set to proactively identify specific partners you’d like to interview or potentially hire (as opposed to waiting for the audit firm to present potential partner candidates). For example, you could filter the spreadsheet on a specific city and company names to identify partners in your area who have experience with similar companies.


You can also filter the data set for specific accounting firms of interest. Based on the identified partners in this targeted search, you could then use other publicly available data (e.g., from LinkedIn) to gather more information about the selected partners (e.g., outside board experience and previous work experience) that may be important to your search.




An important part of assessing fit is interacting with the audit partner. Depending on the characteristics that are most important to you and your company, we provide suggested interview topics and questions that you could use to obtain information about the partners’ accounting knowledge, communication skills, industry knowledge, availability, integrity, and other aspects of their experience and background. The following is a list of potential questions organized by the key partner characteristics identified in Figure 1:


  1. Accounting technical expertise and knowledge
  • Does the audit partner currently serve, or did the partner previously serve, on any technical accounting or auditing standard committees or advisory committees, particularly in a leadership role?
  • Has the audit partner participated in any thought leadership publications provided by the audit firm?
  • What is the partner’s relationship with the firm’s national office and specialists, such as tax specialists, valuation specialists, and consultants (e.g., does the partner engage with them often)?
  • Does the audit partner currently serve, or did the partner previously serve, on any technical committees as an engagement quality/concurrent reviewer or in other technical leadership roles in their audit firm?


  1. Workload and availability
  • How many public, private, not-for-profit, and government audit engagements does the partner oversee annually (and their size), and what are those companies’ year-ends?
  • Does the audit partner currently serve in any leadership or volunteer roles that may be time-consuming?


  1. Business and industry knowledge
  • What are some examples of ways the partner has added value to other clients?
  • Is the audit partner active in or have they written articles for any business and industry trade groups?
  • Has the audit partner led any continuing professional education sessions or presented on any technical accounting, auditing, business, or industry topics relevant to your organization?
  • In what geographic markets has the partner worked? What is the typical size of the organizations the partner serves?


  1. Integrity
  • What does the audit partner’s background check indicate? Does anything in the audit partner’s record indicate a high tolerance for risk?


  1. Objectivity and independence
  • Have any audit quality issues, including any inspection findings or peer review deficiencies or restatements, ever been identified in the partner’s audits?
  • How does the partner communicate audit, business, or fraud risks and issues to management?


Along with asking partners these questions, you can use your personal and professional networks to seek out information about potential audit partners. You can ask about the audit partner’s reputation in the business community and look for indicators of how active audit partners are in their communities (e.g., serving on boards).


Management plays an important role in the auditor selection process. Individual audit partner characteristics have recently garnered increased attention from audit firms, regulators, and stakeholders. The survey results suggest managers value audit partners who not only possess necessary technical knowledge and expertise but also desirable traits such as communication skills, integrity, and the ability to add value to the company.


While technical expertise is important, other characteristics also warrant consideration to determine the right partner “fit” for your company. You can use publicly available information as well as our suggested interview questions to select an audit partner that will satisfy the company’s specific needs. It’s essential to identify an audit partner who not only promotes confidence in the financial statements, but who also can serve as a trusted (and objective) business advisor.



After selecting an audit partner and beginning the relationship, be proactive in briefing your staff and establishing rules for productive interactions.

  • Cooperatively support the auditor in their work.
  • Avoid common misperceptions about auditors or the audit.
  • Avoid seeing the audit as a threat or necessary evil.
  • Realize that the auditor is neither a friend nor a foe of the company.
  • Help the auditor maintain professional skepticism. Beware of the cult of personality or an attitude that the company or CEO is too important or too big to fail.
  • Ensure clear communication between the auditors and executives.
  • Establish procedures and protocols for mandated auditor change or rotation and to build a trusted working relationship with a new auditing firm.
  • Keep in mind that the audit’s purpose is to enable the auditor’s key roles. It isn’t a punishment or adversarial exercise. That will help expedite the audit and establish a trustful relationship with the auditor.
  • Provide quick responses to auditor requests. Avoid long delays in delivering requested materials and documents. That can make the naturally suspicious auditor even more suspicious.
  • Provide clear and concise answers to the auditor’s inquiries.
  • Be open about any contentious accounting issues where the company chose between a number of alternatives. Bring any unusual or questionable accounting treatment to the auditor’s attention in the early stages of an audit. Then you can discuss the issues and resolve them.
  • Don’t feel threatened in dealing with the auditor, and demonstrate that financial officers were also very thorough in determining what accounting treatments to use.
  • Remember that the auditor has a job to do, just like the company’s financial staff.


Source: George E. Nogler, “Working with Auditors: Tips and Traps,” Strategic Finance, July 2015.


Melissa Carlisle, Ph.D., CPA, is assistant professor of accounting at Case Western Reserve University. She can be reached at
Candice Hux, Ph.D., CPA, is assistant professor of accounting at Northern Illinois University. She can be reached at
Aleksandra “Ally” B. Zimmerman, Ph.D., CMA, CPA, is assistant professor of accounting at Florida State University and a member of IMA’s Jacksonville Chapter. She can be reached at
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The Four Levers of Revenue Management

By Julie Harrison, Ph.D., FCA; Frederick Ng, Ph.D.; Paul Rouse, Ph.D., CA; and Monte R. Swain, Ph.D., CMA, CPA, CGMA

Over the past century, accountants and analysts have been successfully employing management models and establishing causal drivers in partnership with executives to achieve strategic objectives involving costs and investments. This same work can and should be extended to sales and revenue.


Anyone who has booked a flight or compared hotel prices has experienced revenue management from the customer’s perspective. Revenue management systems involve the price customers are given, the availability of the product or service they want, how the company innovates to “refresh” the product they’re buying, and any incentives used to adjust the timing of when they receive the product. It’s the combination of these four powerful revenue management levers—pricing basis, inventory allocation, product configuration, and duration control—that are at work when a company successfully deploys a system for growing and sustaining revenue.


In partnership with those in marketing and sales functions, accounting and finance professionals can evaluate a business’s current approach to revenue management, and then continue to improve the business’s revenue management system with optimal analytics and metrics to support the strategic objectives involving revenue. Using the four levers, they can expand the role of accounting in business by implementing and improving revenue management in their organization.




Revenue management is based on optimizing resources by selling the right product or service to the right customer at the right time. Although this sounds simple, establishing strategies, processes, and management control systems that support effective revenue management is more complicated. What’s the role of accounting in revenue management? We can start with traditional financial performance analysis.


Remember the DuPont ROI Framework (also known as the “DuPont Model” or “DuPont Analysis,” among other names)? Shown in Figure 1, it’s a model for drilling down the return on investment (ROI) computation to specific mathematical components that DuPont and other organizations used throughout the 20th Century to focus management on key metrics involving costs and investments. As the figure shows, revenue is central to the framework. Less obvious is that a core purpose of costs and investments is to support and sustain revenue. Rarely is the framework used to delve into revenue management.


Click to enlarge.


Figure 2 presents a modified framework that includes the four key levers of revenue management:

  1. Pricing basis: Setting prices by how customer segments perceive specific value to the product or service, rather than based on costs or by reacting to competitor prices.
  2. Inventory allocation: Deploying the business’s capacity of goods or service depending on demand conditions and prices accepted by customer segments.
  3. Product configuration: Efficiently customizing or innovating goods and service offerings to meet the expectations of different customer segments while optimizing price points in each segment.
  4. Duration control: Optimizing resource constraints to meet the demand of customer segments by internally managing bottlenecks or externally influencing customer behavior.


Pricing basis and inventory allocation are focused on effectively increasing the level or volume of revenue flowing into the organization by segmenting and optimizing customer groups, while product configuration and duration control focus on efficiently positioning resources and investments to support the volume of revenue flow. Let’s take a closer look at each lever.


Pricing basis. The core principle of the four revenue management levers is customer segmentation, which is the practice of defining the distinct types of customers who are served by the business in terms of the goods or services they purchase, the price they’re willing to pay, the quantity they demand, and any additional activities needed to service their needs.


Purchasing an airline ticket is a good example of how customer segmentation works with pricing basis. Using this lever, airlines charge each customer according to their willingness to pay. The result is that airlines are able to better utilize capacity by adjusting prices based on how a customer segment perceives the value received from the ticket purchased.


Figure 3 illustrates the impact of using the pricing basis lever across customer segments. In the left-hand chart, only one price is charged by the business and only customers willing to pay that price (or higher) will purchase the product. This results in unsatisfied demand by customers who would purchase the product, but not at the price offered. It also results in a consumer surplus, representing revenues lost to the business when consumers pay a price that’s less than the value they place on the product or service.



In comparison, the right-hand chart represents a business that segments its customers by charging prices aligned with how each segment perceives value in the product or service. Using the pricing basis lever results in better use of capacity through reaching more customer segments with lower prices and capturing consumer surplus (revenue) with higher prices.


Inventory allocation. Successfully deploying a pricing basis lever involves another revenue management lever: inventory allocation. This lever is focused on better matching productive resource capability with customer demand. The definition of inventory here comes from yield management, which includes both the traditional concept of goods available for sale and the concept in services industries regarding units of capacity to serve customer demand. Inventory allocation practices shift inventory availability and speed of delivery to match changes in demand.


The inventory allocation lever operates by reserving product and service capacity for more profitable customer segments or by changing prices to align demand with scheduled inventory levels. Inventory allocation scheduling systems assist in maximizing the revenue earned from a limited supply of products or services by prioritizing supply to the most profitable customers. Note that accurate measurement of customer profitability is critical to prioritization.


Product configuration. Most businesses will experience constant pressure to update the features of a service or product usefulness or to tailor the fulfillment and delivery aspects of their products and services. The product configuration lever involves innovating or differentiating product or service features to better meet the evolving demands of customer segments for the value they expect.


Product configuration practices focus on targeting and controlling customization of the product or service to customer segments in alignment with pricing basis and inventory allocation practices. By designing the range of product or service characteristics to target different customer segments, this lever assists in the use of differential pricing and discouraging customers from buying cheaper products that don’t completely satisfy their expectations.


Many businesses use physical attributes and custom processes to differentiate their products or services in the marketplace. For example, an airline might provide some seats with more legroom, or a hotel might provide some rooms with king-size beds and others with double beds. This results in the need for resources that can be quite expensive. Alternatively, a business can use nonphysical attributes to differentiate products or services, such as customized labeling, terms of sale, or distribution channels. When the product configuration lever is applied to nonphysical attributes, the resources required are often significantly less expensive than those necessary to redesign and redeploy fundamentally different products or services. For example, imposing restrictive terms and conditions on an airline ticket is less costly than providing extra legroom.


Duration control. Businesses often experience variability in how long it takes to serve different types of customers. Organizations that employ the duration control lever focus on how the total process time and variation in delivery time are managed for particular products or services as demanded by specific customer segments. These management practices can increase the number of customers that can be served using a fixed level of capacity. When the focus is internal, duration control practices often involve bottleneck management that identifies a key constraint and then exploits that constraint by subordinating the rest of the process to that constraint.


The duration control lever can also have an external focus that works by incentivizing or nudging customer behavior to be more predictable or to self-schedule for an optimal inventory allotment. If you’ve ever committed to regularly receive lawn treatment from a landscaping company or arranged your schedule to attend a discounted movie matinee, you have responded to an external duration control lever.




Nearly all for-profit companies can benefit from better revenue management practices. Revenue management models originated in airlines and have since migrated to other industries with similar market and company characteristics, such as hotels, car rentals, railways, rideshares, advertising, recreational resorts, and digital channels (like Amazon or Google). The industries where revenue management practices initially evolved are characterized by cost structures that have high operating leverage (high fixed costs and low variable costs). But the four revenue management levers can be adapted for businesses of all sizes and in all industries.


Figure 4 outlines a quick self-assessment process for evaluating your business to identify and motivate targeted investment in specific revenue management practices. The assessment is organized by the four levers of revenue management, the business setting, and the role of accounting and finance to support revenue management decision making. Answer “Yes” or “No” to each question. More “yes” responses indicate the greater importance and value for your business of investing in revenue management practices.


Click to enlarge.


Most businesses can benefit by critically reviewing their revenue management approaches and determining how management accounting information can support these approaches. An assessment such as this can help accounting and finance professionals obtain early buy-in from top management on the need to develop an organization-wide revenue management system. As the role of the management accountant is to partner with other business functions, this buy-in is critical.




Just as different customers have different needs, so do businesses have different revenue management needs. Revenue management isn’t a one-size-fits-all solution. The four levers of revenue management should be deployed to recognize and support the different environments in which companies operate as well as different organizational structures and objectives. While not every business needs the same intensity of revenue management sophistication, management accountants should be on the lookout for opportunities to adjust the intensity level if the payoff is positive.


The intensity framework in Table 1 applies across different business models, industry settings, and organizational structures. The scales (from lower to higher intensity) provide a comparative view of how organizations choose to engage in management processes across the four levers. Each lever is anchored at two ends of a continuum representing the “intensity” of revenue management. A higher intensity of practice isn’t always best. Accounting and finance professionals should work with managers to consider the organization’s strategy and resources with respect to customers and competition in order to determine an “ideal” level of practice for each revenue management lever.


Click to enlarge.


Pricing basis intensity. When pricing is resource-focused, prices are established based on internal measures of standard costs or on observed standard market patterns. As the focus shifts toward customer needs, differential pricing can be implemented based on customer characteristics. For example, as a restaurant moves further from a standard menu with fixed prices to employing loyalty discounts, seasonal adjustments, and community event promotions, it’s moving from pricing based on its resources to pricing that connects to the expectations and experience of specific customer segments. Note that increasing the intensity of the pricing basis lever in your organization will likely require significant research to identify customer segments and their value preferences as well as investment in more advanced data capture enterprise resource planning systems.


Inventory allocation intensity. In a business using an ad hoc inventory allocation practice, there are limited adjustments during the period with respect to how capacity is deployed across different types of customers. If adjustments are made, the changes occur in an unstructured manner.


A business with more intense inventory allocation employs frequent and systematic monitoring of inventory utilization, with dynamic adjustments made based on sophisticated modeling of customer demand. More intensity in this lever requires tracking and analyzing data to maintain a clear view on customer segments and how their value beliefs respond to the pricing basis lever.


Product configuration intensity. Many businesses will differentiate or “refresh” products or services in the marketplace by making periodic adjustments to the physical product features or the core aspects of the process. By focusing the adjustments solely on physical or core attributes of the product, the differentiation can’t be targeted specifically to key customer segments. While this approach may be appropriate for some organizations, this low-intensity product-configuration tactic often increases the need for more capital investment and other resources to support product development.


Conversely, using nonphysical distinctions (e.g., varying the terms of sale, reconfiguring labels or packaging, or establishing dedicated distribution channels) to differentiate products or services that are physically similar in their core structure is a higher-intensity tactic. Greater intensity in product configuration practices should result in more agility to serve specific customers segments, which then sustains or enhances revenue in that customer segment. Further, the organization deploys its capital and resources more efficiently by standardizing the core physical attributes for all products or services.


Duration control intensity. The duration control lever supports the other levers by optimizing process constraints and by making customers more predictable. Where a business relies on reactive improvements, duration controls only change in response to external events or when the business redesigns its systems. Accordingly, adjustments made are often immediate and temporary. In addition, structure improvements tend to occur infrequently without a clear connection to the strategy of engaging with specific customer groups. In businesses that seek to stabilize customer usage, duration controls are specifically designed to change customer behavior in order to reduce variation in customer arrival times or in the average time it takes to serve customers.


Like the product configuration lever, intensifying the duration control lever doesn’t necessarily require a great investment in resources. To the contrary, by stabilizing processes around constrained resources (bottlenecks) and using incentives or “nudge” structures to stabilize customer behavior, organizations can more efficiently deploy resources that are intended to sustain or enhance revenues.




Some members of our author team have conducted research to examine how different types of businesses engage in revenue management practices. Table 2 contains three illustrations from that research, including ratings of the organizations’ intensity levels for each of the four revenue management levers.


Click to enlarge.


The international airline carrier represents the traditional type of organization that invests in high-intensity revenue management practices. Complex pricing and inventory allocation is possible through real-time matching of ticket prices and allocations to fluctuating customer demand. Product configuration employs high levels of nonphysical product options, which support customer segmentation, and duration control is often managed through charging higher prices for higher customer flexibility.


In contrast, the small, stand-alone retail store is prepared to sacrifice some revenue growth opportunities to retain a simpler system. Pricing basis and inventory allocation are focused on the highest and lowest demand products, and product configuration options are provided by maintaining a wide-ranging inventory that includes new and secondhand products. In this business, duration control relies only on customer queuing.


In the large, government-funded home-care services organization, pricing basis and inventory allocation are done to match customer demand with home-care services based on customer needs. The use of customer groups based on needs supports the development of packages of care that reflect these needs and allow for better use of available resources.


These diverse examples showcase how revenue management levers apply in all manner of settings but are established in different forms according to the organization’s competitive needs, internal resources, and management structure. The diversity of revenue management intensity reflects the competitive environment and strategy for each organization and how much it’s willing to invest in their revenue management systems. Airlines need high levels of revenue management intensity to compete. On the other hand, the retail store, with less competition and its particular product specialization, requires lower levels of revenue management intensity. The government organization had little to no competition but was strategically determined to provide clients with services based on best practices.


These examples and the self-assessment can help as you begin to evaluate the state of revenue management practices in your organization, determine the levels of intensity that best fit, and develop an approach and system going forward that incorporates metrics and analytics that support your organization’s strategic objectives. For more insight and specifics on this evolving discipline, see the IMA Statement on Management Accounting, Revenue Management Fundamentals, which includes a six-step methodology that can be used to develop a revenue management approach that accounting and finance professionals can use to partner effectively with other business functions.


Julie Harrison, Ph.D., FCA, is an associate professor at the University of Auckland Business School. She can be reached at
Frederick Ng, Ph.D., is a lecturer in the Department of Accounting and Finance at the University of Auckland Business School. He can be reached at
Paul Rouse, Ph.D., CA, is a professor of management accounting at the University of Auckland Business School. He can be reached at
Monte R. Swain, Ph.D., CMA, CPA, CGMA, is the Deloitte Professor of Accountancy at Brigham Young University. He’s also a member of IMA’s Salt Lake Area Chapter. Monte can be reached at
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Costs and Benefits of Start-up Funding

By Miguel Fernandez

There is always a point in time when a start-up’s founders, senior management team, and top finance executives evaluate strategies for how to scale the company to the next level and catalog what’s required to do that successfully. Securing financing at an early stage can speed up growth and lead to measurable and attainable success. Eventually, finance managers and the strategic planning team have to decide on the right funding source to help the company reach its goals.


It can be challenging to choose the financing model that best aligns with the strategic targets that management sets for the organization. Weighing the risks and competitive threats in a balanced and intelligent way is crucial as it can decide the future of your company. The implications of selling equity, managing inconsistent cash flow, interest rate movements, and the need to make timely payments to lenders are among the factors to consider, just to name a few.


That said, with the rise of new and more sophisticated funding options that put the business interests of start-ups and midsize companies first, there’s typically a way to figure out a solution that’s a good fit. It’s important to investigate the different funding options that are available to a company’s founders, management accountants, and finance officers and what considerations they need to make for both the short and long term.




Today, there are many funding options that company owners and financial managers can choose from. The following are some of the traditional sources of funding, which include savings, credit cards, venture equity, corporate venture capital, venture debt, and angel investors.


Savings and credit cards: Your initial capital will often come from founders’ bank vaults, especially if you’re just starting out. In fact, using your own savings and personal credit lines is probably the most effective way to test your business before approaching banks or investors. Many companies prefer to kick-start the business in the initial phase using their savings account to fund an idea or a credit card to pay for the equipment, software, or rent.


In this funding option, it’s crucial to maintain expense records early on because unequal financial contributions or sweat equity among the partners may cause disputes over how the ownership shares are divvied up. You’ll want to document everything to avoid future conflicts.


Venture equity and corporate venture capital: Global venture capital (VC) funding in the first half of 2021 surged 61% compared to the prior peak of $179 billion in the second half of 2020, according to Crunchbase. Although this is the most common type of start-up funding, it’s also the most difficult to come by and the most expensive because you have to let go of a portion of your share of equity in the company in exchange for capital.


Getting a meeting with a VC investor can be hard, and even if you win their trust, you must give away approximately 10% to 20% of your allotment of stock each round. On average, a VC-backed founding team will control less than 15% of its company’s shares by the time it achieves an exit, typically seven to 10 years later.


Start-ups and companies looking to raise funds can opt for a deal with corporate VC firms, which often provide industry expertise, executive support, and access to a network and customer base, unlike typical VC companies. Small businesses interested in partnering with corporate VCs should search for firms that will allow them to tap into their enormous customer base instantly and act as a support system that helps start-ups to nourish early relationships.


Venture debt: If you want to avoid dilution, then venture debt can be an option to consider, but it comes at a cost as well. The interest rates vary but are typically somewhere in the 6% to 12% range.


In addition, warrants and transaction fees add up quickly. The all-in costs over the length of the loan will end up adding anywhere from 25% to 50% of the amount drawn. Expect your lender to place a variety of covenants and operating restrictions on your company, and in the event of liquidation, your venture debt will have to be paid first, possibly leaving the company’s founders with nothing.


To get an idea of this type of funding’s scale, €8.3 billion ($9.74 billion) have been raised through debt financing by European start-ups from January 1 through September 7, 2021. These stats indicate that many are no longer considering debt as a secondary option. It’s very much in demand.


This trend is mainly due to two critical factors: The VC market has matured, while companies with recurring revenue and predictable business models prefer debt instead of diluting their equity. It’s a convenient option because founders get cash without compromising their independence or giving up equity, but the overall status of the company’s progress in achieving profitability plays a crucial role in deciding whether it’s eligible to get funds through debt financing.


Angel investors: Angel investors can be a good source of funding for early-stage start-ups. As experienced investors, they can guide your company in its nascent stage and help you when you decide to scale.


But angel investing isn’t any different from other funding options that entail selling shares to new investors, ultimately limiting entrepreneurs’ and finance executives’ ability to make choices independently. It may potentially put a ceiling on valuations and limit alternatives for the next round of funding because privately owned shares have generally been difficult to sell to others.


Sources: “Glossary of Funding Types,” Crunchbase; Emily Heaslip, “Financing Strategies for Every Stage of Your Business,” U.S. Chamber of Commerce. Click to enlarge.



Different funding options may be appropriate depending on which stage of growth your company is in. Diving into all these options puts the CFO and founders in a position to evaluate the best alternative for their company’s growth stage and the requirements of the business. It’s important for finance professionals to understand how funding options match the organization’s requirements.


Start-up phase: An aspiring start-up’s leaders may decide to bootstrap their way to the next stage of growth. Bootstrapping entails starting a business with nothing except founders’ own money and, presumably, the proceeds from the start-up’s early sales and revenue. In this pre-seed stage, the available options are personal savings and lines of credit, loans from friends and family, and crowdfunding, which is funding raised through donations or investments of small amounts of money from many different people via the internet or social media.


Taking out a loan probably isn’t a good idea until you validate that your target customers will pay for your products and services. That said, every situation is different; interest rates may vary widely; and those with an excellent credit score, good unit economics, or valuable sources of collateral may be able to negotiate favorable terms.


Survival mode: Once you’ve gotten the company up and running, you’re likely already eligible for a seed phase of venture funding to get your business off the ground. Proceed carefully, as this next step is crucial and potentially fraught with peril. This is the stage at which the asymmetry of information between investors and founder is greatest. Try to get as many proof points about the potential of the business as possible and make sure you get many eyes on the company and multiple viewpoints on its potential valuation. You also need to know how much money you’ll need to get to the next stage of development—and eventually profitability—and formulate a plan for how you’re going to use it.


Before you seek a VC investment, however, there are several other options to consider: angel investors; equity crowdfunding; and grants from federal and state authorities, private businesses, or nonprofit organizations. In addition, you can seek help from microlenders, which usually offer modest loans of less than $50,000.


Initial success: During this stage when a start-up finds initial success in gaining brand recognition and accumulating customers, many entrepreneurs seek financing to drive further growth. This could mean funding a budget to launch a new product line or e-commerce site or application, open a new location, or expand sales and marketing efforts to reach out to potential consumers, all with the goal of increasing revenues. The record, metrics, and growth trajectory of your company will hopefully pique the curiosity of investors at this stage.


Some of the most popular financing options at this stage of the growth curve include:


  1. Series A funding: A start-up with potential but a shortage of working capital might use Series A financing to grow its operations by recruiting talent, acquiring inventory and equipment, investing in technology, and seeking ways to achieve other long-term ambitions.
  2. Short-term business loans: If you only need a little more cash for significant equipment purchases, then consider a short-term small company loan to boost your working capital.


Takeoff phase: After you’ve decided to expand, the takeoff phase begins, during which entrepreneurs and senior finance executives must decide whether to grow their company further or sell it and potentially start a new venture. Working with a venture capitalist is the preferred fundraising approach at this stage of your journey. Once the product market fit is clear and your go-to-market strategy is predictable, your organization will likely be eligible for Series B and C funding.


  1. Series B funding: This form of finance concentrates on growing your company and satisfying market demand for your product or service. More market research and company development will be requested by a venture capitalist. The money raised in a Series B round is usually between $7 million and $10 million.
  2. Series C funding: This round of financing is for companies with a lot of success that need additional money to keep growing. Some companies utilize their Series C investment to acquire or partner with another company.


Maturity stage: At a more mature stage of a company’s growth curve, some leadership teams seek to make an initial public offering (IPO) of equity shares to investors. Years of hard effort, a fantastic idea and business plan, and significant financial support are required to achieve the degree of success necessary to go public.


It’s widely believed that you must reach at least $100 million in revenue to be eligible for an IPO, but entrepreneurs and finance executives should understand that delaying your IPO can be as disastrous as doing it too early.




Financial leaders need to measure the return on investment (ROI) from each of their financial decisions and evaluate whether it makes sense based on the company’s strategic plan, objectives, resources, and capabilities. The traditional models of financing have many drawbacks, mainly related to removing your freedom to operate efficiently. When founders add new investors to the company, the effect is similar to getting new bosses, especially if they also sit on the board of directors. There’s an additional reporting effort; decisions are no longer made unilaterally, and investors’ motives may not necessarily align totally with the founder’s vision. While they can effectively meet some of the organization’s goals, it would behoove organizations, especially software-as-a-service (SaaS) companies, to explore other more innovative options as well.


One such funding option is programmatic financing, which doesn’t take equity or put companies in debt. Rather, it advances revenues that SaaS companies would get in the future from customers they’ve already signed. Customers can pay monthly, but the company gets cash instantly, which leaders can use to fuel growth initiatives.


The main benefits of programmatic financing include:


  • Speed: Rapidly accessible growth capital is often available within days.
  • Scalability: The borrower’s credit limit adjusts dynamically based on monthly growth.
  • Flexibility: Borrowers can draw what funds they need when they need it; lenders place no restrictions on the use of capital.
  • Affordability: Deployment is generally assisted by AI, leading cumulative fees to be somewhere between 1% and 10%.
  • Transparency: Agreements carry a single transparent fee with no hidden costs in warrants, covenants, or security interest.


The revenue-finance option allows founders to have more independence over their decisions related to the company’s performance, and it doesn’t carry the risk of compromising board seats. Founders and senior finance executives would like to be aware of the avenues where they need to spend their money—and they should. With revenue financing, no one has control over your spending decisions.


Another possibility is to take advantage of the expense financing model to direct the funding more strategically by using it to cover important ongoing expenses or onetime expenditures that your company needs to make. Examples of this can include managing large bills without depleting cash, expanding your payments while getting up-front discounts from vendors, and ensuring that salespeople get their commissions as soon as they close deals, but the cash outflows are split over the following months.




When senior finance executives are working to arrive at a specific number for the company’s ROI that will eventually help the organization to secure funding, consider the following points:


  • Your company’s valuation and what’s in it for the investor;
  • How much money the investor is providing your ­company and how leadership is planning to use it; and
  • The risks associated with investing in your business.


Talking in numbers, this is the difference between the main types of funding and their ROI. The traditional model of financing, or so-called static funding, yields an ROI of 1.5 to 3 times the implied cost of capital in most cases. In this model, the investor contributes a lot of cash up front, which the company doesn’t need instantly. As a result, the founders are selling big parts of the company at the present valuation in exchange for cash that they won’t use until several months into the future. For example, if you raise $1 million for 10% of the company and spend that amount while growing three times over a year, that same 10% would now be worth $3 million, so your investors would be getting a return of 200%.


According to the National Bureau of Economic Research, venture capitalists expect a 25% return on their investment on average. As a founder or senior finance executive, don’t let the cash influx distract you from this 25% number. It may haunt you in the future unless you opt for a more cost-effective option for fueling your business. Additionally, to achieve the 25% overall portfolio return that VCs expect, the most successful companies actually end up returning upward of 60% of the value to their investors. This means that if you were to use other sources of cash to fund the business, that’s the implied interest rate that you would be paying. It’s really expensive.


If the company opts for programmatic funding, then every dollar used is put to work immediately to generate returns, which gives the company the potential to achieve a much higher ROI, often ranging from eight to 11 times. With programmatic financing, you wouldn’t get money today to use over a year; instead, you would get the amount that you need to deploy over the following 30 to 60 days. This method also allows a recurring payment that’s tailor-made to suit your business needs. And with this option, founders don’t have to worry about equity dilution.




Every start-up knows that it needs money to catapult its business to a new level, but the funding may come with a high price tag, especially in the case of VC or debt. While these traditional financing options will help your company in the initial phase with mentorship and support, financial managers should also know that they have other cost-effective financing models to choose from.


As a finance executive at a thriving start-up, your goal is to sustain your business without putting a dent in your daily operations, ownership, and sentiment. If you’re stuck paying high interest rates or end up giving up a portion of your equity, then imagine the long-term impact on your return on equity. It’s worthwhile to consider other forms of funding, such as alternative financing that blends different aspects of VC and venture debt to focus on the essential elements of your business.


Raising cash means that the company can afford more talented people and better tools, multiplying its efficiency and leveraging growth initiatives. Examples of this can include increasing brand awareness through advertising, upgrading technology, developing new products, hiring a marketing research firm to open new markets, or bringing on board high-performing candidates to boost productivity. All these activities will likely help you to outpace your competitors and create a strong position in the industry.


Your company will stay afloat in rough seas if you have a suitable business model and forward-thinking strategic plan in place. But the complicated task of finding the right funding source is probably the most critical step in your journey. Do it wisely. There’s a lot at stake.

Pitfalls to Avoid When Seeking Financing


Borrowing more than you can afford

Even if a lender offers more money than you anticipated, don’t go for it without proper due diligence. Conservative borrowing is preferable to accepting a big loan. That’s because you have to keep in mind interest payments as well. The more you borrow, the more interest you pay. If you don’t have a specific need for the extra funds, then there’s a threat that you could be overpaying for money you won’t utilize.


Not understanding the lender’s intention

Study the investor’s or the lender’s background before you start the process of raising funds. The reason: If you’re just beginning and approach a lender with a vast portfolio, chances are that you won’t get the desired investment and you’ll end up wasting time, which can ultimately lead to frustration.


Going unprepared

The last thing you want to do is hesitate in front of potential investors when they ask about your goals or tactics for achieving ROI. Approach an investor only if you’re sure that your company’s strategic business plan and financial projections build trust and credibility and are worth investing in.


Failing to take care of debt-to-equity ratio

It’s an enticing thought to keep your business afloat by pumping in money. But you must keep in mind that investors will look for your company’s organic growth as well. Your debt-to-equity ratio will be a crucial element in gauging if your start-up is worth investing in.


Thinking it would be an easy ride

Securing investment is a lengthy process. Don’t forget this when you initiate it. Having off-base expectations can lead to frustration and distractions. Be patient and set realistic goals and timelines.


Underestimating the risk of failure

While failure is part of the process, underestimating its consequences can prove costly to you, your cofounders, and colleagues. A lot is at stake when you get a loan from a bank or funding from an investor. You have to worry about the interest payments and the collateral. So, you must identify the associated risks before applying for a loan or an investment.


Approaching just one source

If your research skills are reasonable, then you can find investors or lenders who provide competitive interest rates. Failing to do that can result in your company paying higher interest rates when there are other more affordable options in the market.


Source: Jared Hecht, “6 Business Financing Mistakes You Can’t Afford To Make,” Forbes; Dennis Beaver, “Pitfalls to Avoid When Financing Your Business,” NASDAQ.

Vetting Potential Investors


  1. What is your involvement?
    Gauge the lender’s/investor’s seriousness. While financial capital is crucial in today’s economy, the lender’s/investor’s involvement and time spent with your start-up are equally important.


  1. What is your “primary” vs. “follow-on” investment plan?
    Understand the investor’s stance after making the initial investment.This is important, as investors keep funds in reserve for future rounds, which are usually in a four-to-one ratio.


  1. What’s your follow-on investment status?
    Check with your lenders/investors if they have undertaken follow-on investments or loans in the past. Some lender/investor firms don’t do it, which means you’ll have fewer funding reserves.


  1. How should we report to you?
    Understand lenders’/investors’ expectations in terms of communication regarding annual or quarterly developments.


  1. Who will be our point of contact?
    Stay in touch with your lenders/investors through their internal teams and advisors to guide you in your journey. Some lenders/investors prefer to not interfere once they feel that things are streamlined.


  1. How often will you lead rounds?
    Check if the investors will lead your start-up for new rounds. Without their support, you will find it hard to get funds. So, ask them specifically if they will be leading rounds in the future.


  1. What do you fear most about this investment?
    Helps with clearing their doubts and giving them assurance about your plans.


  1. Can we talk to other entrepreneurs from your portfolio of start-ups?
    Show you’re serious about your start-up and the funding that you received. Also, you’ll get an idea of how the investor reacts if things go south.


  1. What are your expectations regarding the returns?
    Gauge the investors’ stance on the timeline of ROI. If they’re under a lot of pressure and expect quick returns while you’re looking for an easygoing long-term investment, then it probably isn’t a good idea to go with those investors.


  1. How can we improve our pitch?
    Reaffirm your seriousness about the funding round. It’ll show the lender/investor that you’re willing to learn and grow. For creating a winning deck, check out Peter Thiel’s pitch template.


Source: Micah Rosenbloom, “The 12 Questions All Founders Should Ask VCs,” Founder Collective; Alejandro Cremades, “20 Questions Entrepreneurs Should Ask Investors,” Forbes.


Miguel Fernandez is the cofounder and CEO of Capchase, a provider of nondilutive growth capital for recurring-revenue companies, and the founder of HeyDey Brands. You can reach him at
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Improving Critical Thinking Skills

By Sonja Pippin, Ph.D., CPA; Brett Rixom, Ph.D., CPA; and Jeffrey Wong, Ph.D., CPA

Whether working with financial statements, analyzing operational and nonfinancial information, implementing machine learning and AI processes, or carrying out many of their other varied responsibilities, accounting and finance professionals need to apply critical thinking skills to interpret the story behind the numbers.


Critical thinking is needed to evaluate complex situations and arrive at logical, sometimes creative, answers to questions. Informed judgments incorporating the ever-increasing amount of data available are essential for decision making and strategic planning.


Thus, creatively thinking about problems is a core competency for accounting and finance professionals—and one that can be enhanced through effective training. One such approach is through metacognition. Training that employs a combination of both creative problem solving (divergent thinking) and convergence on a single solution (convergent thinking) can lead financial professionals to create and choose the best interpretations for phenomena observed and how to best utilize the information going forward. Employees at any level in the organization, from newly hired staff to those in the executive ranks, can use metacognition to improve their critical assessment of results when analyzing data.




Metacognition refers to individuals’ ability to be aware, understand, and purposefully guide how to think about a problem (see “What Is Metacognition?”). It’s also been described as “thinking about thinking” or “knowing about knowing” and can lead to a more careful and focused analysis of information. Metacognition can be thought about broadly as a way to improve critical thinking and problem solving.



In their article “Training Auditors to Perform Analytical Procedures Using Metacognitive Skills,” R. David Plumlee, Brett Rixom, and Andrew Rosman evaluated how different types of thinking can be applied to a variety of problems, such as the results of analytical procedures, and how those types of thinking can help auditors arrive at the correct explanation for unexpected results that were found (The Accounting Review, January 2015). The training methods they describe in their study, based on the psychological research examining metacognition, focus on applying divergent and convergent thinking.


While they employed settings most commonly encountered by staff in an audit firm, their approach didn’t focus on methods used solely by public accountants. Therefore, the results can be generalized to professionals who work with all types of financial and nonfinancial data. It’s particularly helpful for those conducting data analysis.


Their approach involved a sequential process of divergent thinking followed by convergent thinking. Divergent thinking refers to creating multiple reasons about what could be causing the surprising or unusual patterns encountered when analyzing data before a definitive rationale is used to inform what actions to take or strategy to use. Here’s an example of divergent thinking:


The customer satisfaction metric employed by RNO Company has increased steadily for the quarter, yet its sales numbers and revenue have declined steadily for the same period. Jill, a senior accountant, conducted ratio and trend analyses and found some of the results to be unusual. To apply divergent thinking, Jill would think of multiple potential reasons for this surprising result before removing any reason from consideration.


Convergent thinking is the process of finding the best explanation for the surprising results so that potential actions can be explored accordingly. The process consists of narrowing down the different reasons by ensuring the only reasons that are kept for consideration are ones that explain all of the surprising patterns seen in the results without explaining more than what is needed. In this way, actions can be taken to address the heart of any problems found instead of just the symptoms. On the other hand, if the surprising result is beneficial to an organization, it can make it easier to take the correct actions to replicate the benefit in other aspects of the business. Here’s an example of convergent thinking:


Washoe, Inc.’s customer satisfaction metric has increased steadily for the quarter, yet sales numbers and revenue have steadily declined for the same period. Roberto found this result to be surprising. After employing divergent thinking to identify 10 potential reasons for this result, such as “the reason that customers seem more satisfied is that the price of goods has been reduced, which also explains the reduction in sales revenue.” To apply convergent thinking, Roberto reviewed each reason that best fit. If the reason doesn’t explain the unusual results satisfactorily, then it will either be modified or discarded. For example, the reduced price of goods doesn’t explain all of the results—specifically, the decrease in units sold—so it needs to either be eliminated as a possible explanation or modified until it does explain all the results.


Exploring strategic or corrective actions based on reasons that completely explain the unusual results increases the chance of correctly addressing the actual issue behind the surprising result. Also, by making sure that the reason doesn’t contain extraneous details, unneeded actions can be avoided.


It’s important to note that a sequential process is required for these types of thinking to be most effective. When encountering a surprising or unexpected result during data analysis, accounting professionals must first focus strictly on divergent thinking—thinking about potential reasons—before using convergent thinking to choose a reason that best explains the surprising result. If convergent thinking is used before divergent thinking is completed, it can lead to reasons being picked simply because they came to mind right away.




Improving divergent and convergent thinking can benefit employees at any level of an organization. Newer professionals who don’t have as much technical knowledge and experience to draw upon may be more likely to focus on the first explanation that comes to mind (“premature convergent thinking”) without fully considering all of the potential reasons for the surprising results. Experienced individuals such as CFOs and controllers have more technical knowledge and practical experience to rely on, but it’s possible these seasoned employees fall into habits and follow past patterns of thought without fully exploring potential causes for surprising results.


Instructing all accounting professionals on how to think about surprising results can help them have a more complete understanding of the issues at hand that will help guide actions taken in the future. It can lead to a more creative approach when analyzing information and ultimately to better problem solving.


When teaching employees to use divergent and convergent thinking, the goal is to get them to focus on what should be done once they identify information that suggests a surprising result has occurred. The first step is to learn how to properly use divergent thinking to create a set of plausible explanations more likely to contain the actual reason for the surprising results. There’s a three-step method that individuals can follow (see Table 1):


  1. Ask a broad question that reflects the goal you have: For instance, what is it about the current information that suggests a potential surprising event? Or what led to this event that can help predict future occurrences?
  2. Answer that question with a complete sentence: Be sure the answer includes a description of the information that suggests a potential surprising event.
  3. Turn the broad question into a creative challenge: Identify the plausible reasons that could have led to the indications of a surprising event.


Click to enlarge.


Once employees have a good grasp of how to use divergent thinking, the next step is to instruct them in the proper use of convergent thinking, which involves choosing the best possible reason from the ones identified during the divergent thinking process. Potential reasons need to be narrowed down by removing or modifying those that either don’t fully explain the surprising results or that overexplain the results.


Two simple questions can help individuals screen each of the possible explanations generated in the divergent thinking process (see Table 2):

  1. Can I think of transactions or events that would be considered expected but are accounted for by my ­explanation?
  1. Can I think of transactions or events that aren’t accounted for by my explanation but are unusual?


Click to enlarge.


The first question is designed for an individual to think about whether there are other events outside of the current issue that fit the explanation: “Does the explanation also address phenomena that aren’t related to or outside the scope of the surprising result that’s being studied?” If the answer is “yes,” then this is a case of overexplanation. Consider, for example, a scenario involving an increase in bad debts. Relaxing credit requirements may explain the increase, but they would also explain a growth in sales and falling employee morale due to working massive amounts of overtime to make products for sale.


The second question is designed to think about whether an explanation only accounts for part of the phenomenon being observed: “Does the explanation address only part of what’s being observed while leaving other important details unexplained?” If the answer is “yes,” then it’s an under-explanation. For example, consider a decline in sales. An economic downturn at the same time as the decline may be a possible explanation, but it might only be part of the problem. A drop in product quality or a drop in demand due to obsolescence could also be causing sales to decline.


If the answer to either screening question is “yes,” then the explanation needs to be discarded from consideration or modified to better address the concern. In the case of over-explanation, the reason is too general and may lead to action areas where none is needed while still not addressing the actual issue. For underexplanation, the reason is incomplete because it accounts for only a portion of the phenomenon observed, thus action may only address a symptom and not the actual root problem.


If the answer to both questions is “no,” then the explanation is viable. The chosen reason neither overexplains nor underexplains the issue at hand, making it more likely that the recommended solution or plan of action based on that reason will be more successful at addressing the actual cause of the issue.


Divergent and convergent thinking are two distinct processes that work in conjunction with each other to arrive at potential reasons for the results they observe. Yet, as previously noted, the two ways of thinking must be conducted separately and sequentially in order to obtain optimal results. Divergent thinking must be applied first in order to achieve a diverse set of potential reasons. This will maximize the probability of generating a feasible reason that explains the results correctly. After the set of potential reasons has been generated using the divergent thinking approach, convergent thinking should be used to methodically remove or modify the reasons that don’t fit with the surprising results.


If both divergent thinking and convergent thinking are done simultaneously, premature convergence can lead to a less-than-optimal reason being chosen, which may lead to taking the wrong course of action. Thus, it’s important with training to instruct employees in the use of both divergent thinking and convergent thinking and to use the types of thinking sequentially.




Learning to apply divergent and convergent thinking can require a substantial time commitment. The process we’ve described here is designed to enhance critical thinking and problem-solving skills. It outlines a general approach that doesn’t provide specific guidance on the best methods to analyze data or complete a task but rather focuses on successful methods to think of a diverse set of reasons for any surprising results and then how to choose the best explanation for that result in order to be able to recommend the most appropriate actions or solutions.


Individuals can practice the approach we’ve described on their own, but each organization will likely have its own preferred way to approach the analyses. Plumlee, et al., used training modules in their study that could be employed in a concerted effort by a company, with supervisors training their employees. We estimate that a basic training session would take about two hours. Complete training with practice and feedback would require about four hours—which could grow longer with even more for intensive training.


One area where this training could be very effective in helping employees is data analytics. In the past decade, an increasing amount of accounting and financial work involves or relies on data analysis. Data availability has increased exponentially, and companies use or have developed software that generates sophisticated analytical results.


Typical data analysis procedures accounting professionals might be called on to perform include things such as ratio and trend analyses, which compare financial and nonfinancial data over time and against industry information to examine whether results achieved are in line with expectations for strategic actions. Additionally, analyses are forward-looking when performance measures examined are leading indicators.


In order to perform data analytics effectively, accounting professionals must exercise sufficient judgment to critically assess the implications of any surprising results that are found. The quality of judgments and understanding the best ways to conduct and interpret the information uncovered by data analytics have typically been a function of time spent on the job along with training. At the same time, however, it’s commonplace that many of these analyses are performed by newer professionals.


Training in metacognition will help these employees more effectively and creatively reach conclusions about what they’ve observed in their analysis. Since the method discussed provides general instruction, each organization can customize the approach to best fit its own operations, strategies, and goals. Implementing a training program can be worth the investment given the importance of critical thinking throughout the process of evaluating operating results. Avoiding potential failures with interpreting results that could be prevented would seem to warrant the consideration of metacognitive training.


Sonja Pippin, Ph.D., CPA, is a professor of accounting and the director of the Master of Accountancy Program at the University of Nevada, Reno. She can be reached at
Brett Rixom, Ph.D., CPA, is an assistant professor of accounting at the University of Nevada, Reno. He can be contacted at
Jeffrey Wong, Ph.D., CPA, is a professor of accounting and the chair of the Accounting Department at the University of Nevada, Reno. He can be reached at
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Compliance Training is Key to Preventing Fraud

By Daniel Butcher

Engaging compliance training is an effective way to spark ethics conversations and overcome complacency toward fraud prevention.


The refrain “trust, but verify” first entered common parlance in 1980s political talks, but it also has relevance for ethics, compliance training, and fraud prevention. You want to be able to trust all of your colleagues, business partners, and customers, but trust must be earned. Sometimes perpetrators of unethical conduct and outright fraud are those you least expect and among those most invested in the organization’s success.


There are many cases that illustrate this point. For example, criminal charges were filed against Thomas Wiechmann, the former CFO of Reichel Foods, for allegedly spending more than $600,000 on unauthorized purchases with corporate credit cards between 2013 and 2019. In March 2021, he was “discharged for cause,” with the company accusing him of “abusing his position of trust” and “violating his fiduciary duty” by getting financial benefits from Reichel Foods “to which he was not entitled.”


Kelly Richmond Pope, a professor of accounting at DePaul University and a faculty fellow at Surgent, directed and produced the documentary All the Queen’s Horses. It investigates the crime and affluent lifestyle of Rita Crundwell, a formerly trusted comptroller of Dixon, Ill., who stole $53 million of public funds over 20 years and used it to build a highly successful quarter-horse-breeding business.


“Once you start pulling back the layers of how fraud happens at organizations of any size, you notice there’s typically an overreliance on one person who does something really well, and you just let them go do it, and you don’t ask a lot of questions because they own that function,” Pope said. “You’re just happy that they’re on your team. So that can impact the oversight that you have of that person in that function. That’s really what happened in Dixon, which can happen anywhere, so the need for a routine check-up of your internal controls is a universal message.”


Many companies establish compliance policies and internal controls but don’t communicate them to employees regularly or periodically evaluate if updates are needed. A best practice is to review the organization’s code of conduct, mission and ethics statements, compliance policies, and internal controls annually or at least biennially.


“You put them in place, and then you walk away from them—you don’t go back and update or pressure-test them, for example, doing a hackathon and asking your employees or an external service provider, ‘How could you break this? How could you defraud us if you wanted to?’” Pope said. “Many people think, ‘I have a trusted employee’ but not ‘When’s the last time I’ve looked at our internal controls? What did the auditor say? And did I even ask our auditors the right questions to get them to think about fraud in the audit process?’”




People can fall into a kind of blindness to fraud risk because “things have always been done this way.” Many of us have a high degree of comfort with the status quo that prevents us from seeing warning signs of unethical conduct.


“People say, ‘Oh, no, we’ve never had any fraud before. We’ve always done business this way,’ so there’s no urgency to scrutinize the policies, procedures, and controls,” Pope said. “But often there are indications that people might be able to look at to say, ‘Maybe we do need to tighten up our compliance, risk management, and internal controls.’”


If your organization hasn’t updated its internal controls or explored what technology is out there to protect against cybercrime and fraud within the past year or two, then that’s a sign there could be vulnerabilities and such a process is overdue. It’s difficult to plan for every eventuality; be proactive about looking for red flags, and educate your staff about signs that fraud has already happened so everyone knows what to look for.


It’s important to instill ethical principles and values that could make a difference if an ethically ambiguous situation or indications of fraud emerge. Prevention is more effective than reacting.


“People have so much on their plate. Sometimes you don’t find out about fraud until it’s too late, but when you replay what happened, there were so many red flags that could have pointed you to it before it was too late,” Pope said. “Our bias and our blinders prevented us from seeing the signs, and we just didn’t want to think the worst of a person or people—if you hear things like, ‘We’ve always done it this way; we’re like a family; we don’t need internal controls because that person manages it,’ those are all telltale famous last words.”




Most organizations should aim to schedule compliance training once a year. Pope recommends presenting various workplace situations and then asking employees behavioral science questions that have an ethical component.


“Compliance training has to be fun; speakers need to use tactics like visual aids and humor to keep an audience engaged,” Pope said. “You need to give people situations so they can get sticky with their thinking and almost see themselves in the scenario that you presented, and that’s why film and storytelling are so powerful, because they allow you to do that—people can empathize with characters in a well-told story.”


The training should have a participatory element to it. Examples include using TED Talks, podcasts, documentaries, articles, and recent case studies. Those are effective prompts to get employees talking about compliance, ethics, and fraud-prevention situations and issues with each other.


“If we can move away from the check-the-box kind of compliance training, where it’s truly engaging in some regard and even enjoyable in some capacity, then we could see more of a change in behavior with internal fraud,” Pope said. “More attention should be placed on it to have richer conversations and then sneak in reminders about some of those rules.”


Daniel Butcher is the finance editor at IMA and staff liaison to IMA’s Committee on Ethics. You can reach him at
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The Perfect Catch

By J. Stephen McNally, CMA, CPA

The “catch” in rowing occurs when the oar blades enter the water to start the stroke. A successful catch requires squaring your blades and dropping them cleanly into the water before beginning to pull.


The perfect catch is crisp. Then you must “stay connected,” pulling your blades evenly and with steady pressure through the water. If you do, you’ll feel power flow from you through the blades to the boat. If not, you’ll either wash out (i.e., the blades come out of the water mid-stroke), or you’ll go too deep. Either way, you’ll rock the boat (literally).


As management accounting and finance professionals, we must also strive for the “perfect catch” and “staying connected.” Specifically, we should prioritize meeting new people and expanding our network (the “perfect catch”) and then building and strengthening these relationships over time (“staying connected”).  It starts in college, when we have the opportunity to establish lifetime bonds with peers and professors. Throughout our career, we’ll engage with many people, including team members, cross-functional partners, vendors, customers, and others. Each contact could become a strong professional ally, even a friend. We can also expand our network by joining professional associations such as IMA®, volunteering at other nonprofit organizations, and enjoying our hobbies. By making and deepening relationships over time, we increase the probability of professional success and personal happiness.


I’ve seen firsthand the power of relationships in action. Shortly before leaving Campbell Soup Company, I knew I was ready for a change, but a change to what? To answer this question, I tapped into my network of IMA friends. They were CFOs, CEOs, consultants, and board directors. They represented a mix of industries and public, private, and nonprofit organizations. By learning about their career journeys, I clarified that my career goal was to become CFO of a small to midsize private company. These friends also helped prepare me for the search process, providing advice on my résumé, my “elevator speech,” and how to prepare for interviews. Their input was invaluable.


While I was tapping into my IMA network, I also was focused on developing my professional network in northwest Ohio. Our kids were entering high school, so my wife and I didn’t want to relocate. Then, one day, I received an out-of-the-blue call from the chair of the PTI Group of Companies. She said they needed a CFO, and someone recommended that she talk to me. After I was hired, I learned that four others in my network also had recommended me and that I was the only candidate considered. Relationships matter!


As an IMA member, you have access to a network of nearly 140,000 professionals around the world. I encourage you to leverage this network. Using LinkedIn is a great way to do so. When sending an invitation, though, I strongly recommend adding a personal message (e.g., “Steve, I saw your column in SF, and I’d love to connect”). Doing so is best practice. So, work on that perfect catch and staying connected!


J. Stephen McNally, CMA, CPA, is CFO of Plastic Technologies Inc. (PTI) Group of Companies and Chair of the IMA Global Board of Directors. He’s also a member of IMA’s Toledo Chapter. Contact Steve at, or follow him on LinkedIn.
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Tools of the Trade: November 2021

By Michael Castelluccio

1. iPHONE 13 PRO

This year’s Apple fall preview featured two new iPhones, a revamped iPad mini, and the ninth version of its classic iPad, but no watch; that will be later this fall. The new iPhone 13 Pro has a faster chip, an improved screen, better battery life, and what Apple says is the biggest upgrade ever of its three cameras. The 6-core A15 Bionic chip is the fastest in a smartphone, and there’s a 5-core GPU and 16-core Neural Engine. The Super Retina XDR display (6.1″ 2,532 x 1,170 pixels and Max 6.7″ 2,778 x 1,284 pixels) is 25% brighter outdoors, and for gaming, the refresh rates adjust up to 120 times per second. This ProMotion constant adjustment saves power and adds to battery life that now can provide up to 28 hours of video playback. Available memory storage ranges from 128GB up to 1TB. Three lenses provide telephoto, ultrawide, and wide cameras, and for the first time a macro camera that will focus as close as two centimeters—less than an inch away—for stills and video. True Depth allows depth-of-field adjustments, even at the editing stage. The 13 Pro is available in silver, gold, graphite, and sierra blue.



2. iPAD 10.2

The basic 10.2″ iPad is now in its ninth generation. It has a new A13 Bionic chip that provides 20% faster GPU and Neural Engine performance—six times faster than the best-selling Android tablet. The iPadOS 15 supports multitasking, app switching, new widgets, and an App Library. The front-facing camera is a 12MP ultrawide lens with a 122° field of view and Center Stage’s ability to detect people and follow them as they move around or are joined by others. True Tone adjusts the display to the color temperature of the room. Battery life is up to 10 hours, and the basic storage has been increased, ranging from 64GB up to 256GB. Starting at $329, the new iPad 10.2 sup­ports Smart Keyboard and Apple Pencil and is the most affordable and pop­ular iPad.




The biggest upgrade ever for the iPad mini has been a long time coming. The new sixth-generation mini has a completely redesigned body; it’s available in four colors—purple, pink, starlight, and space gray—and the Liquid Retina display has been increased to 8.3″ in the same size body. The display features True Tone automatic temperature adjustment, improved antireflective coating, and 500 nits of brightness. Touch ID fingerprint recognition is now triggered in the top button of the case. The speed has been increased with a 40% boost for CPU and 80% increase for GPU performance. A new USB-C port provides connections with faster data transfers and 5G. The new 12MP front camera has Center Stage, and there’s a new speaker system and support for the 2nd generation Apple Pencil.




Your phone regularly picks up all sorts of pathogens, so sanitizing makes sense. The mophie sanitizer uses UV-C light that kills up to 99.9% of staph and E. coli surface bacteria without chemicals or heat. The device is designed for smartphones but can also be used to sanitize your keys, credit cards, and earbuds. A charger is included in the lid that provides up to 10W of charging power for any Qi-enabled device, and you can charge one phone while another smartphone or item is sanitized inside the case. The 8.05″ x 4.97″ x 1.69″ case can accommodate most smartphone sizes, and a complete cleaning cycle takes only five minutes.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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New Capitalization Rules For Cloud-Based Software

By Bradford A. Hamilton, CMA, CPA

An FASB accounting standards update changes the recognition of software expenditures in cloud computing.


Companies are turning to cloud software solutions at a higher rate than ever before. The Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-15 (ASU 2018-15) specifically to address accounting for cloud-computing software. This update requires companies to capitalize certain costs associated with implementing a cloud arrangement.


Historically, companies have expensed cloud-computing costs as the costs were incurred, whereas internal-use-software costs have been capitalizable. The FASB initially issued Accounting Standards Codification 350-40 (ASC 350-40) to align the accounting for cloud-computing implementation costs with the rules for internal-use software. Entities reached out to the FASB for clarification, indicating ASC 350-40 didn’t adequately specify which costs associated with cloud-computing agreements could be capitalized. The FASB issued ASU 2018-15 to provide this clarification.




For context, there are traditionally three phases of software implementation.


  • Preliminary project phase. An entity determines the system requirements for software.
  • Application development phase. If the software to be used requires customization or changes to the configuration or infrastructure, development work will be conducted at this time. Costs can include manual data conversion, design, development, testing, and training.
  • Post-implementation phase. This phase begins when the software is placed in service. Costs may include maintenance, additional training, upgrades, or enhancements.


Within these phases, implementation costs incurred in a hosting arrangement are fees incurred by the customer to get the hosted service implemented, set up, and ready for use.


  • If a software license existed, the license might be capitalized and all other costs expensed.
  • If no software license existed, the entire service contract was expensed.


In some instances, the FASB leaders believed this discouraged companies from evaluating cloud computing as a potential solution to business needs. ASU 2018-15 provided two main clarifications to ASC 350-40: guidelines for which specific implementation costs could be capitalized, whether a software license existed or not; and guidelines to determine, for capitalization purposes, what the asset is. One criterion considered, for example, is whether or not the cost provides a benefit to the organization over time.




Capitalization allows for allocation of cost over the life of the asset. Generally, entities look at capitalizable costs more favorably because it reduces the impact to net income for the period incurred. For public companies, a smoother impact on earnings can be critical. Capitalization depends on the phase of the project in which the costs are incurred as well as the nature of the costs.


Only costs incurred in the application development phase qualify for capitalization. While training, manual data conversion, and maintenance and support costs are noncapitalizable, software, software licensing, third-party software development fees, external materials, and coding and testing fees are all capitalizable.


Under ASU 2018-15, the effective reporting dates for annual and interim reporting periods began after December 15, 2019, for public business entities. The annual reporting periods for all others began December 15, 2020.


Figure 1: Impact of the ASU 2018-15 Clarifica­tions




Let’s say Company ABC has recently expanded into a new global line of business. Prior to this, it had only operated in one country. Its internal accounting system would require a major overhaul to be able to account for multiple currencies and global reporting requirements. Vendor DEF offers a cloud solution that will interface with ABC’s accounting system and provide the necessary global solution. Implementation work will be required to build a proper interface before the solution can be placed in service. The costs associated would be as follows:


  • $8.7 million three-year service contract, which must be paid up front.

– $6 million software license (software returns to vendor if agreement terminates).

– $2.7 million for maintenance costs associated with the existing solution and new integration.

  • $0.6 million for configuration work and manual data conversion, costs to be incurred during preliminary project phase.
  • $2 million to contract with a third-party vendor to design, develop, code, and test the integration work.
  • $0.7 million to train ABC’s employees to utilize the new solution.
  • $12 million total cost, and the three phases of implementation will take the first six months of the three-year contract period (one month preliminary, four months development, one month post-implementation).


The new rules result in the $6 million attributable to the software license and the $2 million of application development costs with the third-party vendor to be capitalized and amortized over the life of the agreement. While Figure 1 only includes a visual graphic for earnings before interest and taxes (EBIT), note that there’s an even more significant impact on earnings before interest, taxes, depreciation, and amortization (EBITDA). The impact of the ASU 2018-15 clarifications can be material and significant. In this example, amortization of the $8 million capital is spread straight-line over two years and six months, the remaining life of the contract once the integration work is completed and the asset is placed in service.


The clarifications provided by FASB in ASU 2018-15 benefit entities in evaluating and accounting for cloud-computing arrangements. Generally Accepted Accounting Principles (GAAP) don’t specifically address the accounting for implementation costs of a hosting arrangement that’s a service contract. Accordingly, the amendments in this update improve current GAAP because they clarify that accounting and align the accounting for implementation costs for hosting arrangements, regardless of whether they convey a license to the hosted software. ASU 2018-15 has brought the accounting for cloud-computing arrangements more in line with the rules for internally developed software and should encourage companies to more readily consider cloud solutions as an alternative when evaluating business software needs.


Bradford A. Hamilton, CMA, CPA, is a retired corporate IT controller. He is a member of IMA’s Technology Solutions and Practices Committee as well as IMA’s South Central Indiana Chapter. You can reach Brad at
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Lessons from an Agile Product Owner

By Esteban Quiros, CMA

The Agile project management methodology enables finance professionals to hone their leadership and organizational skills.


The accounting and finance profession is going through a major transformation as digital technologies continue to evolve, changing not only the type of work that we do, but also the way we deliver our work product. Now more than ever, management accountants need to understand how to navigate their evolving roles and responsibilities within a technology-dependent work environment and seek out opportunities to optimize the value-delivery process.


When working in a multifunctional team, consider leveraging the Agile project management methodology, which involves breaking up a project into several phases; constant collaboration; and a process of planning, executing, and evaluating geared toward a goal of continuous improvement. To improve your teams’ results, learn the new language of Agile, focus your efforts and attention where they matter most, and become a better communicator.


When I became the product owner for the Procter & Gamble (P&G) Source-to-Pay global platform, I wasn’t familiar with Agile, but I did have prior project management experience. The team was having some problems getting business involvement on its sprints—the Agile term for short, defined periods when a scrum team works to complete a task—and needed help to prioritize stories in the backlog grooming process. My thoughts at the time were, “What is a sprint?” and “Say again, what is it you’re grooming?”


Jokes aside, I’ve learned some valuable lessons as a product owner. It’s an amazing experience that enabled me to hone my leadership and organizational skills. Here are the most important pieces of advice that I can share with team leaders and managers:


1. Learn the language of Agile and each player’s position on the team. This was probably one of the biggest up-front time investments for me. Even after a few meetings, I wasn’t sure who on the team did what. I took time to learn more about Agile so that I understood new words related to how the work is organized such as epics, stories, and sprints. I also identified the various players—e.g., scrum masters—and their roles.


2. Contribute to the team’s success by being the link to the business. The product owner represents the business and the voice of the different stakeholders using the product. The IT Agile team I work with focuses on fast delivery of small tasks organized into sprints. That involves constantly producing new features and adjusting existing ones. The team needs interactive, timely business engagement even if the stories are well defined. While I’m very impressed with the team’s understanding of the process and our business strategy, I’m often consulted either to validate the design or share some real-life examples of how the process should work. I had to learn more about the product and articulate the upstream and downstream touchpoints and the effects of changes to the Agile team.


3. Invest heavily in the project-prioritization process. Backlog grooming is probably one of the areas to which I, as the product owner, was able to add the most value. The list of pending business enhancements is usually long and urgent. The team often struggled to determine how to prioritize the work and whether some items needed to be pushed back. To tackle this, I reviewed each story with the different stakeholders and helped them to articulate the real value of their request and rank the team’s priorities. I created simple criteria based on return on investment and risk remediation. We then sorted the projects with the highest impact and used it to plan future sprints. I also used this list to have an open, honest discussion with the business, requesting an enhancement of how their requests are prioritized and what to expect.


4. Communicate often and effectively. Keeping the business and users apprised, engaged, and prepared for changes is easy to overlook or mishandle. The product owner needs to work with the team to define a successful go-to-market approach. As sprints advance, it’s vital that adequate documentation, testing, and a user feedback mechanism are in place. For example, P&G recently introduced an automated invoice tax posting engine in Germany, Spain, and France. This change enabled the automatic posting of thousands of invoices and, if done properly, will improve tax compliance in these countries. With each sprint, we carefully orchestrated every step with the tax compliance, invoice posting, and accounts payable teams. We cautiously timed each sprint to minimize rework and eliminate the possibility of misses that could create a fiscal exposure.


5. Celebrate success and keep the team’s morale high. As the product owner, I meet regularly with the scrum master to review the list of stories we’ve delivered and the value we’ve added. This exercise will enable us to share results. I realized that Agile teams require high-intensity management and strong performance. The product owner can boost morale by making sure that the team understands the value of the work it’s delivering, how it fits in the bigger picture, and how to share results with the broader organization.


As some of you have already experienced, being a product owner is hard work that takes skill, time, and dedication. While it was scary at first, it has proven to be rewarding. You have a unique opportunity to make a more profound impact to business results and to continue to evolve your skills. A finance function using Agile can realize elevated outcomes, maximize value, and expedite delivery, enabling organizations to adapt to change quickly and glean data-backed insights.


I’m still very much on the Agile journey myself and encourage others to embrace it. The product owner role can add real value to the process, the business, and, importantly, to the professional development of the person playing that role.


Esteban Quiros, CMA, is director of global business services and Source-to-Pay operations at Procter & Gamble and a member of IMA. You can reach him at
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Rebooting Big Tech

By Michael Castelluccio

A new book, System Error: Where Big Tech Went Wrong and How We Can Reboot, takes a close look at the problems and influence of technology today.


What makes the analysis unique are the three authors, all staff at Stanford University. Rob Reich is a philosopher, Mehran Sahami is a tech innovator, and Jeremy M. Weinstein is a former White House staffer, and their prismatic view includes the technology, ethics, and related policy for each issue discussed in the book.


Albert Einstein once warned about losing control of the products of our genius: “The hardly bought achievements of the machine age in the hands of our generation are as dangerous as a razor in the hands of a three-year-old child.” When you add the current obsession with speed expressed in Facebook’s motto, “Move fast and break things,” Einstein’s toddler becomes even more disturbing. To these, the authors add their own caution: “If we accept that technology is simply beyond our control, we cede our future to engineers, corporate leaders, and venture capitalists.”





Part one of System Error explains how we got to where we are, from the perspectives of the engineers’ narrow focus on optimization, the marriage of the engineers and venture capitalists, and the obsessive pursuit of disruption without regulation. All three influences share a myopic neglect of other consequences beyond market share and notice—costs imposed on others.


To understand the current tech ecosphere, we need to begin with the mindset of an engineer. The almost exclusive emphasis on measuring and optimization begins early in the training of computer scientists. The terms optimize and optimization were unknown prior to 1950, but computer science has elevated them to where some see algorithmic insights as a form of wisdom. The authors explain, “What begins as a professional mindset for the technologist easily becomes a more general orientation to life.” But there are deficiencies of efficiency, especially where the optimization mindset is misapplied or consequences are ignored.


In tech, venture capital (VC) is replacing older means of funding—bootstrapping or grants. “The potential for gaining riches from a future IPO [initial public offering] adds more tinder to the fire that fuels the breakneck pace of technological development.” And as VC fund managers look for hockey-stick growth, “blitz-scaling” prioritizes speed, causing some to invest less in security, to write code that doesn’t scale, or to even wait for things to start breaking before building in tools and processes, all in order to get big fast.


As technology companies accumulate and turn economic power into political power, engineers/CEOs are now able to set the rules for how they are, or aren’t, regulated. The authors note that “In 2019 and 2020, Facebook and Amazon spent more on federal lobbying than any other company, besting even defense contractors such as Lockheed Martin.” And now, looking ahead, it appears likely that Big Tech won’t submit to regulation without serious pushback. The book section titled “Government is complicit in the absence of regulation” explains these trends with examples.




Chapters four through seven illustrate where Big Tech is already off the rails or is heavily listing. Chapter four asks whether AI’s algorithmic decision making can ever be fair. The bias can come from the programmers writing the algorithms because they decide what criterion to optimize. The quality of the data used in the learning models for the algorithms can be flawed, or just the wrong data might be used by the designers. And there’s the question of whether you can reduce fairness to a mathematical formula. The authors note that “fairness is not easily understood as a timeless and universal thing on which we all agree.” They suggest designers should pay attention to what fairness means in particular social contexts, and they offer practical advice on how to govern algorithms. The three other questions covered in this section are equally serious:


  • What’s your privacy worth?
  • Can humans flourish in a world of smart machines?
  • Will free speech survive the internet?




In the final section, there’s specific advice about three alternate routes for a different future. The authors encourage developing a greater appreciation of ethical issues among technologists. They propose regulations to check corporate power and call for “empowering citizens and democratic institutions to govern technology instead of passively allowing technology and technologists to govern us.”


System Error offers a valuable historical overview, but more than that, it’s a sorely needed ethics text for the guardians of Einstein’s three-year-old.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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Plan, Believe, Act

By J’Maine Chubb, CMA CSCA, CPA

Pablo Picasso was quoted as saying, “Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.”


After becoming a CPA (Certified Public Accountant) in 2010, I decided I wanted to become a CFO. Working with Toyota Motor Corporation at the time as a financial reporting specialist, I understood there were many facets of finance and accounting I needed to hone if I were to accomplish my goal. My prior experience included mostly accounting and financial reporting, so I required more experience in disciplines that, when paired with my accounting knowledge, would prepare me to become a knowledgeable CFO.


My journey to gain additional experience began as a senior financial analyst with Schlumberger, a global oil and gas services company. The vast opportunities within this organization allowed me to gain expertise in areas such as financial planning and analysis, risk management, decision analysis, performance management, and other finance disciplines as part of my daily job responsibilities. After starting as a senior financial analyst, I was promoted to operations controller within six months and, one year later, to manager of financial planning and reporting.


Seeking to gain more experience, I moved on to become a business unit CFO for a division of Halliburton. It was at this time that I decided to pursue the CMA® (Certified Management Accountant) certification. Having responsibility to lead a global organization in investment decision making, cost management, performance management, planning and forecasting, profitability management, and other finance and accounting concerns, I wanted to master the finance disciplines that would help me excel in my role. Earning the CMA was my way to demonstrate mastery of these disciplines and give me the confidence to act as a strategic business partner within the company.


I vividly recall purchasing study materials to help me pass the CMA. As I had while taking other professional exams, I established my own plan of studying, deciding on my test dates, the topics I would cover on a weekly basis, and the number of self-tests I needed to complete each week. I followed this plan religiously, identifying any problem areas several weeks before the exam. This allowed me to focus on those areas just prior to taking the exam, a strategy I’ve employed successfully over the years. Fortunately, this strategy paid off, and I earned my CMA in 2014.


The body of knowledge covered by the CMA truly has helped me in my journey to success, allowing me to achieve significant accomplishments for multiple organizations across multiple industries. After earning my CMA, I moved on to roles at CITGO Petroleum and eventually to Houston Airport System, where I now serve as CFO. Recently, I earned my CSCA® (Certified in Strategy and Competitive Analysis), which is helping me become a key player in driving the strategic planning process within my organization. I will look to IMA® for additional learning opportunities as I continue my career journey.


J’Maine Chubb, CMA, CSCA, CPA, is CFO of Houston Airport System and a member of IMA’s Houston Chapter. You can reach him at
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Whistleblowing Laws Evolve

By Patrice Schiano, CPA, CFF, and Arcady Zaydenverg, CPA, CFE

History has taught us the importance of whistleblowers, and increased protections will ensure that they can report crime and misconduct with confidence.


Whistleblower protections have come a long way since 2001 when Sherron Watkins, a former Arthur Andersen auditor, first blew the whistle on Enron in one of the largest corporate financial frauds in U.S. history. On the 20th anniversary of Enron’s collapse, it’s worth examining the hard-won protections available to today’s whistleblowers.


Given their understanding of a company’s books and records as well as internal controls, accountants are well-situated to blow the whistle. So what should an accountant do if they find fraud or securities law violations?


Whistleblowers are encouraged to report wrongdoing internally or through a company’s whistleblower hotline, if one exists. In situations where the corporate culture encourages such behavior, management will likely implement corrective action or report the matter to the appropriate authorities, if warranted.


But what if, like at Enron, the corporate culture or the tone at the top is suspect? Watkins tried to report accounting irregularities to Kenneth Lay, Enron’s CEO, but her claims fell on deaf ears. At that point, Watkins’s identity was well-known within the organization and the business community. Like many whistleblowers whose identities aren’t protected, life for Watkins became increasingly difficult.


Prior to Enron, many whistleblowers were retaliated against. They lost their careers and reputations. Many were blackballed and never able to find gainful employment in their respective professions again.




In the wake of Enron, Congress passed the Sarbanes-Oxley Act of 2002 (SOX). Most accountants are likely familiar with this legislation, especially because of all the requirements imposed on auditors, management, and boards of directors to ensure the accuracy of financial information. One of the lesser-known SOX provisions is Section 806—Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud. It prohibited the efforts of any “officer, employee, contractor, subcontractor, or agent” of a publicly traded company to “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee” who blows the whistle on securities law violations including fraud against shareholders.


This provision was a step in the right direction but didn’t go far enough to prevent retaliation. The easiest way to prevent retaliation is to keep the identity of a whistleblower confidential, which may not be possible if the information the whistleblower provides is so unique as to give away their identity.


It wasn’t until the Great Recession that Congress again acted to strengthen whistleblower rights. Under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, whistleblowers could now remain anonymous, have their retaliation claims heard in federal court, and possibly earn a whistleblower award.




So what do whistleblowers need to do to file a successful complaint with the U.S. Securities & Exchange Commission (SEC)? Whether filing a complaint with the SEC or with another agency, retaining an attorney who is experienced in whistleblower laws is critical. Besides advising the whistleblower of their rights and helping them navigate through complicated legal and procedural requirements, filing claims through an attorney can help whistleblowers remain anonymous.


In fact, if a whistleblower wants to remain anonymous, the SEC mandates that the whistleblower retain an attorney to file the claim. Filing complaints anonymously can help whistleblowers keep their jobs and their professional reputations intact while the SEC or other agency considers an enforcement action. If the SEC doesn’t bring an action, the whistleblower can continue working without fear of retaliation because their identity hasn’t been disclosed.


Under Section 21F of the Securities Exchange Act of 1934, “eligible whistleblowers who voluntarily provide the Commission with original information about a violation of the federal securities laws that leads to the successful enforcement” of a covered action are entitled to an award of 10% to 30% of what has been collected in monetary sanctions. To be eligible for the award, such monetary sanctions must exceed $1 million. The award is discretionary, and among the factors considered are whether the reporting was voluntary and original.


To be voluntary, the submission to the SEC must precede any request for information from the SEC. Submissions aren’t considered voluntary if the whistleblower has a preexisting legal duty to disclose the information.


For information to be considered original, there are four requirements:


  1. The information must be derived by independent knowledge or analysis;
  2. It must not be previously known to the SEC from any other source;
  3. It isn’t derived from a previous allegation unless the whistleblower is the original source of the information; and
  4. The information was provided to the SEC after July 21, 2010, the date that the Dodd-Frank Act was enacted.


Whistleblowers should be aware that it can still take years to collect an award.


Each year the SEC’s Office of the Whistleblower (OWB) submits a report to Congress. According to the SEC, fiscal 2020 was a record-breaking year for the whistleblower program. The SEC received and processed the largest number of whistleblower claims and set a record for the most awards paid in terms of the number of individuals and dollars awarded. The SEC received more than 6,900 whistleblower tips during fiscal year 2020, which represents a 33% increase over the prior fiscal year.


One explanation for the increase might be that the fully remote work environment allowed greater opportunity to file complaints privately. Another explanation could be the OWB’s continued outreach efforts and the publicity generated by the number and size of recent high-dollar awards.




In addition to the SEC’s whistleblower program, there are other options for accountants who decide to blow the whistle. The Commodity Futures Trading Commission and the Internal Revenue Service have followed the SEC’s lead and have also implemented whistleblower programs. For fraud against the government, whistleblowers can file claims under the False Claims Act. For insider information about bribery of foreign officials, whistleblowers can file claims under the Foreign Corrupt Practices Act. And there are a host of other state and local whistleblower laws that might offer additional protections against retaliation and/or awards for information.


Whistleblowers should be protected and rewarded for their courage, not vilified. Unfortunately, whistleblower laws are still complicated and hard to navigate without the help of an attorney. An attorney can not only help whistleblowers find protection from retaliation or help keep a whistleblower’s identity confidential, but also assist a whistleblower in determining whether there might be additional protections other than what is offered by the SEC. Whistleblowers have gained hard-won protections, but the laws are still evolving. It’s still difficult for whistleblowers to navigate the process to avoid retaliation and be rewarded for putting their reputation and livelihood on the line.


Patrice Schiano, CPA, CFF, is a doctoral lecturer in the department of public management at John Jay College of Criminal Justice. She can be reached at
Arcady Zaydenverg, CPA, CFE, is the managing member at Arcadia Consulting, LLC. He can be reached at arcadyz
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Always in Demand

By Jeffrey C. Thomson, CMA, CSCA, CAE

You may have heard the term “The Great Resignation” tossed around a lot lately. It’s a phrase used to describe a troubling trend, the tidal wave of resignations among employees, around the world and across all industries (healthcare and high-tech most pointedly).


In the United States alone, the Bureau of Labor Statistics reported that 4 million Americans quit their jobs in July 2021 (the last month for which data is available), and that stat continues to climb. According to a recent Microsoft study, 41% of the global workforce is likely to consider leaving their current employer within the next year, with 46% planning to make a major pivot or career transition.


Driving this trend are myriad factors, mostly related to the COVID-19 pandemic. Many professionals are reevaluating their priorities. In “Who Is Driving the Great Resignation?” (Harvard Business Review), Ian Cook concludes, “Many of these workers may have simply reached a breaking point after months and months of high workloads, hiring freezes, and other pressures, causing them to rethink their work and life goals.”


The challenge for organizations is to find qualified people with the skills needed to do their jobs so that the global economy can rebuild. In the accounting and finance arena, hiring managers are looking for talent with the ability to think strategically to deliver sound business decisions—and mounting job vacancies show they aren’t finding that talent easily.


IMA® has always emphasized the need for our members to gain additional certifications and focus on continuous learning to improve their career outlook and capture new opportunities. In this current business environment, these goals matter more than ever.


To address the realities of the world we’re living in, IMA recently launched the sixth year of our global advertising campaign for the CMA® (Certified Management Accountant), which includes digital and TV ads, a concurrent public relations campaign, and promotions on IMA’s website and social media channels. The campaign offers a lighthearted take but with a focused, underlying theme: Earning the CMA can give an enormous boost to one’s employability and career prospects. The new ads, available on IMA’s YouTube channel, emphasize that the CMA makes all the difference. The ads tap into the rising demand for professionals who can meet the evolving needs of CFOs and their teams. While our previous campaign struck a serious note, this new campaign takes a humorous approach to the lengths that recruiters, hiring managers, and CEOs would go to hire and keep the best accounting and finance staff—that is, those who’ve earned the CMA. The message is that accounting and finance professionals with a CMA will always be in demand.


As an IMA member, you can do your part too. Share a link to the lead commercial on social media, which can help to raise the brand awareness and credibility of the CMA. Together, as CMAs and IMA members, we can step into the gap and help to rebuild.


Jeffrey C. Thomson, CMA, CSCA, CAE, is IMA president and CEO. He also is a member of IMA’s Bergen-Rockland-Meadowlands Chapter. You can reach Jeff at or follow him on Twitter: @IMA_JeffThomson.
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Excel: Full-screen Mode and Sketch Types

By Bill Jelen

They say no one knows every feature in Excel. This adage must apply to the Excel team in Redmond, Wash., because they just added a new full-screen mode feature to Excel when the old Full Screen View was never actually removed.


Why would you need full-screen mode in Excel? It might be useful when you need to display a lot of numbers on a kiosk display, but no one will actually be interacting with the spreadsheet. The ribbon interface is hidden, and you can display the maximum number of rows able to fit on the screen.


There was a Full Screen View in Excel more than a decade ago. I went looking for it in 2019 and found a 2013-era Microsoft Knowledge Base article saying that Full Screen View was removed from Excel as of the release of Excel 2013. This wasn’t a great loss for me since I rarely used full screen. After all, they removed it in 2013, and I didn’t miss it until six years later.





Recently, the beta version of Excel introduced a new choice in the drop-down menu at the bottom-right corner of the ribbon. As shown in Figure 1, you can now choose full-screen mode. How exciting: A full-screen view is back.


There are a number of statistics that are often cited when discussing the quality of a monitor, such as display size, aspect ratio, resolution, and so forth. But for me, it all comes down to one important question: How many rows and columns can I see in Excel?


The number of rows visible in Excel depends on your monitor size, display settings, and the font you’re using. For the sake of comparison, all of these statistics are from the same 24-inch monitor:


  • If you choose “Always show Ribbon,” you can see 37 rows in Excel.
  • If you choose “Show tabs only,” you can see 42 rows in Excel. The shortcut for this setting is Ctrl+F1.
  • If you choose “Full-screen mode,” you can see 46 rows in Excel. In this mode, you see a green title bar, the formula bar, the column letters, 46 rows of the grid, and then the ribbon tabs and status bar. To exit this mode, use the “three-dots” icon at the top-right to temporarily display the ribbon, and then open the same drop-down shown in Figure 1. Alternatively, Ctrl+Shift+F1 will toggle in and out of this mode.


The return of the full-screen mode is a somewhat interesting conversation if you’re talking to people who spend most of their working week using Excel. It was a great factoid to tell people: “Microsoft took Full Screen View out of Excel eight years ago, and they just brought it back.” But after sharing this fact with a number of people, I encountered two people who told me that they’ve been using Toggle Full Screen View every day of their lives continuously for many years.


After investigating, it turns out that there has been an icon that you could add to the Quick Access Toolbar to get into the “discontinued” Full Screen View. Right-click the ribbon and choose Customize Quick Access Toolbar. From the top-left drop-down menu, choose All Commands. Until recently, you had to scroll to the “T” section to find Toggle Full Screen View. Recently, it moved to the “F” section, under Full Screen [Toggle Full Screen View]. This ancient command, allegedly removed from Excel 2013, doesn’t show the formula bar and manages to fit 48 rows in Excel. This view is the “best” at showing the grid full screen. To exit this view, press the Esc key.


It’s a mystery why the official Excel documentation says that the “best” full-screen view has long since been removed from Excel and why it’s still there but only known to a small percentage of people using Excel. Did the engineers who designed the new full-screen mode know that this old Toggle Full Screen View was still available? I’ve asked, but they have no comment.




Full-screen mode isn’t the only feature introduced recently. The Office interface was redrawn for the release of Windows 11. The one recurring theme in the new interface is that many corners that used to be at a 90-degree angle have now been rounded. You’ll see the rounded corners in the sheet tabs at the bottom, in the name box and formula bar above the grid, and at the ends of the ribbon itself.



Another part of this theme is a new property for shapes that you add to your spreadsheet. With a shape selected, go to Shape Format and open the Shape Outline drop-down menu. A new “Sketched” flyout menu opens at the bottom, offering sketch types of “None,” “Curved,” “Freehand,” and “Scribble,” as shown in Figure 2.


Yet most of the changes announced for the new Windows 11 refresh of Excel aren’t new at all. If you’ve been a Microsoft 365 subscriber, you’ve also already had access to XLOOKUP, dynamic arrays, data types, AI, and the LET function.


Bill Jelen is the host of and the author of 61 books about Excel. He helped create IMA’s Excel courses on data analytics and the IMA Excel 365: Tips in Ten series of microlearning courses. Send questions for future articles to
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Taxes: ARPA 2021 Expanded Tax Credits

By Anthony P. Curatola, Ph.D., and James W. Rinier, CPA, EA

The American Rescue Plan Act of 2021 expanded the child and dependent care tax credit and the earned income tax credit for the 2021 tax year.


The American Rescue Plan Act of 2021 (ARPA 2021), P.L. 117-2, that became law on March 11, 2021, provides substantial benefits to individual and business taxpayers. Changes to the child and dependent care tax credit (CDCTC) and the earned income tax credit (EITC) are two benefits that some individual taxpayers can enjoy. But the credits are amended for tax year 2021 only.


ARPA 2021 increased the upper percentage for claiming the CDCTC and made it refundable for some taxpayers. In addition, the EITC percentage and qualifying ages are increased, which makes it available to more taxpayers earning lower income.




The CDCTC is available for an eligible taxpayer to help pay for the care of a child younger than 13 years old or any dependent physically or mentally incapable of taking care of themselves (Internal Revenue Code (IRC) §21) so that the taxpayer can be gainfully employed.


Before ARPA 2021, for tax years 2020 and prior, the CDCTC was a nonrefundable credit—a taxpayer would only get the tax benefit of the credit up to the amount of tax owed with no tax refund for the unused credit. For taxpayers with an adjusted gross income (AGI) of $15,000 or less, the credit was equal to 35% of employment-related expenses up to $3,000 for taxpayers with one qualifying individual and $6,000 for taxpayers with two or more qualifying individuals.


Employment-related expenses are those costs that the taxpayer incurs to allow themselves (or the taxpayer’s spouse if filing jointly) to work or to look for work by paying for the care of the qualifying child to keep or find employment. These expenses can’t exceed the taxpayer’s earned income. The expense may not be considered related to work just because a taxpayer had the expense while working or looking for work. The expense must have been to enable the taxpayer to work or look for work to be allowed for the credit based on the facts and circumstances of each taxpayer.


The CDCTC was reduced one percentage point for each $2,000 of AGI or a portion of it above $15,000 to $43,000, but not below 20%. Thus, taxpayers with AGI more than $43,000 were still able to take the credit at least equal to 20% of the employment-related expenses.




The CDCTC was expanded by ARPA 2021 with a few key benefits limited to only tax year 2021 (ARPA §9631). A special one-year tax amendment was added for any taxable year beginning after December 31, 2020, and before January 1, 2022 (IRC §21(g)). The CDCTC is fully refundable for tax year 2021, which means that the taxpayer can get a refund back from the Internal Revenue Service if this tax credit is more than the tax that the individual owes. Thus, there won’t be any unused credit.


Furthermore, the credit percentage increases from 35% to 50%, and the limit on employment-related expenses increases from $3,000 to $8,000 for one qualifying individual and from $6,000 to $16,000 for two or more qualifying individuals. The credit is still reduced by one percentage point for each $2,000 of AGI or a portion of it, but not below 20%. Yet the credit-reduction limits for AGI increase from $15,000 to $43,000 for tax year 2020 to an AGI of $125,000 to $400,000 for tax year 2021. Taxpayers in tax year 2021 with AGI up to $400,000 instead of $43,000 will have the opportunity to have an increased percentage above the 20% lowest rate applied to their employment-related expenses for the CDCTC.




The EITC provides taxpayers with low to moderate income with a tax break by claiming a refundable tax credit based on a percentage of their earned income (IRC §32). Before tax year 2021, individual taxpayers with no qualifying children were eligible for the childless EITC (for a tax credit of 7.65%) if they were between 25 and 65 years old.


ARPA §9621 expands and strengthens the EITC in tax year 2021 for individual taxpayers with no qualifying children by reducing the age limitations and increasing the credit limit. A special one-year tax amendment was added for any taxable year beginning after December 31, 2020, and before January 1, 2022 (IRC §32(n)). The EITC increases from 7.65% to 15.3% for tax year 2021.


There’s no longer a maximum age to be eligible to claim the childless EITC, so individual taxpayers over age 65 may claim it. The minimum age was reduced from 25 to the following: 19 in general, 18 for a qualified former foster youth or a qualified homeless youth, and 24 for a specified student who isn’t a qualified former foster youth or a qualified homeless youth.




Here are more specifics for childless EITC eligibility:


  • Age 19 is the minimum age, except if the individual is a qualified former foster youth, qualified homeless youth, or a specified student.
  • A qualified former foster youth is an individual who, on or after the date of turning 14 years old, was in foster care provided under the control of an entity administering a plan under Part B or Part E of Title IV of the Social Security Act, and that entity provides consent to disclose the status of the individual as a qualified foster youth.
  • A qualified homeless youth is an individual who certifies that he or she is either an unaccompanied youth who is a homeless child or youth or is unaccompanied, at risk of homelessness, and self-supporting.
  • A specified student is an eligible student (who meets the requirement of the Higher Education Act of 1965 and is carrying at least half the normal full-time load for any course of study that the student is pursuing per IRC §25A, the American opportunity and lifetime learning credits) during the last five calendar months of the year.


ARPA 2021 provides not only tax reductions for eligible taxpayers but also opportunities to get more refunds to provide funds to taxpayers needing assistance in tax year 2021. The most significant change is the increase of refundable tax credits where taxpayers can receive more refunds and not be stuck with unused tax credits with the CDCTC and the EITC.


© 2021 A.P. Curatola


Anthony P. Curatola, Ph.D., is editor of the Taxes column for Strategic Finance, the Joseph F. Ford Professor of Accounting at Drexel University, and a member of IMA’s Greater Philadelphia Chapter. You can reach Tony at (215) 895-1453 or
James W. Rinier, CPA, EA, is the Vertex Fellow at Drexel University. He can be reached at  
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Approach to Bond Rating Under Scrutiny

By Stephen Barlas

Lawmakers in the United States are pushing to revamp the bond and credit rating industry and its “issuer pay” model. The U.S. House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held a hearing in July 2021 to examine the nationally recognized statistical rating organizations (NRSROs).


Chairman of the subcommittee, Rep. Brad Sherman (D.-Calif.), raised the issue of “unchecked conflicts of interest,” referring to a suspicion that when companies pay a rating agency to rate a corporate bond, the agency is pressured to give the bond a more favorable rating, fearing loss of business.


Sherman is sponsoring the Commercial Credit Rating Reform Act that would require the establishment of a credit rating agency assignment board within the jurisdiction of the U.S. Securities & Exchange Commission (SEC). The board would be responsible for assigning the NRSROs to provide ratings for corporate issuers and issuers of new asset-backed securities. Currently, there are nine rating agencies registered with the SEC as NRSROs. As of December 31, 2019, 95.1% of all credit ratings outstanding were published by the three largest NRSROs: S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings.


Not only is there support for eliminating the “issuer pay” model and diversifying the credit rating industry, but additional corporate disclosure could also be in the cards. The SEC’s Fixed Income Market Structure Advisory Committee (FIMSAC) made a number of recommendations in June 2020, which included requiring companies to make new disclosures regarding their choice of credit rating agencies. One recommendation stated, “We encourage the SEC to partner with appropriate trade groups to develop a set of best practices for choosing NRSROs and, once established, to require corporate issuers to disclose if/why they deviated from them in their annual reports.”


Amy McGarrity, chief investment officer of the Colorado Public Employees’ Retirement Association, agrees that a “conflict of interest lies at the heart of the discussion of improving credit rating quality.” McGarrity chaired the credit ratings subcommittee of the FIMSAC, which suggested the SEC should oversee a random assignment process for both structured products and corporate bond ratings, with at least two NRSROs being assigned to each issue, to provide diversity of views.


But some advocacy groups don’t support the proposed reforms. Michael Bright, CEO of the Structured Finance Association, said, “Over the long-term, our members are concerned a government-controlled assignment system will perversely reduce the incentive to compete on the quality of ratings.”


Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at
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Q3 2021 GECS Released


The results of the Global Economic Conditions Survey (GECS) for the third quarter of 2021 have been released by IMA® and ACCA (Association of Chartered Certified Accountants).


GECS is the largest economic survey of accountants around the world, both in terms of the number of respondents and range of variables monitored. This quarter’s survey found that economic growth connected to pandemic recovery has weakened, with levels of confidence varying significantly by region.


The full GECS report is available here.


IMA® (Institute of Management Accountants) is the worldwide association of accountants and financial professionals in business. Founded in 1919, we are one of the largest and most respected associations focused exclusively on advancing the management accounting profession.  We are committed to empowering our 140,000+ members—and those throughout the rest of the profession—to strengthen on-the-job skills, better manage companies, and accelerate careers.
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COSO Issues Guidance on AI

By Lori Parks

New guidance from the Committee of Sponsoring Organizations of the Treadway Commission (COSO), Realize the Full Potential of Artificial Intelligence, can help organizations align risk management with the strategy and execution of their AI initiatives.


As AI grows more pervasive in business, there’s a greater need for organizations to identify, manage, and respond to AI-related risks to maximize benefits for all stakeholders. The project, commissioned by COSO and coauthored by Deloitte & Touche LLP, focuses on the need for organizations to design and implement governance, risk management, and oversight strategies and structures to realize the potential of humans collaborating with AI.


The report describes how the COSO Enterprise Risk Management—Integrated Framework, coupled with Deloitte’s Trustworthy AI Framework, can provide a comprehensive approach that aligns risk management with strategy and can reduce performance variability and improve the likelihood of success for AI initiatives.


“AI-related risks need to be top of mind and a key priority for organizations to adopt and scale AI applications and to fully realize the potential of AI,” said COSO Chairman Paul Sobel. “Applying ERM [enterprise risk management] principles to AI initiatives can help organizations improve governance of AI, manage risks, and drive performance to maximize achievement of strategic goals.”


The report states that by understanding AI-related risks, organizations may be better equipped to deliver return on investment and meet stakeholder expectations. Further, by implementing ERM, organizations can refine and adapt their innovation initiatives to support their strategies in a rapidly changing business environment.


The report is available at


Lori Parks is a staff writer/editor at IMA. You can reach her at (201) 474-1536 or  
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Survey: Prioritizing ESG Reporting

By Christopher Dowsett, CAE

Among the findings in Protiviti’s recently published 2021 Finance Trends Survey is that CFOs and VPs of finance in public and private ­companies around the world are increasingly recognizing the need to devote more time and resources to environmental, social, and governance (ESG) reporting:



said that measuring and reporting on ESG risks and issues has become part of the finance team’s role within the last year.



report substantial increases in the focus and frequency of reporting related to ESG issues.



are involved in conversations with senior leaders and boards to ­develop ESG metrics.


The report is available at Security, Data, Analytics, Automation, Flexible Work Models and ESG Define Finance Priorities.


Christopher Dowsett, CAE, is editor-in-chief/vice president, Publications, at IMA. You can reach him at
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Books: The Best Leaders Are Storytellers

By Cory Tefft, CMA

Storytelling is a skill that finance leaders can use to become more influential and boost their careers.



Management accountants and finance professionals shouldn’t overlook the ability to craft narratives as a factor in achieving long-term career success (see “Developing Creative Accountants,” April 2021). In fact, the Accenture study From Bottom Line to Front Line found that 81% of finance executives list data storytelling as an essential skill for today’s finance professionals. Stories that Stick by Kindra Hall details how to create a story to communicate data, findings, and more.


Hall begins with the neuroscience behind storytelling, explaining in accessible language how listening to well-spun stories releases chemicals in listeners’ bodies and even rewires parts of their brains, causing them to feel more emotionally connected to others. That’s a powerful, persuasive tool that finance leaders can implement to inspire employee loyalty, influence the organization’s strategy, and spearhead financial planning and analysis.


The elements of storytelling that Hall describes are fundamental for finance professionals to understand when translating detailed financial data to leadership of various backgrounds. The many anecdotes and processes that Hall describes to craft strong stories can be used to spark creativity and change the way we view data. These ideas can turn dry presentations that fall on deaf ears into stories and conversations with leadership and clients that result in strategies, initiatives, and investments to drive growth and create lasting change within an organization.


Once Hall makes the case for the value of storytelling, she breaks down how to utilize narrative elements to improve their communication skills. Hall outlines four components of a solid story:

  • Identifiable, relatable characters
  • Authentic emotion
  • A significant moment
  • Specific compelling details


These components must then be embedded into a simple storytelling framework with a beginning, a middle, and an end—a notion that Hall presents in the following format: normal (things how they are or used to be); explosion (something happens); and new normal (things are different now).


After providing this foundation, Hall explains how to implement this narrative framework to produce four types of essential business stories that finance leaders can use to get buy-in for their vision: the value story, the founder story, the purpose story, and the customer story.


Stories that Stick is loaded with instructive examples, how-to guidance, and ideas for management accountants to create captivating stories based on these narrative building blocks. Readers will be well prepared to transform the way they communicate for the better.


Cory Tefft, CMA, is a financial analyst on the FP&A team at SurePoint Technologies and a member of IMA’s Blue Grass Area Chapter. You can reach him at
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Welcome, New CMAs: September 2021

By Dennis Whitney, CMA, CFM, CAE

The following IMA members became CMAs between September 1 and September 30, 2021.


For more information on CMA certification, visit


Ahmed Mohamed Abdelazim

Mustafa Mohammed Abdelrahman Mosa

Baher Abdelsamie Elsaid Shaat

Nader Mohamed Abdou

Ahmed Atef Abdulatif

Yassmin Osama Mahmoud Ahmed

Reda Ahmed Sayed Ahmed Abdalla

Hui Ai

Mohammad Alazzeh

Saeed Othman Alghamdi

Kasif Ali

Mohammad Zaid Abdel-Fattah Alkhawaja

Mohammad Alkouz

Shaikha Khalil Almarzooqi

Dana Sadeq Alnatour

Rawan Sultan Alrawashdeh

Mohamed Ashraf Al-Sebaiey

Shedin Ammanadathil

Ying An

Immacolata Andolfo

Mariel Santos Angeles

Judith Anton

Shreeya Arora

Sharaniya B P

Shravanti B P

Guohui Bai

Jiayi Bai

Xuejing Bai

Baoyan Bao

Kang Bao

Wanyu Bao

Xicai Bao

Danielle Baudoin

Tanaya Santosh Bedekar

Gerco Berentsen

Helen Berhane

Fangfang Bi

Wei Bi

Yanling Bi

Prudent Abraham Bommelijn

Shaolei Bu

Himalaya Budhathoki

Jiayang Cai

Liyan Cai

Xu Cai

Jiawen Cao

Jun Cao

Lu Cao

Minghua Cao

Shiyu Cao

Xiaolan Cao

Xinran Cao

Yixin Cao

Erma M. Casenas

Aneta Castaneda

Xiaomeng Chai

Hongyu Chang

Huichao Che

Lei Che

Wei Che

Chen Chen

Dan Chen

Dasen Chen

Fangzhou Chen

Fei Chen

Ge Chen

Hao Chen

Huichao Chen

Jiemei Chen

Jing Chen

Jingchu Chen

Jinran Chen

Jun Chen

Junjie Chen

Liang Chen

Lifen Chen

Linxian Chen

Liuhong Chen

Liying Chen

Minyu Chen

Nan Chen

Pei-Li Chen

Qiaoyan Chen

Rixing Chen

Shengwei Chen

Shiqi Chen

Shujiao Chen

Shujuan Chen

Ssu-Wei Chen

Ssu-Yu Chen

Tingting Chen

Wenjin Chen

Wenxia Chen

Xi Chen

Xiaojing Chen

Xiaolei Chen

Xiaoyan Chen

Xin Chen

Xiuqin Chen

Yanhua Chen

Yantong Chen

Yao Chen

Ye Chen

Yi Chen

Yixin Chen

Yuanbin Chen

Yue Chen

Yun Chen

Yutian Chen

Zhuanping Chen

Guanguan Cheng

Xin Cheng

Yahua Cheng

Yuan Cheng

Xiaomei Chi

Meici Chu

Xiaoying Chu

Yuzhen Chu

Nathan Claflin

Adam Coyne

Karen Cuevas

Chaonan Cui

Qi Cui

Xinhua Cui

Yaoyue Cui

Yu Cui

Carlo Angelo Nuqui Cunanan

Reinier Daams

Baoquan Dai

Fen Dai

Lingran Dai

Yanying Dai

Rahul Damania

Lijuan Dang

Ao Deng

Chengwen Deng

Dandan Deng

Guiling Deng

Hui Deng

Jinqiu Deng

Liping Deng

Qiaoling Deng

Yingjue Deng

Yiyi Deng

Xingfei Di

Xinpeng Diao

Ellysse Marinella Jose Diasanta

He Ding

Wei Ding

Xiaoyu Ding

Ye Ding

Yi Ding

Saad Diouri

Nicole Maria Distler

Li Dong

Qi Dong

Ruiqi Dong

Xiangna Dong

Yanmei Dong

Yaping Dong

Yiqi Dong

Kevin Doodnath

Aili Du

Chunyan Du

Hengzhi Du

Lin Du

Lingling Du

Na Du

Yuanjun Du

Yun Du

Chaohua Duan

Liyuan Duan

Tzu Mau Dung

Nour Mohamed Eissa Ahmed

Rahul Ellath

Steve Elliott

Mariam Fekry Elmoghazy Eltoody

Li Fan

Liping Fan

Lu Fan

Ningyun Fan

Rongxuan Fan

Tianmeng Fan

Tingting Fan

Wujun Fan

Xiaoying Fan

Li Fang

Liulin Fang

Ning Fang

Zhou Fang

Jia Feng

Qiongman Feng

Tao Feng

Xuejing Feng

Yanan Feng

Yanxiao Feng

Yuqin Feng

Yuran Feng

Yuwei Feng

Yuzhen Feng

Justin Flury

Huifen Fu

Daiki Fukumori

Haihua Gai

Massimiliano Galante Galante

Heqiong Gan

Huajie Gan

Qi Gan

Xingyan Gan

Chen Gao

Haiman Gao

Heyi Gao

Jiangkun Gao

Jun Gao

Lina Gao

Pei Gao

Qifeng Gao

Shuang Gao

Tong Gao

Xinyi Gao

Xueting Gao

Yanfeng Gao

Yang Gao

Ying Gao

Yingdi Gao

Yujie Gao

Ni Ge

Ran Ge

Hongli Geng

Jingjing Geng

Juanjuan Geng

Qian Geng

Mary Louise Gonzalvo Gerona

Reginald Gichanga

Monica Girija Nair

Beining Gong

Changle Gong

Jianying Gong

Jiaoyang Gong

Sihua Gong

Wei Gong

Weiling Gong

Zhiying Gong

Gokul Gopalakrishnan

Jay K. Gould

Chengyu Gu

Haiyan Gu

Jianping Gu

Jiayi Gu

Songjie Gu

Yingzhe Gu

Yitian Gu

Diyu Guan

Hemin Guo

Jiang Guo

Jie Guo

Li Guo

Liuhong Guo

Ning Guo

Qiliang Guo

Rongping Guo

Ruijun Guo

Shengxi Guo

Shihu Guo

Tong Guo

Xiaole Guo

Yu Guo

Zhidan Guo

Sachin Gupta

Tanay Amol Gupte

Jie Han

Mei Han

Qiang Han

Yonghui Han

Yubo Han

Zhenggang Han

Ning Hao

Qihui Hao

Amritha Pathiappattu Haridas

Shelly Grace Hartzell

Syed Ahsan Hashami

Fahad Hashmat

Bin He

Congjun He

Furong He

Hongding He

Jun He

Li He

Lingyan He

Liu He

Mengyuan He

Min He

Qihui He

Sen He

Shan He

Tingting He

Wanling He

Xingkun He

Yan He

Yanxing He

Yujie He

Zhixiu He

Zhongrui He

Mahmoud Ibrahim Heikal

Zachary Herlin

Andrea Hoppenbrouwer

Dongmei Hou

Jiayu Hou

Mingyan Hou

Yi Hou

Ming Hsiung Hsu

Can Hu

Difei Hu

Fangxin Hu

Haifeng Hu

Mao Hu

Mengting Hu

Min Hu

Minqian Hu

Shuangwen Hu

Xinyi Hu

Xueji Hu

Yang Hu

Yanting Hu

Yanyu Hu

Hui Hua

Mengyan Hua

Chenghua Huang

Dan Huang

Daolan Huang

Feiyun Huang

Jialin Huang

Jiaofeng Huang

Jibao Huang

Jing Huang

Juan Huang

Lixiang Huang

Mei Huang

Meng Huang

Minshuang Huang

Mushan Huang

Qi Huang

Qiuyan Huang

Rong Huang

Routing Huang

Xian Huang

Xinchun Huang

Xingye Huang

Xingyuan Huang

Yan Huang

Yanfeng Huang

Yuhua Huang

Yuqing Huang

Yang Huo

Kate (junga) Hwang

Rania Isis

Ahmed Mohamed Hussein Mohamed Ismail

Mostafa El Araby Ismail

Ishtaa Jain

Vikas Jain

Jasbin Jaleel

Lianlian Ji

Liqin Ji

Qing Ji

Tongtong Ji

Huijing Jia

Jian Jia

Lumeng Jia

Xiuqin Jia

Yanchao Jia

Feijuan Jian

Taohua Jian

Biying Jiang

Danyu Jiang

Jie Jiang

Lei Jiang

Lijuan Jiang

Liyun Jiang

Mengyao Jiang

Minna Jiang

Naying Jiang

Peilong Jiang

Tao Jiang

Xialin Jiang

Yan Jiang

Yu Jiang

Zhiqiang Jiang

Zhiying Jiang

Zhuozhi Jiang

Jin Jin

Liqin Jin

Minghui Jin

Yirong Jing

Yu Jing

Sean Jordan

Het Nitin Joshi

Sohyeon Kang

Youwei Kang

Ho Karasawa

Garima Kaushik

Sara Ali Kittaneh

Feng Kong

Emi Kosa

Brian Edward Kowalski

Yixin Kuang

Suman Kunder

Mae Lin Jiwani Lactaoen

Biya Lai

Binyu Lan

Guobin Lan

Yunfen Lan

Yi Le

Dong Jun Lee

Qiuye Lei

Tingting Lei

Xu Lei

Yuanjiao Lei

Ang Li

Baorong Li

Caichang Li

Cailing Li

Chao Li

Fei Li

Guodong Li

Guofeng Li

Haiqin Li

Hanbing Li

He Li

Hongyuan Li

Huadan Li

Jialing Li

Jiameng Li

Jianhui Li

Jichao Li

Jieli Li

Jin Li

Jing Li

Jingxian Li

Jueliang Li

Jun Li

Kezhen Li

Li Li

Liang Li

Lihong Li

Lingyu Li

Lixia Li

Lixuan Li

Maoxiong Li

Mei Li

Mengshi Li

Min Li

Minglan Li

Mingwei Li

Mingzhe Li

Pingping Li

Qian Li

Qiaoling Li

Qiuxiang Li

Ruheng Li

Ruiming Li

Sanmian Li

Shumeng Li

Shun Li

Sihan Li

Sijing Li

Ting Li

Tinglu Li

Tingting Li

Wanwan Li

Wen Li

Xi Li

Xiaofang Li

Xiaoming Li

Xiaonan Li

Xiaoting Li

Xinyu Li

Xiuqin Li

Xiwei Li

Xue Li

Xuejian Li

Xuexin Li

Yadong Li

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Dennis Whitney, CMA, CFM, CAE, is senior VP, certification, exams, and content integration at ICMA® (Institute of Certified Management Accountants). You can reach him at
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Is Your Finance Function Agile?

By Loreal Jiles
October 1, 2021

Moving away from rigid, stagnant, and manual ways of working, finance and accounting teams across the globe are realizing agility is the best path forward.


Prompted by an ever-changing external environment and increased demand for advanced analytics, the finance function must commit to greater collaboration, timely delivery of data-backed insights, and tailored decision support to meet current and future business demands. Already in need of a holistic approach to continuous improvement and sustainable transformation (from data stewardship to value creation), some finance function leads are benefiting from embedding and leveraging agility as they transform with the goal of becoming an agile finance function.


As part of this journey to develop greater agility, many finance functions have begun to adopt processes and approaches based on the Agile software development life cycle that focuses on iterative, incremental, and adaptive delivery by self-organizing, cross-functional teams. Adapting Agile to project management and operational delivery presents an innovative opportunity to increase efficiency and enhance value as the finance function undergoes a significant transformation—in other words, using Agile to become agile.


Let’s take a look at the journey toward becoming an agile finance function.




Finance functions in organizations of all sizes and industries, spanning healthcare and energy to professional services, government, and nonprofit, recognize the need for transformation. Long relied upon for traditional reporting and control activities, teams are now required to continue this delivery, only with a greater focus on strategy, critical decisions, and analysis. Resource constraints, manual processes, and siloed operations, however, limit transformation progress and place teams at varied stages of their transformation journeys—in most instances, they aren’t as far along as they’d initially hoped.


Gartner defined agility as “the ability of an organization to sense environmental change and respond efficiently and effectively to it.” This attribute is precisely what finance functions need to make meaningful progress with their transformation efforts and ensure that the end result positions their teams to make greater contributions to the organization’s strategic objectives.


Integral to leveraging agility during functional transformation is remaining laser-focused on maximizing the business value to be delivered by the transformation effort itself (see Figure 1).



A key objective of the finance function transformation is to regularly deliver timely analysis and insights that inform strategic decisions, predict performance and behavior, and propose data-backed action to prepare for and respond to change. Tactically, this means nimble, multidisciplinary finance teams should have frequent engagement with internal customers (business and operational teams supported) to deliver projects and recurring activities with an iterative, incremental cadence. Teams like these are able to experience how agility yields a quicker path to business value, more collaborative engagement, streamlined risk management, and efficient course correction. These benefits, when reaped while transforming, nurture the agile culture that’s essential to the transformed finance function.


An Agile approach to transformation. Finance transformations are comprised of several individual initiatives that include implementing emerging technologies, standardizing and automating processes, upskilling staff, and improving ways of working, to name a few. In most finance functions, transformation programs are complex, require the input of multiple internal and external stakeholders, and have undefined details of the specific solutions to be implemented. The complexity, cross-functional nature, and opportunity to shape the outcomes make an approach based in Agile incredibly effective.


In an Agile approach, each individual initiative might be assigned to an overarching backlog housing the corresponding value and effort estimates for each project. The initiatives would be prioritized, and small cross-functional teams would be formed to deliver individual (or groups of) projects based on the team’s capabilities. A component, or increment, of the individual projects (an individual or group of backlog items) is delivered by the teams at the end of a predetermined period (e.g., every one, two, three, or four weeks).


This approach can be applied to all projects under the transformation umbrella—from automating invoice processing or automatically populating a dashboard enabling real-time access to financial results to implementing new controls in accounts payable procedures, responding to ad hoc analysis requests, or fostering greater connectivity between relevant finance teams.


Minimum viable product. To ensure value is delivered as soon as reasonably possible for complex, multifaceted projects dependent on end-user feedback, teams leveraging Agile often employ the concept of the minimum viable product (MVP). With software development, MVP is seen as the smallest combination of final product features needed to deliver value to the end user and enable you to gain enough feedback to learn if the customer will buy or use the final product. If the customer wouldn’t use the product, the objective becomes learning what adaptations are needed to ensure the final product will be purchased and valued by customers.


In large transformation programs, MVP might be a combination of automation initiatives that adds up to a target financial value and doesn’t compromise the control environment. Success with this subset of processes would serve as the green light to continue scaling use of the technology across other processes. Note, the product, in these instances, is the outcome of the initiative—automated invoice processing for large vendors, new fields added for enhanced filtering to a system-based report, a new revenue recognition policy, etc.


In less complex initiatives, the time or resources needed to employ MVP might outweigh the benefits of the final product, in which case, simply delivering a usable, valuable, and inspectable increment of the final product during each iteration is sufficient. In all cases, adopting an iterative approach while soliciting feedback will significantly increase the likelihood that business value will be created and delivered well before project completion.




With transformation efforts under way, CFOs and controllers should nurture a culture of agility with hope that the traits developed throughout the transformation journey will translate into a sustained path to continuous improvement and greater value.



As seen in Figure 2, an agile finance function focuses on creating value through the following characteristics:


  • Scalable, efficient operations: Leveraging automation and other digital technologies that can be applied widely, across multiple persons or teams, enables greater standardization, a strengthened control environment, and sustainable time and cost savings.
  • Transparent, accessible data and metrics: Granting relevant team members with access to real-time data and metrics (in compliance with company policies) leads to more informed decisions, greater confidence in results, and fewer surprises.
  • Frequent inspection to ensure fit-for-purpose insights: A culture that allows for regular inspection by end users fosters constant communication with stakeholders and ensures that the insights or project outcome delivered is tailored for current needs.
  • Quick, responsible adaptation to change: Streamlined processes and a culture that enables timely adjustments to new developments empower delivery of relevant insights when needed and without increasing the organization’s risk profile.
  • Empowered, capable, and multidisciplinary teams: Diverse teams with the autonomy and space to shape how they deliver results, along with the skills and capabilities needed to meet current and future demands, best position finance functions for innovative value delivery.


Digital tools; value-creation-centric strategies; and an inclusive, collaborative culture combine with these characteristics to enable finance functions to generate efficiencies; enhance offerings to the organizations they support; and foster continuous improvement, innovation, and inclusion among functional and operational teams.




To translate the characteristics of an agile finance function into improved operational delivery, some finance leaders equip and empower their teams to perform tasks and execute projects by adopting Agile and the Scrum Framework (Scrum), one of the branches of Agile most easily adaptable to business processes. Let’s take a look at examples of Agile and Scrum in action in finance and accounting.


Partnering with IT. Organizations of all sizes and industries are increasingly becoming more digital, yet IT departments are still regularly tasked with delivering more with less. Consequently, many have adopted Scrum and other branches of Agile to deliver projects with greater efficiency and client satisfaction. Accounting and finance teams serve as internal customers of IT teams and business partners of the IT function.


As finance functions embrace digital technology through broader transformation efforts, close partnership with IT teams is critical. In most organizations, IT departments are leading technical enhancements of accounting and finance systems to automate repetitive tasks, migrating financial and nonfinancial data to data lakes or data warehouses to improve data accessibility, and implementing emerging digital technologies such as robotic process automation and AI for finance and accounting processes.


Currently, the most frequent application of Scrum by finance team members is in support of IT-led initiatives. To collaborate effectively with IT teams and contribute to digital initiatives that directly impact finance processes, finance teams need to be conversant in Scrum terminology, familiar with the Scrum process, and actively engaged as a stakeholder or scrum team member. To strengthen cross-functional relationships and increase efficiency and value, agile finance functions are embracing Scrum while partnering with IT by serving as scrum team members (scrum master, developer, or product owner) and key stakeholders. Accountants and financial professionals most commonly hold the role of product owner on the scrum team because they’re best positioned to estimate value and prioritize initiatives and components on the backlog that will benefit their teams.


Finance and accounting operations. Common finance and accounting processes like accounts receivable, accounts payable, reconciliations, and month-end close are all great candidates for Scrum adaptation. Monthly activities such as processing invoices, closing the financial ledger, and reconciling financial accounts could be assigned to a common backlog on a digital or physical scrum board that all finance and accounting team members can access (see Figure 3).



The work to be performed can be arranged in weekly sprints (time-boxed periods of regular delivery throughout the project), and the conclusion of each sprint would naturally deliver value because these activities contribute directly to organizational value delivery.


As teams seek to normalize continuous improvement, improvement initiatives could also be added to a central backlog, perhaps managed in three-week sprints. Three weeks might allow functional team members to form smaller working groups, or scrum teams, across departments to progress opportunities that will ultimately contribute to the function’s transformation while still having time to carry out their regular operational tasks or responsibilities. One or more initiatives, or increments of the final product (backlog items), would be delivered at the conclusion of each sprint.


Internal audit. Another important function within the management accounting arena is internal audit. Typically, a linear, sequential, and phased approach is applied to audits. Prior to beginning the audit, significant time is spent planning the audit engagement. Once the audit begins, the team commences fieldwork. And upon conclusion of the audit, the reporting phase begins, at which time the audit report is drafted and ultimately delivered weeks or months following the audit. If delivered using Agile and Scrum, however, internal audits could yield more regular delivery of findings, opportunities for teams to close gaps quicker, and greater stakeholder engagement.


An Agile or Scrum-based approach to internal audit wouldn’t reserve the audit report drafting for the end of the audit engagement. First, a backlog would be prepared to identify all areas for which assurance must be provided at the audit’s conclusion. The scrum team (the audit team, in this scenario) would determine how the assurance and evidence thereof is provided.


Some audit teams have seen success employing two-week sprints, at the end of which an increment is delivered. The increment would be comprised of a written description of the positive assurance, control gaps, and other detailed audit findings and accompanying corrective action plans, where appropriate. This increment could be considered done when the draft includes references to evidence, the team has reviewed the draft, the relevant approver has signed off on it, and the work paper is logged in the audit system.


With this approach, business teams can remedy control gaps much quicker than they would in the traditional model because they receive findings at the end of each sprint rather than after the conclusion of the audit. Scrum could even be applied to the continuous audit approach, employing continuous monitoring, investigating, and reporting activities during sprints on an ongoing basis to enable real-time fraud or error detection and, ideally, prevention of financial loss or misstatement. Similar benefits can be reaped by external audit teams that elect to adopt an Agile approach to delivery.




Figure 4 provides a scorecard that can be used to assess the agility of your company’s finance function in relation to each of the five characteristics of agile finance functions.


Click to enlarge.


To employ a 360° approach to this self-assessment, members at all levels of the finance function should be engaged in the scoring. Initially, they should conduct this evaluation on their own. Leaders are likely to find that there is misalignment between their view and the functional team’s view of the amount of progress made in specific areas. These discrepancies are important to identify early on because they can ensure the entire functional team begins the journey toward agility from the same starting point, allowing for more resources to be directed toward areas in greater need of improvement.


An agile finance function is about more than ensuring you can check “done” for the full list of characteristics. It involves ensuring that those characteristics indicate that your function’s organizational culture rewards innovation, removes impediments to efficient delivery, provides room for growth and development, fosters collaboration, creates value for the organization, and visibly encourages the notion of failing fast.


Leaders who encourage their teams to fail fast without fear of repercussions are approachable and have measures in place to prevent team members from being penalized for innovative ideas that don’t present sustainable solutions. They also hold their leadership team members accountable for ensuring staff feel comfortable to share ideas and challenge the status quo. Failing fast is less about encouraging failure and more about expediting the learning and adaptation process, leading to a quicker path to the value-added solution.




As shown in Figure 5, there are three steps that finance function leaders can take to embrace agility:

  1. Assess functional agility: Invite finance and accounting leaders and team members to use the self-assessment scorecard to report their perspective on the current agility of the finance function. Collaborate with team members to aggregate the findings and identify gaps to address.
  2. Fill gaps: Strategize and collaborate with your leadership team to fill those gaps. Each gap should be assigned to a specific leadership team member who will be held accountable for closing the gap and empowered (with resources and autonomy) to close the gaps.
  3. Visibly support development: Personally learn more about Agile and Scrum, then partner with IT leaders and require leaders within your function to create bandwidth for team members to participate in training in this area.



There are also several steps individual finance team members can take to embrace agility (see Figure 6). It begins with learning more about Agile and Scrum to help them deliver with greater agility. They should review the characteristics of agile finance functions and identify ways to incorporate some of those attributes into their personal ways of working or those of their immediate team.


The second step is to put it into practice themselves by choosing a project. At a minimum, team members should be able to identify a single improvement opportunity that can provide benefit. It should be a project that will require the involvement of multiple individuals and for which the solution isn’t yet defined.


That leads to the third step, which is delivering a pilot use case. After choosing a project, team members form a scrum team that then creates and prioritizes a backlog and employs the Scrum process. (For more details on these steps toward delivering with Agile and Scrum, see the IMA® (Institute of Management Accountants) Statement on Management Accounting An Agile Approach to Finance Transformation.)


The long-term viability of the finance function is dependent on the extent to which agility becomes embedded within its functional culture. Thus, it’s imperative that finance functions not only embrace agility but employ an Agile approach to finance transformation itself. An agile finance function is prepared to provide assurance for financial results and contribute to strategic decisions in the face of evolving market conditions, the accelerated pace of change, and the introduction of unforeseeable circumstances—all likely to arise on any given day.


Loreal Jiles is vice president of research and thought leadership at IMA, a member of IMA’s Technology Solutions and Practices Committee, and a member of IMA’s San Gabriel Valley Chapter. She can be reached at
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The CFO Playbook

By Peter Russo

This past year has magnified challenges for organizations and their respective industries in unique ways, but there’s one common theme I’ve seen across the board: Those who could adapt quickly found new, unexpected ways to thrive and grow amidst one of the most challenging market environments in modern history. It came down to one thing: speed.


With the U.S. economy rebounding quicker than expected, many business leaders are now grappling with how to keep up with demand. As CFOs and their teams look for ways to deliver on present growth opportunities, a lot can be learned from the organizations that thrived through the worst.


Earlier this year, Oracle pinpointed four recurring strategies that the most ambitious and innovative companies have taken advantage of over the last year to gain a competitive edge and achieve rapid growth: business model innovation; mergers, acquisitions, and divestitures; accelerating the financial close; and building a risk-intelligent culture (see “The Four Growth Strategies”).



As much of the developed world reopens, many organizations are optimistic and looking to invest for a new era of growth. These same four strategies that have proven successful over the past 16 months will continue to be the foundation for companies looking to advance in this new business environment.




The COVID-19 pandemic changed consumer habits and expectations overnight. To meet these new and constantly evolving expectations, companies had to stay relevant by rethinking existing business models. For instance, when students were suddenly required to stay at home due to local health ordinances, universities had to shift to online learning while still giving students a valuable educational experience. These shifts are continuing to occur across every industry. In fact, a recent poll conducted by PwC found that changes to product and service offerings are considered the most critical component to rebuilding and improving an organization’s revenue streams in the current environment (see Figure 1).



The companies embracing business model innovation are redefining industries by transitioning from transactional business models to service-based business models that ensure a steady and recurring revenue stream. For example, fitness companies that once sold physical pieces of equipment now sell monthly subscriptions to online classes that users can stream on demand from the comfort of their homes.


The case is clear for why business model innovation is a must for many industries coming out of the pandemic and how it can support the shift in consumer habits. But how can your organization get started on taking advantage of this growth opportunity? Begin with these five steps:


  1. Assess what your customers want. What your customers wanted in early 2020 may not be the same as what they want now. Research your customer base and listen to their feedback using surveys, customer community groups, or virtual events. For instance, a retail company might learn that, while it’s planning on opening another storefront, many of its customers prefer to never shop in-store again. Armed with this information, the company can decide how to best pivot its brick-and-mortar and e-commerce strategies to meet those customer preferences.


  1. Analyze various business models. Many CFOs are hesitant to shift business models because of the negative impact on short-term revenue. To calm this fear, finance teams should use scenario modeling and financial planning tools to analyze the potential cost of the immediate shift vs. the revenue potential over time. By modeling different scenarios, offerings, and market conditions, company leadership can see what investments make the most financial sense and have the highest potential for continuous revenue growth.


  1. Collaborate across the entire organization. Even the best innovation attempts can be sabotaged by information silos. To be successful in your business model shift, it’s important that stakeholders across all departments, from HR and finance to engineering and sales, are involved in the innovation process. This collaboration encourages critical components to be debated while developing the product and/or service: What is the best way to bundle services? What should we charge? Should we staff up internally or through contractors? Clear and strong alignment across the organization on these details will ensure every offering is set up for success.


  1. Design for customer success. With subscription-based business models especially, customer satisfaction is a key indicator for recurring revenue. That’s why companies should create a self-service platform for customers to easily manage their subscriptions or buy a new service when it’s convenient for them. When using a simple and intuitive user interface, customers will have a positive experience with the brand and be more likely to continue renewing services, creating reliable recurring revenue for the organization.


  1. Measure outcomes and stay agile. Changing a business model requires a reimagination in the way key performance indicators are measured and tracked. For example, moving to a subscription-based model means you’ll be recognizing revenue and billing customers differently (e.g., monthly or quarterly vs. a onetime fee).


To ensure business leaders know what’s working and what isn’t and can quickly adjust any underperforming offerings, finance teams need to collaborate with the rest of the organization to keep them informed using real-time data set against their initial forecasted plans to adapt investments as needed.




According to Reuters, the first half of 2021 alone saw a record $2.4 trillion globally in mergers and acquisitions (M&A) activity. Why? In addition to low interest rates, the most agile companies capitalized on the changes forced by the pandemic to rethink their long-term growth and performance strategies. Some companies considered M&A an opportunity to build on the company’s core business. By growing its footprint in its existing industry or spreading into adjacent markets, a company could expand its customer base and diversify products and services. Others saw the pandemic as an opportunity to drop the dead weight of underperforming assets to lower operating costs, increase profits, and improve organizational coherence.


While taking advantage of M&A and divestitures can be a hugely beneficial method to achieve organizational growth, it’s also one of the most challenging tasks of a CFO’s career. From consolidating multiple companies’ financials onto a single ledger to deciding which company’s enterprise resource planning (ERP) system to stick with (or sometimes an even tougher task—deciding to start from scratch and implement an entirely new ERP system), here are the best practices for getting started:


  1. Know what you’re getting into. To mitigate risk, start your M&A journey by modeling likely scenarios and then develop financial plans and cash flow analyses for each of those possibilities. But don’t stop at financial planning. Make sure to model scenarios across every department. For instance, you’ll want to evaluate your current and future workforce needs by linking financial with workforce plans to assess how M&A projects will impact corporate resources as well.


  1. Establish business process owners. Change management is a critical component to success when it comes to M&A and divestitures. To ensure that everyone is working toward the same goal, assign owners for each business process across IT, finance, operations, and more. Holding every team equally accountable for M&A or divestiture success will foster collaboration, alignment, and buy-in across the organization.


  1. Create a plan for financial reporting. For finance professionals, one of the most challenging parts of a merger or acquisition is marrying two separate companies’ financial data into one. Ask yourself: Will you move Company A onto Company B’s ERP system? If both systems are on the respective premises, which cloud-based ERP platform should you use? Should you onboard end-to-end processes all at once or gradually?


By mapping out a plan early on that’s aligned with your high-level strategic goals, the finance team will remain organized with its eye on the prize, rather than becoming overwhelmed by processes and having to make decisions under duress once it’s knee-deep in the process.




Now more than ever, companies and their finance teams need to move fast to identify and capitalize on areas of potential growth. But moving quicky is difficult when an organization is spending weeks reconciling accounts, closing the books, and reporting earnings to stakeholders. With some organizations spending up to a month to close their financial quarter, finance teams can potentially spend a third of their time looking back instead of looking forward.


By leveraging AI and machine learning to automate financial close processes such as account reconciliation and reporting, organizations can root out many of the manual processes that hinder a company’s ability to achieve a fast financial close. And by removing the manual effort required, finance teams can reduce human error and spend less time crunching numbers and more time doing what they’re passionate about: identifying new opportunities for revenue and growth. So, how can companies embrace automation to accelerate the financial close? There are a few critical steps for getting started:


  1. Think through the “extended” process. It isn’t possible to improve financial close processes without first factoring in the hundreds of steps and employees that make up the process. Be sure to think past the final step of closing the books, and instead consider the “extended” financial close, which includes account reconciliation, tax provision, subledger close, and submitting filings to regulatory bodies. By thinking about the full, extended task, CFOs will be able to develop a more strategic plan that achieves the organization’s holistic goals.


  1. Focus on specific areas of improvement. After the extended financial close process is documented and understood, you can then focus on pinpointing the areas that need to be improved most urgently. In identifying these areas, look for tasks that are tedious, repetitive, or prone to frequent error that could benefit from automation. For many organizations, these processes are extremely manual and reliant on spreadsheets, such as account reconciliation, currency exchange, or payables and receivables.


  1. Leverage intelligent process automation. Once you’ve identified the processes that could benefit from automation, begin implementing the right tools. Intelligent process automation (IPA) is the next evolution of robotic process automation (RPA), adding in AI capabilities to analyze data, identify new patterns, and make recommendations that improve efficiencies. With IPA, finance teams can automate the repetitive areas that are sucking up their team’s valuable time and instead allow them to focus on higher-level tasks that make a noticeable impact in their organization’s bottom line.


  1. Create a real-time view of the close. With something as important as the financial close, the status of tasks shouldn’t be left to guesswork. Being able to track and share the status of close processes with stakeholders anywhere, anytime is crucial to collaboration and success and shouldn’t be tracked through spreadsheets living on a computer desktop.


That’s why many finance teams are moving to cloud-based solutions with shared dashboards that provide a real-time view of project statuses across any geography or division. And because closing the books is a recurring activity, full visibility of what worked and what didn’t in past iterations provides an opportunity for finance teams to learn and identify opportunities for improvement.


Leveraging AI and machine learning to accelerate the financial close shouldn’t be an intimidating adjustment for finance teams. In fact, it’s an exciting opportunity for everyone involved. By passing off the most repetitive, manual accounting tasks that are prone to human error, finance professionals can instead focus on more strategic work—allowing them to elevate their career paths and have a voice in board-level strategies, rather than crunching numbers in a corner office. For business leaders, it’s critical to paint the picture of what these new, improved roles could look like to ward off any concerns around job security and gain full buy-in from your finance team early on.




Unfortunately, innovative technologies and new business strategies can be risky. In fact, a 2019 SANS Institute Cloud Security Survey that examined the business security competency among hundreds of companies across the globe found that nearly one in five companies had a breach occur in 2018. This leaves CFOs with the important responsibility of defining and combatting risks associated with the big moves they’re making to get their organizations back to growth. For example, during an acquisition, the number of access points to an organization’s sensitive data are increased as the company onboards new employees and transitions information from one system to the other.


Having a well-integrated risk management strategy to monitor the compliance and security of these processes can ensure that any new opportunities for business growth don’t jeopardize the company’s reputation or bottom line. But when it comes to something as critical as risk management, it’s important to follow best practices:


  1. Secure a quick win. With risk management, time is of the essence, so don’t wait to kick off your journey to risk intelligence. Instead, identify the most critical areas of exposure in your enterprise and shift existing resources to those activities. By starting with a smaller, well-defined project, you’ll see quick results for a relatively low investment, which will increase confidence in the strategy, identify critical players in the decision-making process, and create a playbook for rolling out a larger risk management blueprint.


  1. Centralize risk management activities. When everyone in the organization has insight into risk metrics and performance, from security monitoring to compliance, it heightens risk awareness and allows for stronger risk-based decisions and oversight. To get started, it’s important to prime your organization by eliminating manual, spreadsheet-based processes in favor of the native risk automation capabilities that are embedded in business applications. And by leveraging a suite of business applications that are fully integrated on a common data model, organizations can mitigate risk by having a full view of the company’s decisions, including how one department’s actions could put another’s at risk.


  1. Automate critical controls across the organization. When it comes to risk management, removing as much manual error as possible can be the difference between overcoming or falling prey to nefarious actors. Assess the activities and controls within your organization’s risk strategy to determine what can benefit from the continuous monitoring of automation, and then leverage the AI capabilities within your business applications to do so. It’s important to work with stakeholders in every department to better identify and understand the risks that pose the biggest threats across the entirety of the company.


There are many ways for CFOs and their finance teams to restart their organization’s growth engine and take advantage of the rebounding economy, and this playbook will continue to evolve as our new normal is established. But no matter what strategy an organization takes, those that will be successful have one thing in common: a strong technological foundation that enables them to be flexible and pivot quickly.


Cloud-based business applications that embed the latest emerging technologies, such as AI, analytics, and blockchain, are no longer the exception—they’re the rule. Advanced technologies combined with a willingness to make big moves will determine an organization’s ability to outpace change and avoid being left behind.


Peter Russo is global vice president of ERP product marketing at  Oracle. He can be reached at
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The Guided Self-Control Management Model

By Franz Wirnsperger and Klaus Moeller

Replacing traditional budgeting with modern performance management practices can transform the management control system and drive organizational agility.


The traditional annual planning and budgeting routines still employed at many companies today were invented more than 100 years ago. At the time, the underlying assumption was that the future can be planned for, and, with large, untapped markets, business success is mainly a matter of efficiency. Complexity would be managed by detailed planning of simplified tasks and tight control of their execution. This command-and-control (C&C) performance management concept was the source of great efficiency gains throughout the Industrial Revolution and beyond.


Today, markets are global and highly competitive. The acronym VUCA (volatility, uncertainty, complexity, and ambiguity) is frequently used to describe today’s business environment. Organizations have been adapting to the new playing field. Lean approaches have become standard in manufacturing, the Scrum Framework is spreading in IT departments, and companies are increasingly experimenting with objectives and key results (OKRs) and other agile performance management practices. Nevertheless, most organizations still shy away from changing the entire C&C-based system.


In 2013, we founded the Hilti Lab for Integrated Performance Management at the University of St. Gallen, Switzerland, to inspire, understand, and learn from the transformation of the corporate performance management system at Hilti, a multinational company with more than 30,000 employees that supplies drilling and fastening solutions for the construction industry. The goal was to develop insights in the area of management control and inspire further corporate performance management innovations.


From those efforts and experiences, we have identified an alternative approach to financial target setting and incentives, as well as planning and coordinating activities, that adjusts to the needs of today’s dynamic and complex business environment. Rather than a C&C approach to performance management, it centers on a management principle of guided self-control. It affects the culture of an organization, drives organizational agility, and transforms the governance of an organization toward a model based on more self-control and self-organization guided only by a few strategic objectives and targets.


The practice-tested system change is guided by specific self-control building blocks that can be implemented in an evolutionary way that minimizes disruption within an organization. It’s an opportunity for the finance organization to position itself as a leader in the transformation of the entire corporate performance management system.




Corporate performance management is a complex and abstract discipline. In practice, the term “performance management” is frequently associated with the individual leadership process or IT support of the management process. The ideal form is typically described as an iterative cycle of target setting, giving support and feedback, and rewarding through individual bonuses for target achievement, which emphasizes a pay-for-performance approach.


On the corporate level, the steering process is often described with the help of William Deming’s Plan-Do-Check-Act cycle. A strategy guides the planning process. The strategy execution is orchestrated by the annual planning and budgeting process, which breaks the strategy down into measurable targets and actionable initiatives. Forecasting and business review routines ensure the checking and adjustment during the year.


Click on any image to enlarge.


While the general steps make sense, the problem is that the application follows a C&C pattern built on the following assumptions (see Figure 1):

  • The future is plannable; therefore, it’s clear how to get to the target.
  • A plan (budget) is a good yardstick for performance, and it’s possible to perfectly measure deviations to the plan.
  • People are fully rational; therefore, carrots and sticks (rewards and punishment) work best in all situations.
  • The supervisors (managers) are more knowledgeable about the tasks to be executed than the frontline, operationally responsible employees.


The assumptions were probably correct when this model of corporate performance management was established. Today, however, markets are much more competitive, and the environment is significantly more dynamic and complex. In a VUCA environment, the corporate performance management requirements change significantly (see Figure 2).



In an increasingly dynamic and complex environment, transparency, trust, and entrepreneurial behavior by empowered employees are far more effective than tight control and micromanagement. The guided self-control approach focuses on longer-term strategic objectives and a few relative financial targets (called “North Star” targets) to guide the company and its activities. These serve as a much better orientation and performance yardstick than short-term, detailed budgets that become increasingly obsolete as time passes.


Rather than planning, coordinating, and adjusting measures once a year, the adjustment of measures needs to be more agile and should be organized in an unbureaucratic, rolling process. The significantly more complex, knowledge-based tasks of today require a much stronger focus on intrinsic motivation and teamwork—hence, the need for greater emphasis on purpose and involvement. In addition, behavioral research, such as that from Paul Marciano (Carrots and Sticks Don’t Work, 2010), has produced compelling evidence that money (bonuses) for individual target achievement (i.e., carrot-and-stick principle) can be demotivating in the VUCA context. Bonuses should instead be used as a form of appreciation for team efforts (i.e., the participation principle).




C&C patterns are deeply embedded in many organizations. Heavy emphasis is still placed on top-down strategy development and execution processes. The assumption that an organization’s complexity can be summarized into one plan is still widespread.


Why do so many organizations maintain their C&C-based management systems given the changing business environment? We see three major barriers to change that reinforce each other:


  1. Lack of awareness of the problem. Change has always been around us, and the increasing pace of change is hard to recognize when you’re in the middle of it. It’s difficult to see the interdependencies inside a complex management control system and realize that the underlying assumptions of the existing management system are no longer applicable. It also isn’t transparent how much the system is slowing down the organization. There may be indicators like low employee engagement, tactical behavior, increasing bureaucracy, sandbagging, lack of growth, etc., but it isn’t obvious to relate this back to a system problem as a root cause. Therefore, the magnitude of the problem and the improvement potential, which go along with a system change, aren’t obvious.


  1. Complexity of the change. Those who get an idea of the need for a system change may shy away from making a change because of how complex the effort will be. To change toward more self-control and self-organization involves a paradigm shift at the top and at the bottom of the organization. Leadership roles change, so it involves the board of directors and senior leaders triggering a change that impacts their own roles. Moreover, employees must be ready to take on more responsibility. As a result, the motivation to make such a change to the organization either requires visionary thinking and courage or comes in response to pressure and pain—and sometimes both.



  1. Lack of awareness of alternative solutions. Those who see the problem and would have the courage to change may not be aware of alternatives. Methods like the Holacracy governance model (see Brian J. Robertson’s Holacracy: The Revolutionary Management System that Abolishes Hierarchy, 2015) are still little known and cater more to small, strongly knowledge-based business models. Other suggestions for a management model change, like the Beyond Budgeting model (Jeremy Hope and Robin Fraser, Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap, 2003), may be too generic to guide transformation efforts.


Given the dynamics in today’s environment and the complexity involved, there’s a clear need for more guidance on the available alternatives to a C&C performance management system and how such systems can be implemented.




Some organizations have seen the need for change and have begun to optimize parts of the system. Yet rarely do they change the entire system. When making these piecemeal changes, the risk is very high that the entire system may lose its effectiveness. Leadership and culture development efforts preaching purpose orientation, strong values, empowerment, and the supremacy of transformational leadership over transactional leadership aren’t compatible with traditional approaches to performance management, like tight budgeting. Employees experience these inconsistent change efforts as conflicting messages and often perceive them as hypocritical and cynical.


Transitioning out of a C&C system is a complex task that requires an integrated, holistic view and adjustments of practices in finance, HR, and general management (see Figure 3). To foster supportive behaviors, practices related to strategic and operational target setting and to motivation and coordination not only need to change, but they must be synchronized. Only an integrated design ensures that the parts of a new performance management system are fully synergetic and simultaneously drive alignment, engagement, and agility.





The key to adopting a much more self-controlled way of managing performance without having to make radical organizational changes is to find the sweet spot between the very tight C&C system and a very loose system of complete self-organization and self-control. We call this sweet spot the “guided self-control management system.”


The key characteristic of guided self-control is that the organization still has top-down direction through strategic targets and strategic initiatives, like in a C&C model. But the way those targets and initiatives are formulated and translated throughout the organization ensures that they function as guidelines and remain at a high, broad level so that self-control and self-regulation can take place further down the organization’s structure. Our application experience shows that the principle can be brought to life with five guided self-control building blocks (see Figure 4).



Building Block 1: Separate financial target setting from action planning. In the C&C management system, financial targets are combined with initiatives and tasks that lead to one total plan for the organization: the budget. It documents a complete horizontal and vertical alignment of the organization based on the assumption that the target and the path to get there can be planned. In today’s complex and dynamic environment, the path toward a desired outcome is frequently too complex to be planned for in all details up front. It’s rather the result of an iterative trial-and-error process.


The first step away from the C&C steering system is to recognize this systemic problem and consciously separate the financial target setting from the planning of initiatives and action plans to achieve those targets—and thus developing separate instruments for the different functions (motivation, coordination, and prognosis).


Setting financial targets as a source of orientation becomes even more important in a VUCA business environment, not less so. To make it meaningful, however, target setting should be done more strategically on a higher, aggregated level and in relative form, as we’ll see with building block 2. The planning of initiatives and actions should follow a much more decentralized, self-organized process with frequent reflections of progress, which needs to be coordinated, but not with the unrealistic expectation to fit everything into the one annual number of a budget.


Building Block 2: Guide with financial North Star targets. In a dynamic and complex environment, detailed annual budget targets can provide a false sense of security and are the wrong yardstick for performance. It’s much more effective and meaningful to have relative strategic targets for a few key performance drivers of the company’s business model.


Growth, profitability, and capital efficiency are the three generally applicable drivers of financial value creation. Our suggestion is to set targets in a relative form derived from the strategy of the organization. In this context, “relative” means relative to an external or internal benchmark and in the form of output/input ratios like return on sales (ROS) or efficiency and productivity ratios. That way, much like the North Star served as a fixed point that sailors would use to help navigate and remain on course, these targets would help the organization stay oriented to the proper strategic direction in a volatile environment—hence the term.


For sales growth targets, for example, an organization defines a benchmark target in the form of a growth target factor relative to the relevant market. For example, a growth target factor of 1.5 means that, for (assumed) market growth of 2% per year, the sales growth target is 3% per year (1.5 times 2%). This factor is derived from the organization’s strategy that defines what relative market share or market position the organization or business unit wants to achieve. The growth targets move up or down with the movement of the market, but the relative ambition stays fixed, like the North Star.


Other organizations use an established peer group as a benchmark and set growth target factors relative to that group’s sales growth. Targets are set for the future based on the assumptions for the market/peer-group growth, and performance is measured retrospectively, depending on the actual growth of the relevant market or peer group.


Organizations that don’t have access to good market or peer group data simply use percent-based average annual growth targets (typically derived from compound annual growth rates) that reflect management’s opinion on the growth potential of the business model given the current strategy. These relative targets are usually derived from a strategic planning exercise reflecting on relative market share/position and the respective strategic ambition.


Examples of North Star targets for the profitability and capital efficiency targets could be ROS or capital turn targets (capital employed divided by net sales). Service centers like manufacturing plants set strategic North Star targets in the form of output/input improvement ratios (i.e., annual productivity of x%).


In this way, North Star targets are set for all main organizational units—the profit, service, and cost centers of an organization—for the one or two essential growth, profitability, and (where applicable) capital efficiency outcome key performance indicators. At the same time, the measurement system is adjusted. Instead of comparing financial results of budget vs. actual, the organization measures the rolling 12-month trends of the strategic gap, i.e., the comparison of actual results compared to the North Star target.


In many cases, using North Star targets and tracking the development of the strategic gap provide sufficient guidance for steering purposes. The annual target-setting routines of a budgeting process and the midterm financial planning exercise become redundant.


Since North Star targets are valid for an unspecific time period, the targets are only changed when external or internal events change the assessment on the strategic potential of an organization or business unit. This usually happens only in the case of structural changes, such as a major merger or acquisition, or other major strategic moves that lead to changes in the organization’s business model.


Major external impacts, like the financial crisis in 2008-2009, can also trigger changes. But it depends on the event. In most organizations already applying this concept, the COVID-19 pandemic didn’t lead to a change of targets. Businesses recovered better than initially expected, and the organizations’ longer-term potential assessments therefore didn’t change. This is a good example for how relative North Star targets keep their relevance in a volatile environment.


In larger organizations with many units and diverging performance levels, the guidance from North Star targets can be enhanced with “what-if rules” for more specific annual target guidance. The rule is simple. The bigger the strategic gap of a unit’s prior-year performance, the more improvement is required in the following year. With such rules, the North Star target system enables self-regulated portfolio steering, an extremely simple and powerful way of strategic guidance in a larger organization. Figure 5 illustrates an example for a “what-if rule” for ROS targets.



This concept not only provides more stable and meaningful guidance in a dynamic environment, but it also institutionalizes the separation of target setting and motivation from the coordination function, which enables more self-control with a significant positive impact on entrepreneurial behavior in an organization. It systematically improves the alignment of an organization with its strategy and with the objectives of shareholders and investors. Information requests from potential creditors and investors, who still may require the traditional annual budget information, can be equally well (if not better) satisfied with the most recent forecast (see building block 5).


Building Block 3: Incentivize progress toward North Star targets. C&C organizations rely heavily on variable compensation elements (bonuses) linked to individual targets. As noted earlier, research and experts in the field of incentive design suggest that money in today’s more complex task environment shouldn’t be instrumentalized as a reward for individual target achievement but rather be used as an (important) form of appreciation by sharing the success of the entire team. This can be done very effectively by unlinking the bonus calculation from individual targets and linking it instead to the progress of an organization (or business unit) toward the longer-range North Star targets, i.e., linking individual bonuses to the development of the strategic gap of an organization or unit.


Dropping individual target bonuses is a hotly debated issue within many companies that set out to implement this new approach, as it touches a fundamental paradigm shift away from a C&C philosophy in management. Yet our experience regularly shows that the initial concerns regarding this change aren’t justified. If the change is implemented in a fair way, it leads to a significant simplification and to a much better alignment of employee, management, and shareholder interests. It’s another important self-control building block that further strengthens the relevance of the relative North Star targets.


Building Block 4: Define and execute strategy with rolling planning and OKRs. Now that the entire organization and its major responsibility centers are aligned with the strategy through the North Star targets, no more energy and time needs to be wasted on annual target-setting exercises. The entire focus and energy of an organization can be put on the main performance lever: the planning and execution of strategic initiatives and activities.


The separation from financial target setting opens up much more room for more frequent, flexible, and self-organized planning processes. This context is a perfect fit for the utilization of more agile alignment and engagement methods like OKRs, which can replace the traditional annual management-by-objectives methods and drive much more bottom-up involvement in the planning and execution process of initiatives, an extremely critical element for intrinsic motivation, innovation, and agility.


Building Block 5: Add greater flexibility to resource allocation with rolling forecasts. A rolling forecast process forms the final building block for guided self-control. Typically, rolling forecasts take place in a three-to-four-month cycle synchronized with the rolling planning process of building block 4. The rolling forecast ensures a coordinated and flexible resource allocation process.


The rolling forecast isn’t the basis for future targets, so tactical considerations don’t influence the prognosis. The target setting is already covered by the North Star target system. In this setting, the rolling forecast is an instrument to manage and steer fixed costs in corporate functions. This is similar in principle to a budgeting process, but with the advantage that resource allocation decisions can be done regularly throughout the year, not just on an annual basis. Also, organizations that need a formal budget for other stakeholders, like creditors, can easily use the rolling forecast as a “formal synonym” for the budget. Experience shows that it regularly provides even better—i.e., less tactically loaded—information than the traditional budget.


Separating out the target-setting function through the use of North Star targets creates the perfect conditions for positioning the rolling forecast as an instrument purely for prognosis and coordination. In contrast, if the rolling forecast is implemented on top of a traditional budget approach, as is done frequently, the rolling forecast is regularly perceived as more, rather than less, command and control. It continues to be the basis for future budgets and, therefore, systematically triggers tactical behavior. For this reason, it’s no surprise that the rolling forecast is unfortunately already “burned” in quite a few organizations.




In the traditional C&C system, the annual budget number is the central yardstick for performance evaluation. In the guided self-control system, the strategy, represented by the relative North Star targets, becomes the central yardstick for performance evaluation—not just in the strategic planning and review session, but also for day-to-day operational steering.


Strategic planning and operational steering processes seamlessly merge into one integrated process. Continuous improvement and closing the gap toward the North Star targets become the main focus. Having more consistent targets as well as the constant monitoring of actual trends both lead to significantly higher levels of transparency about the organization’s performance. With the implementation of the five guided self-control building blocks, the traditional budget processes become obsolete. All of the functions of the budget process are covered with more flexible methods.


All in all, our experiences have shown that the implementation of the building blocks transforms an organization’s management control system. The approach exerts a strong influence on the behavior of team leaders and team members, thereby systematically driving the culture of an organization toward more entrepreneurial behavior. It systematically supports alignment, engagement, and organizational agility as an outcome. And with that comes greater growth and innovation in the long run. The finance organization can be the trigger for this transformation and thereby position itself as a strong business partner in the company.


Franz Wirnsperger is the former CFO of the Hilti Group and initiator of the Hilti Lab for Integrated Performance Management at the University of St. Gallen in Switzerland. He can be contacted at
Klaus Moeller is professor of controlling/performance management and director of the Hilti Lab for Integrated Performance Management at the University of St. Gallen. He’s also a member of IMA’s Switzerland Chapter. Klaus can be contacted at
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Heat Experiences: A Career Accelerator

By Barbara Larson

They say that if you can’t stand the heat, get out of the kitchen. But if you aspire to take your career in finance to the next level, dialing up the heat at work just might be your ticket to the C-suite. Enter “heat experiences,” those high-stress, high-stakes assignments that really allow you to grow as a leader.


These are usually stretch assignments that draw you out of your comfort zone, requiring you to add to your skills, adapt decisively to new or different situations, and find ways to succeed in more complex environments. I recently completed such an experience in preparation for a new role leading the accounting, tax, and treasury teams at Workday.


According to the Center for Creative Leadership (CCL), heat experiences are becoming increasingly popular as a leadership tool to help companies and their talent manage in a world that’s increasingly uncertain and complex. These assignments can push people to their limits in ways that can make or break careers; they can be mentally taxing, emotionally confusing, or physically demanding—sometimes all three at once. But heat experiences can also allow emerging leaders in your organization to practice—and test—their leadership and collaboration capabilities in new ways, increasing both confidence and resilience while boosting the capacity for innovation.




According to a recent white paper by CCL, heat experiences work because, as shown by research on expert performance across many fields, what sets superior performers apart is the quality and quantity of their mental maps: small-scale “models of reality” that we use to understand our world. Over time, top performers develop highly complex and sophisticated maps of the situations they might face in their fields. These maps allow them to process large amounts of information quickly despite the overload and make faster, more accurate decisions in a given situation. See Figure 1 for more on gauging the right level for heat experiences.



While most people are happy to become “good enough,” superior performers continually push themselves into heat experiences (e.g., bigger, more complex roles) that their current maps can’t explain. This requires them to construct new, more accurate maps, thus adding to the number they have available and further boosting their adaptability and performance.


You may be thinking that as finance leaders, managing through the pandemic was enough of a heat experience to last you your entire career. But the pandemic showed us that the pace of change is only accelerating. It’s up to us in finance to provide the strategic guidance, data-driven insights, and out-of-the-box thinking our companies and employees need right now to seize the opportunities generated by digital acceleration.


According to Robert Half’s 2019 Road to CFO survey of 800 U.S. CFOs on their career paths, only 14% reported serving exclusively in finance, with the rest having served in business development (36%), administration (35%), human resources (34%), and technology (33%) roles. Accepting a heat experience or stretch assignment outside finance can dramatically improve your chances of becoming a CFO. And if you’re a finance leader, creating heat experiences for those rising stars on your team is another way to ensure that you’re providing new ways to engage and retain high-potential talent while strengthening your strategic impact on the business.





The company I work for, Workday, has used heat experiences with great success. Heat experiences and their associated attributes, such as having the appropriate level of support relative to the degree of heat and risk, are a central part of Workday’s learning language. Using these experiences has helped us become increasingly intentional about providing the accelerated continuous development that’s typically associated with the 70% of on-the-job development in the classic 70:20:10 learning framework. At Workday, the strategy of heat experiences is shared with all employees intentionally, whether to level up a capability or skill, deepen a connection, or broaden a perspective.


CCL gives some great examples of heat experiences that companies in fast-moving industries such as enterprise software use to groom their next-generation talent:

  1. Ask managers to lead change initiatives or product releases in areas where they have no expertise and to build leadership skills in coaching and collaboration vs. just being an expert at something.
  2. Merge disparate product lines under a single talented leader to help develop the capacity to manage complexity while still growing the business.
  3. Place leaders in situations where they must navigate completely unfamiliar terrain with minimal training, such as executing a cross-functional change with conflicting stakeholder expectations.


My own heat experience was aligned to CCL’s first example: After five years of leading Workday’s corporate finance team, I was asked to become the general manager of our financial management applications organization, with responsibility over the product strategy, product management, and engineering teams. Like most finance professionals, I had no background in software development—no experience in Agile methodologies, no domain expertise in data science, and certainly no coding skills. What I did have was a keen interest in financial technology, having been our finance team’s liaison with product development to provide input into our financial applications products and services. Adding to the pressure was the fact that the team I would lead was tasked with making Workday’s financial solutions the market leader and growth engine for our expansion. No pressure, right?




Any good cook knows that the recipe for success is all in the preparation, from making sure you have the right ingredients to using the right utensils and heat sources to ensure that your finished meal isn’t burned. Similarly, when considering the level of heat that an individual can tolerate, it’s important to get the temperature right by providing a “safe space” for that individual throughout the process so that the person doesn’t lose his or her composure, overreact, or burn out. Companies can do this by watching for the warning signs that individuals are overheating and intervening with executive coaching, peer support, online learning, and other mechanisms to create that safety net.


It’s also important to ensure that those embarking on a new role employ strategies to handle the intense feelings that inevitably arise with added responsibilities. I knew I could add value to my new role, bringing my experience and perspective as a finance practitioner to the process of developing new financial management solutions. Having never led a product development organization, let alone one of the size I was being asked to lead, I also felt vulnerable and nervous at the prospect of failure. Fortunately, I had already participated in a leadership program that gave me access to an established network of executives across the company. I leveraged that network to get their outside perspective on my capabilities for the role and what they felt I could bring to the product development role, as well as to get their advice on managing a larger organization.


The second critical step I took was to create a map of people both within my new organization and across the company who could help me be successful in my new role. I can’t emphasize the importance of this step enough. I built my support map based on several criteria: whom to tap for important information, whom to talk to about priorities, with whom to brainstorm on product innovations, and so on. My support map was composed of roughly 20 people across product development, sales, marketing, and services, based on a framework I developed across three categories:

  1. Operational: People who understood and managed day-to-day operations in Workday product development and knew the priorities and key stakeholders.
  2. Strategic: People who would help me uncover new business opportunities and strategies and could help me enlist the stakeholders able to make those initiatives happen.
  3. Personal: People I could turn to for unbiased input and personal development, including both internal mentors and external coaches.


I leaned on about 80% of those people heavily for the duration of my two-year stint leading the financial management product team. One important relationship I developed early on was with the interim general manager who was tasked with helping to lead the product group’s transition to a general manager model. A longtime product team executive, she knew how to navigate the organization and was an exceptional leader with an eye for talent. During my first week as general manager, I was asked to host a meeting with an important customer. My ally guided me through the process of how to engage with strategic customers and identified other key stakeholders who should be invited to the meeting.


My goal was to build trust with people in my support network by being very transparent about what I did and didn’t know and being very open to learning as much as I could from each of them. One lesson from my experience I want to reinforce: Be very intentional about the people you select for your support team, and also be very intentional about nurturing and fostering those relationships so you give as much as you get. I’ve made it a point to still talk frequently with many members of my support network in my current role as Workday’s senior vice president of accounting, tax, and treasury.




Many people ask me if I would do my heat experience over again, knowing what I know now. The answer is unquestionably yes. It was one of the hardest challenges I’ve faced in my career, stepping outside my financial planning and analysis domain expertise to lead a 600-member technology organization 10 times the size of my previous finance team. In retrospect, I wouldn’t trade my heat experience in product development for anything. It gave me an entirely new perspective on the role that this group plays in our success as a software vendor, as well as the confidence to know I am capable of leading a large organization contributing so much to my company’s growth.


One of the products that launched during my tenure as general manager that I’m especially proud of is Workday Accounting Center, which was the result of a closely coordinated cross-functional team effort. Workday Accounting Center was built leveraging functionality across Workday Prism Analytics and financial management product development teams, but the final solution had to appear seamless to our customers. My tasks were to bring these two product teams, one focused on analytics and the other on accounting processing, together to operate as one and to create a pricing and support model that made sense to our customers.


Workday Accounting Center recently won the 2021 CODiE Award as Best Financial Management Solution, a stamp of validation that means a lot to us, as CODiE Awards are judged by a distinguished panel of peers and experts in the business technology industry. The award reflects our belief that Workday Accounting Center will be truly transformational for finance organizations, thanks to its ability to easily ingest, enrich, and transform mission-critical operational transactions into accounting.


Looking forward, I am now far better equipped to lead my teams in my current role thanks to the deep exposure I received during my assignment to cutting-edge finance technologies such as AI, machine learning, Big Data, and predictive analytics. Robert Half’s Road to CFO research notes that “digital fluency” is now table stakes for any CFO who wants to help their company navigate today’s data explosion, as is being able to articulate the benefits of cloud computing and IT investments to your board and management teams.


While I’m not advocating that you spend two years completely immersing yourself in finance technology like I did, I do recommend that you strengthen your collaboration with your IT, data science, and analytics teams to understand the why behind the numbers. I recently attended Fortune’s CFO Collaborative event on how CFOs are managing the data explosion and was struck by how many CFOs are actively managing their data science and advanced analytics teams, down to shaping the algorithms used to get the answers they need from their data. Getting comfortable with technology and creating those strong bonds with your IT teams will help you put technology to work for your organization, identifying those key inputs and market trends that can help you turn your data into a competitive advantage.


If you haven’t had the opportunity to pursue a heat experience yet, I’d encourage you to speak to your leadership about the possibility of creating one designed to hone your skills as a future CFO. And if your company hasn’t adopted heat experiences yet, create your own. Think about taking on a high-profile, cross-functional assignment; deepening your technology expertise with a certification or advanced degree in areas such as Big Data or advanced analytics; or tapping into your professional network for opportunities on relevant boards or with consultancies. Each opportunity will help you build your confidence for the next challenge; refine your leadership, collaboration, and influencing skills; and allow you to serve as a role model for the next generation of finance leaders coming up behind you.


Barbara Larson is a senior vice president in Workday, overseeing the accounting, tax, and treasury organizations. She can be reached at
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Strategic Valuation in The New Economy

By Mark L. Frigo, Ph.D., CMA, CPA

Valuation of a company has always been an important challenge for CFOs and management teams. It’s an even greater challenge today in the new economy where intangible assets drive most of the value creation and the valuation of a company.


At the Strategy, Execution and Valuation Initiative and Strategic Risk Management Lab in the Kellstadt Graduate School of Business at DePaul University, we’ve examined high-performance companies and integrated the various perspectives of our research partners, executive teams, board members, and the investor community.


The goal is to help CFOs and executive teams in making better strategic resource allocation decisions. This analysis includes reinvestments in all forms of capital, including human capital, and impacts decisions in mergers and acquisitions (M&A) and divestitures. Today, strategic valuation thinking is needed to understand how a company intends to create value and to communicate the strategy within the organization, to the board of directors, and externally to investors and other stakeholders.




SF: Let’s begin with a definition. How do you define strategic ­valuation? What are the steps in strategic valuation?


FRIGO: Strategic valuation is a qualitative and analytical valuation process, and a logical foundation for properly valuing a company (or business unit); it can be used to help develop and validate the key assumptions and value drivers (return on investment (ROI), margins, asset turns, and growth) in the traditional quantitative valuation processes and models and can be used in capital and resource reinvestment decisions. ­



Figure 1 presents a visual representation of the steps involved in strategic valuation. The process is continuous, beginning with strategy analysis, and each step in the process drives cash flow valuation and is part of an interactive knowledge-building process.


Step 1. Strategy Analysis: In this step, the Return Driven Strategy framework is used to describe and analyze the strategy of a company in terms of how the company intends to create long-term sustainable value with its business strategy. There are several questions to address in this step:

  • Targeting value-creating customer needs: What are the otherwise unmet customer needs we fulfill? For how long will the customer needs exist and how are those needs changing? How valuable and valued are these needs to our customers? These questions will help determine the profit margins and pricing power of the company that are key assumptions in traditional quantitative valuation models.
  • Targeting the right customers: Are we targeting the right customers? Do the customers have the otherwise unmet needs we’re targeting? How many customers have these needs? Is the number of customers growing, shrinking, or stagnant? These questions will help determine the potential revenue growth of the company.
  • Innovating offerings: How well are we innovating our offerings to better fulfill changing customer needs?
  • Vigilance to forces of change: How well are we managing the threats and opportunities in forces of change? How skilled are we at strategic risk-taking?
  • Shareholder and stakeholder value creation: Can we ethically create shareholder value with this offering? Will it generate the margins, growth, and ROIs that are superior and sustainable? How does the strategy create value for stakeholders (other than shareholders) who can be viewed as capital providers? (See also Mark L. Frigo and David R. Koenig, “Achieving Purpose through Innovation,” Strategic Finance, July 2021.)
  • Corporate purpose: How can we achieve both our purpose and profits in our business model?


Step 2. Intangible Asset Analysis: Here we examine how the intangible assets of a company create financial value using the lens of the Return Driven Strategy framework. We also examine how intangible assets are created, developed, and protected in the company. This step involves taking an inventory of intangible assets (remembering this is valuable since most intangible assets aren’t on the balance sheet) and then describing how intangible assets create value in the business strategy. Intangible assets can include organizational capital such as managerial skill, knowledge-building culture, and the ability to adapt to forces of change, which in the parlance of Return Driven Strategy, we call “genuine assets.” We can also use balanced scorecard strategy maps to describe how intangible assets create value.


There are key questions to address in this step:

  • How would you describe the key intangible assets of the company?
  • How would you rate the effectiveness of the company’s research and development (R&D) strategy in creating long-term financial value on a 1-10 scale?
  • What is your company’s research quotient? (See Anne Marie Knott, “The Trillion Dollar R&D Fix,” Harvard Business Review, May 2012.)
  • How would you rate the company’s knowledge-building culture on a 1-10 scale?
  • Genuine assets: Why us? Do we have the genuine assets necessary to have a competitive advantage? Are there missing genuine assets we’ll need to succeed? How can we develop, acquire, or partner to get missing genuine assets?


Step 3. Strategic Life-Cycle Analysis: In this step, we use the competitive life-cycle framework to understand when, how, and where capital should be reinvested in a company or business unit based on economic returns and capital reinvestment metrics. (For a detailed description, see Mark L. Frigo and Bartley J. Madden, “Strategic Life-Cycle Analysis: The Role of the CFO,” Strategic Finance, October 2020.)


Click to enlarge.


Here, we also analyze capital resource allocation and reinvestments in the company (or business unit) using the Return Driven Strategy and insights from investors regarding long-term value creation. See Figure 2 for the life-cycle capital allocation guide. Here are two key questions to address in this step:

  • Where should the company grow assets?
  • Where should the company shrink assets?




SF: Why should CFOs and finance organizations use a strategic valuation approach? What are the advantages of this approach?


FRIGO: Strategic valuation ensures that strategy will drive resource allocations to create long-term value. This may seem reasonable, but in my research with Joel Litman, we see many cases where management teams inadvertently let capital expenditures and resource allocation drive strategy (and therefore the direction of the company). A key question to address: How well are capital expenditures evaluated, with rigorous attention to how the capital expenditure will create long-term financial value through the strategy?


Strategic valuation helps companies avoid the common problem of allowing operating plans and budget targets (rather than strategy) to inadvertently drive capital investment decisions that work against long-term value creation and lead to short-termism (see Mark L. Frigo and Gregory V. Milano, “Avoiding Corporate Short-Termism,” Strategic Finance, April 2021). Strategic valuation is based on the basic premise that strategy should drive capital investments and resources allocation.




SF: In recent years, many companies have launched new ventures and many independent start-ups have been launched, driven by investments in primarily intangible assets. How can strategic valuation be valuable for start-ups and for new ventures in established companies?


FRIGO: Start-ups can describe how their business strategy will create financial value using the Return Driven Strategy framework and understand where the company is in the life-cycle framework. For entrepreneurial start-up or early-stage companies, strategic valuation can be a form of due diligence that builds the organizational expertise and managerial skill and sets the stage for valuation of the company in the future.


For new ventures in established companies, the strategic valuation approach offers a fresh point of view on the venture, unencumbered by bureaucratic systems of an established company. Johnson & Johnson Innovation is a great example of strategic valuation thinking in action: “Established companies can create greater value by acting more like start-ups. Given their size and capabilities, those like J&J have an opportunity in terms of strategic growth, which requires a balanced approach to organic growth and business development” (see Mark L. Frigo and Darren Snellgrove, “Why Innovation Should Be Every CFO’s Top Priority,” Strategic Finance, October 2016).




SF: How can CFOs and executive teams use strategic valuation to communicate with investors and other stakeholders? What are some investor perspectives that would be useful for companies developing strategic valuations?


FRIGO:  Jeffrey B. Madden makes a compelling case for changing the way investors analyze intangible assets and value companies in the new economy (see “The World Has Changed: Investing in the New Economy,” The Journal of Wealth Management, Fall 2019). The ideas Madden presents are useful for executive teams and boards in making M&A, investment, and divestiture decisions and for best practices in communicating how the company intends to create value and its valuation. Madden notes:

  • Valuation in the new economy requires a focus on managerial skill, knowledge-building culture, and distinct adaptive capabilities.
  • Strategic valuation can help you uncover the right analytical questions and focus attention on the key issues likely to determine future cash flow returns, value creation, and valuation of your company.
  • A company’s position on the life cycle depends on the level and change of its economic returns and its reinvestment rate especially in intangibles.
  • Value creation can occur across the entire life cycle as long as the company is doing the right thing with its capital.




SF: How can a company’s sustainability and environmental, social, and governance (ESG) strategies be reflected in strategic valuation? How can sustainability strategies create competitive advantage and create greater long-term sustainable value?


FRIGO: Companies can develop effective sustainability strategies and related metrics to communicate to investors and other stakeholders using a three-step strategic valuation process. These metrics can include carbon-adjusted ROIs as important factors in valuation and in the strategic life-cycle analysis step in strategic valuation. They should also integrate sustainability strategies and metrics in their risk management processes. Here are some other factors to consider:


U.N. SDGs: Companies can consider how the United Nations Sustainable Development Goals (SDGs) can be reflected in the strategy and reporting of the company, demonstrating long-term financial value and impact to investors (see Cristiano Busco, Giovanni Fiori, Mark L. Frigo, and Angelo Riccaboni, “Sustainable Development Goals,” Strategic Finance, September 2017).


SASB metrics: Companies can include sustainability strategies and related Sustainability Accounting Standards Board (SASB) metrics in the strategic valuation process (see Mark L. Frigo and Ray Whittington, “SASB Metrics, Risk, and Sustainability,” Strategic Finance, April 2020).


Zero-carbon strategies: Companies can use the strategic valuation process to understand and communicate how their zero-carbon strategies can drive more effective innovation, growth, competitiveness, and risk management.




SF: How can brands and reinvestments in brands be reflected in strategic valuation?


FRIGO: Companies can use the strategic valuation approach to evaluate and guide reinvestments in brands as strategic assets. In steps 1 and 2, this would involve describing the purpose of their brands and in step 3 using strategic life-cycle analysis. (For more, see Bobby J. Calder and Mark L. Frigo, “The Financial Value of Brand,” Strategic Finance, October 2019.)




SF: How does Baruch Lev and Feng Gu’s “Strategic Resources & ­Consequences Report” on the items that create a sustained economic advantage inform strategic valuation?


FRIGO: Companies can develop their own internal strategic resources and consequences report as part step 2 in the strategic valuation process. This can help the CFO and finance organization develop performance measures and incentives that are more highly aligned with long-term sustainable value creation.


SF: How can balanced scorecard strategy maps be used in the strategic valuation process?


FRIGO: Balanced scorecard strategy maps can be very useful in steps 1 and 2 of the strategic valuation process to develop the cause-and-effect linkages between intangible assets and financial value creation. The architecture of the balanced scorecard and Return Driven Strategy framework are consistent, so we can use strategy maps to describe and connect the strategic objectives and performance measures in the four perspectives of the balanced scorecard: financial, customer, internal processes, and innovation and growth.

This article is part of the Strategic Finance Creating Long-Term Sustainable Value series, which includes “Creating Greater Long-Term Sustainable Value,” by Mark L. Frigo with Dominic Barton (October 2018); “Strategic Life-Cycle Analysis: The Role of the CFO,” by Mark L. Frigo and Bartley J. Madden (October 2020); “The CFO and Strategic Risk Management,” by Mark L. Frigo and Richard J. Anderson (January 2021); and “Achieving Purpose through Innovation,” by Mark L. Frigo and David R. Koenig (July 2021).


Mark L. Frigo, Ph.D., CMA, CPA, is cofounder of the Strategy, Execution and Valuation Initiative and Strategic Risk Management Lab in the Kellstadt Graduate School of Business at DePaul University and Ezerski Endowed Chair of Strategy & Leadership Emeritus in the Driehaus College of Business at DePaul. His research on strategy, valuation, and strategic risk management is used by executive teams and boards of directors worldwide. You can reach Mark at
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IMA Life: Inspiring Integrity

By Yumi Trelut, CMA

When I was an undergraduate studying political philosophy, I repeatedly asked myself what it means to be human and how one could make the world a better place. I longed for a job that would help me contribute to more ethical business practices.


After earning my bachelor’s degree in 2012, I enrolled in business school at HEC Paris and discovered my love for financial analysis and accounting. Thanks to inspirational professors and internships, I decided management accounting was my path. Among their most important roles, management accountants guide key business decisions, as well as help protect jobs and encourage employees to act ethically.


HEC Paris began a partnership with IMA® as I was completing my degree. I discovered that the content of the CMA® (Certified Management Accountant) exam addressed areas I hadn’t explored in my schoolwork; so I decided to sit for the exam, passing Part 1 before graduating and Part 2 shortly after starting my career at Faurecia Automotive Interiors.


When preparing for the exam, I participated in group study sessions and benefited from a seminar on test-taking tips organized by my school and led by IMA staff members Nina Michels-Kim and Lisa Beaudoin. Their advice to focus on time management was instrumental to my success.


What’s more, meeting these two passionate and confident women made me want to join the IMA network. I was reminded of my grandmother, who inspired me to pursue a financial career. She served as the bookkeeper of the family business my grandfather built in postwar Japan. For me, the IMA values of integrity, generosity, and agility align perfectly with what my grandmother taught me.


Looking back at my six years working in the automotive industry, I find opportunities to use the skills I learned as a CMA on a daily basis. In addition, IMA provides a solid framework and a common voice to a diverse profession that spans nations, industries, and company cultures. IMA has helped me keep a sense of purpose and identity throughout this time, where I’ve fulfilled four different finance roles. My current role in Slovakia as an assistant plant controller has been focused on helping the plant adhere to internal rules and processes in order to improve operational efficiency and protect against potential fraud. In particular, I coach and coordinate internal stakeholders involved in the validation and booking of vendor invoices. I’m proud that we were able to significantly smooth the process in one year while also strengthening company protection. The improved efficiency allows my colleagues from accounts payable, logistics, operations, and purchasing to spend more time on value-added activities.


As an IMA member, I’m grateful we can all inspire each other. In this respect, I would love to share my passion for the Japanese tea ceremony. This art, which derives from Zen Buddhism, holds immense relevance to our contemporary management challenges by inviting us to listen, plan carefully, and build bridges between people. Thank you, IMA, for encouraging us to continuously grow as leaders and embody the values of integrity and generosity.


Yumi Trelut, CMA, is an assistant plant controller at Faurecia Automotive Slovakia. You can reach her at
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Vocal Values-Driven Leadership

By Mary C. Gentile, Ph.D.

Leaders who want to instill an ethical culture can encourage their organization’s personnel to give voice to their values.


Giving voice to values (GVV) is an approach to values-driven leadership development in business education and the workplace that draws on scholarship and practical experience navigating ethical issues. GVV isn’t about persuading people to be more ethical. Rather, GVV starts from the premise that most of us already want to act based on our values effectively and successfully. The GVV pedagogy and curriculum focus on ethical implementation: what to say and do to act on our values most effectively.


GVV encourages practitioners to find alignment between their own personal values and their employer’s corporate values. Although a particular entity or individual may act unethically at times, the core values that most organizations espouse (e.g., integrity, respect, honesty, etc.) tend to overlap with high-level universal human values or “hyper norms,” forming a common ground to which we can appeal ethically. If we want to communicate effectively despite values conflicts, then we need to identify the values that we’re likely to share with others and frame our approach in terms that appeal to that commonality.


A GVV case study describes an actual situation where a newly promoted corporate controller is pressured to adjust the publicly traded company’s quarterly report in a fashion that conflicts with accounting standards. He begins to wonder if this sort of request is standard operating procedure in the organization and whether he should wait until he’s more established in his new role before raising the ethical issue. He tests the waters with a senior colleague, who warns him against mentioning the topic with a veiled threat that if he isn’t able to handle such situations, then perhaps he shouldn’t be in his new role.


After considering his options, the controller determines that waiting will only make his position more difficult and increase the risks for him and his organization. He decides to approach the CEO, explaining his decision to kick off an organization-wide initiative to emphasize integrity and accurate reporting. The controller asks for the CEO’s support and, by so doing, creates a context wherein tinkering with the reporting will be more visible and therefore no longer feasible. The controller uses all his influence as well as problem-reframing and persuasion skills to successfully address the situation in accordance with his values.


When leaders effectively voice and enact their values, they set a tone for their colleagues. One of the deterrents to acting on our values is the misconception that we’re alone. Seeing others behave ethically provides encouragement, and the impact is amplified when the role model is in a leadership position. This also means that leaders are more likely to receive honest feedback and complete information from their team members that they need to make quality decisions.




While most agree that expressing their ethical beliefs in the workplace is important, it can be difficult to know where to start. Examples of GVV strategies and tools that professionals can use to effectively voice and enact their values include:


Speak up now or later. Sometimes we’re able to act or speak effectively immediately in the moment when we recognize a values challenge, but even if we miss that opportunity, we can often return to the issue later when we’ve had the chance to think through our response.


Buy time. If we can’t effectively address an issue as it arises, then sometimes we can request more data, input, or consideration to buy time to find an effective way to address the challenge.


Address the issue. Sometimes we can point out the values conflict directly, but other times we can find ways to address the issue without embarrassing or shaming the other person. Simply offering an alternative approach allows the individual to shift gears while saving face.


Support others. If we witness someone raising a values issue, then it can be very powerful if we offer that person support publicly and/or privately.


Identify and enlist allies. If we see a challenge, then there are likely others who feel the same way. We may not know who they are, however, if we don’t try to raise the issue. We can often make our points more effectively if we enlist well-chosen allies who bring experience, knowledge, and influence.


Think short- and long-term. When raising values concerns, try to raise both short- and long-term benefits of doing the right thing, as well as both short- and long-term costs of doing the wrong thing.


Reframe the concern in positive terms. If we’re trying to encourage others to work with us on a values concern, then it can be helpful to frame the request as “taking a leadership role” or “building a stronger, more successful organization.” Avoid framing concerns as a complaint or an accusation.


Identify and reduce risks. If we identify what’s motivating all parties and what’s at risk or at stake for everyone involved, then we can sometimes find ways to raise our concerns that will help people feel less vulnerable and solve their problems in a way that’s consistent with the organization’s values and our own.


Appeal to purpose. Support our ethical positions by focusing on the purpose and goals that we share with the individuals whom we’re trying to influence, as opposed to focusing only on our differences or playing the blame game.


Counter lowest-common-denominator assumptions. Often, assuming the worst of those around us makes us think that it may be impossible to act on our values effectively, but we can create a virtuous circle by appealing to the good in our colleagues.


Goals worth achieving aren’t necessarily easy, and we may not always succeed, but we can get better at voicing and acting on our values. GVV is about developing the skills, scripts, practices, and action plans that are likely to succeed, then rehearsing and peer-coaching them so that we develop a “moral muscle memory,” instilling the habit of behaving ethically.


Mary C. Gentile, Ph.D., is the creator/director of Giving Voice to Values and the Richard M. Waitzer Bicentennial Professor of Ethics at the University of Virginia Darden School of Business. You can reach her at
Jolene Lampton, Ph.D., CPA, CGMA, CFE, a member of IMA’s Committee on Ethics, contributed to this column.
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A Beacon of Ethical Behavior

By J. Stephen McNally, CMA, CPA

When I first joined the Villanova University crew team, our coach said he could teach us the fundamentals of rowing in an afternoon, representing about 90% of what we needed to know.


As for the remaining 10%, he said we’d need to invest a lifetime. He was right. Even now, as a master rower, I’m still learning new techniques and am constantly focused on improving my skills.


I would suggest that professional ethics (celebrated worldwide during Global Ethics Day on October 20) shares this quality. You can easily learn the basics of ethics, but mastering the subject in practice requires ongoing focus and commitment.


Most people assume that as management accounting and finance professionals, we must have professional ethics in our DNA. We’re expected to ask tough questions, identify and challenge irregularities, and always deliver the unvarnished truth. Too often, however, we face complex issues where “the right thing to do” isn’t so clear. How do we earn and maintain our well-deserved reputation for having integrity, behaving ethically, and inspiring trust?


Fortunately, IMA® members have the IMA Statement of Ethical Professional Practice. It includes overarching principles that express our values, specifically honesty, fairness, objectivity, and responsibility, as well as standards that guide our conduct—competence, confidentiality, integrity, and credibility.


Yet understanding and committing to the IMA Statement only gets us to 90%. We need to continually practice our skills and reinforce them with new learning. That is, we must factor ethical considerations into our daily decisions; integrate ethical principles into our organizations’ operations and culture; leverage peers as a sounding board; learn the stories of whistleblowers and how their companies experienced ethical lapses; and engage in webinars, live learning, role-playing, and other training opportunities.


We can also take advantage of IMA’s free, confidential Ethics Helpline to learn how the IMA Statement may apply to a specific ethical dilemma. It’s a valuable resource! After a preliminary discussion to determine the kind of ethical challenge you witnessed or are experiencing, a member of IMA’s Committee on Ethics will contact you, if you’d like, to help you understand and apply the provisions of the IMA Statement. Bear in mind, though, that the helpline isn’t a hotline to report specific ethical violations. Rather, it can give you clarity on how a particular issue relates to the IMA Statement and explain which of its principles and standards may be relevant to your situation.


Mastering professional ethics is a lifelong pursuit. It begins when you’re an accounting student and young professional, learning the fundamentals of professional ethics so you’re prepared to successfully navigate through your entry-level positions and, with hard work, pass the CMA® (Certified Management Accountant) exam. Then, as your career progresses, you must commit yourself to learning the nuances of professional ethics and to upholding the IMA Statement in thought and deed. Over time, this practice and experience—the “other 10%”—will help you become a beacon of ethical behavior within your organization.


J. Stephen McNally, CMA, CPA, is CFO of Plastic Technologies Inc. (PTI) Group of Companies and Chair of the IMA Global Board of Directors. He’s also a member of IMA’s Toledo Chapter. Contact Steve at, or follow him on LinkedIn.
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Corporate Philanthropy and Employee Productivity

By Jeremy Douthit, Ph.D.; Patrick Martin, Ph.D.; and Michelle McAllister, Ph.D., CPA

Charitable contribution matching by companies can increase employee productivity because it encourages the social norm of helping others.


Many businesses participate in charitable giving. In the United States, for example, Giving USA estimated that corporate charitable giving totaled more than $21 billion in 2019. Companies often include a charitable contribution matching (CCM) program to direct a substantial portion of their charitable giving: They offer to match employee donations to qualified charities, often at a dollar-for-dollar rate.


It’s estimated that 65% of Fortune 500 companies offer this type of compensation benefit. We conducted research to see whether CCM programs benefit organizations by motivating higher levels of employee productivity.


CCM is a type of corporate charitable contribution. It’s often portrayed as a compensation benefit to employees, but its use requires employees to give some of their compensation to charity to trigger a matching donation from the company. Thus, a CCM program joins the company and its employees in a “giving partnership.” This giving partnership is unique to CCM, and distinct from more direct forms of corporate charitable giving, because it requires the employee to contribute in order to initiate the company’s giving.


Our research suggests that this difference makes CCM a powerful tool in increasing employee productivity because it yields a greater increase in employee productivity relative to other uses of company resources. (For more information and details on the study, look for “Charitable Contribution Matching and Effort-Elicitation” in a forthcoming issue of The Accounting Review. The research paper includes the full battery of our results, the methods we used to conduct the study, and other related research on this subject.)




We examined the effect of CCM programs on employee productivity using a series of laboratory experiments. To measure productivity, we asked our employee-participants to solve as many simple puzzles as possible within a set time limit. The more puzzles an employee solved, the higher their productivity. After the time limit for solving puzzles expired, employees could choose to donate a portion of their cash earnings from the experiment to charity. When a CCM program was available, the employees’ donations were matched. When CCM was unavailable, the employees’ donations were given to charity without the added match.


Employee-participant compensation also differed between experiments. In one experiment, employees received a fixed wage. In another experiment, employees received performance-based pay where they earned their wage based on the number of puzzles solved. Across all of our experiments, regardless of how employees were compensated, productivity was higher (i.e., they solved more puzzles) when the CCM program was available. This supports the conclusion that CCM can increase employee productivity under a variety of employee pay arrangements.


CCM is also a relatively cost-effective method of improving employee productivity. When we compared employee productivity under CCM to productivity in a condition where employees were told that their company is making a direct donation to a charity, we found that CCM results in greater employee productivity than an equivalent amount of direct corporate charitable contribution. Based on these findings, we conclude that a CCM program motivates greater employee productivity than direct corporate giving.




The key to CCM’s potential in increasing employee productivity lies in its ability to create, sustain, and support beneficial social norms within an organization. A social norm is an unwritten rule that guides people’s behavior in certain settings because they believe it’s what individuals generally do in such settings. Social norms are prevalent across society but often have nuanced applications based on aspects of people’s surroundings.


For example, honesty is a common social norm that, despite what we often claim, can’t be boiled down to a single directive to “never tell a lie.” Rather, specific settings and contexts dictate whether total honesty is the appropriate norm. Most adults are aware of the importance of context for honesty and don’t apply the strict definition of honesty universally. They often tell “white lies” to avoid hurting the feelings of others when dealing with nonessential information. Practicing absolute honesty, rather than understanding honesty as a setting-specific social norm, can lead children to make (often humorous or hurtful) statements that would be socially unacceptable if made by adults. This highlights that social norms are dependent on their setting.


We hypothesized that CCM can act as an important element in the professional setting by creating a social norm of helping others. This norm implies that employees should contribute their time, resources, or effort to benefit others. Because CCM creates a “giving partnership” between the company and its employees, it’s likely that a CCM program signifies to employees that helping others is a norm that’s expected of them. In response, employees put in greater effort, which is personally costly to them but beneficial to the organization, as a means of demonstrating that they’re adhering to this seemingly expected norm.


Conversely, because direct corporate giving doesn’t require employee input, this form of contribution doesn’t uphold the social norm of helping others in the same way that CCM does. A CCM program helps establish and support a norm of helping others, which subsequently increases employee productivity to the company’s benefit.




The results of our study indicate that utilizing a CCM program can potentially provide the external benefits companies are accustomed to pursuing with corporate philanthropy as well as the additional internal benefit of increased employee productivity. Thus, for businesses that already engage in corporate charitable giving, it would make good economic sense to shift some of those contributions toward a CCM program.


While many companies already offer a CCM program, employee awareness and participation in such programs is often low. Human resources departments in such organizations can consider shifting some resources toward making employees more aware of the program in order to establish the social norm of helping others and to reap the potential productivity benefits associated with CCM.


Jeremy Douthit, Ph.D., is an assistant professor in the Dhaliwal-Reidy School of Accountancy at the University of Arizona. Jeremy can be reached at
Patrick Martin, Ph.D., is an assistant professor of accountancy at the Joseph M. Katz Graduate School of Business at the University of Pittsburgh. Patrick can be reached at
Michelle McAllister, Ph.D., CPA, is an assistant professor of accountancy at the W.A. Franke College of Business at Northern Arizona University. Michelle can be reached at
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Invest in Your People

By Paul McDonald

In the current employment market, investing in employees’ career growth can help organizations retain their top talent.


Employers find themselves facing a candidate-driven employment market in 2021, much like what we saw prior to the onset of the pandemic in 2019 and early 2020. Even though remote working—and hiring—lets you cast a wider net for candidates, there are generally more job openings than professionals looking for new work.


Because of this, competition for skilled talent is fierce, and recruitment pressure is at an all-time high. Many businesses are growing their teams, which means that top-tier job seekers often field multiple offers at once.


Even if you have a great team in place, you can’t rest easy. As more companies look to expand, they’ll try to win over your top talent if they get the chance. To prevent this, businesses need to focus on retention and invest in their people.




Research by Robert Half shows that staff retention is a source of unease in every industry, with 88% of senior managers worried about losing their best people.


Leaders are right to be concerned. Another Robert Half survey found that 38% of employees feel their careers stalled during the COVID-19 era. That figure rises to 66% for Gen Z professionals, many of whom are in their first jobs and understandably anxious to make progress. Workers experiencing a stalled career report feeling “stuck” when it comes to:


  • Salary growth (54%)
  • Career advancement (47%)
  • Ability to grow their professional network (47%)
  • Skills development (44%)


Perhaps most important in terms of retention, about one in three professionals (32%) said their shift in feelings toward work due to the pandemic is prompting them to pursue a more fulfilling job.


If your team members feel like they aren’t progressing in their career path, it won’t be long before they start looking elsewhere. Managers should seize the opportunity now to affirm or reaffirm their commitment to each employee’s professional development. That means sitting down with individuals to talk about their goals and possible obstacles and helping them chart the right path.


Here are a few things you can do right now to get the conversation started:


  1. Conduct a career-mapping exercise.
    Career maps are written plans outlining where you are in your career, where you want to go, and the specific steps you could take to reach that objective.


Everyone can benefit from a career map, no matter where they’re starting from. A talented finance director might want to plot the right course for making CFO, while a junior analyst could need help to become a compliance expert or earn their CMA® (Certified Management Accountant) certification. Every time someone takes a step forward in their career journey, they need to redraw their map so that it points to the next opportunity.


Each person on your team should have a realistic career map that takes them toward their goal. This map should include essential milestones, such as certifications or advancing to a new position. By helping your employees chart their paths, you’ll establish yourself as a partner in their future success.


  1. Provide appropriate professional development.
    Once they’ve drawn up their career maps, employees need practical support to turn those aspirations into reality. Depending on the circumstances, this could mean the company offering:


  • Certification. Tuition reimbursement programs for employees pursuing further education, certifications, or participating in other independent study programs.
  • Training. Hands-on guidance from a colleague who can impart vital skills.
  • Mentoring. Connect employees with senior professionals who can offer advice on career development.
  • Study support. Time off for exams and study, or adjustment of work responsibilities and schedule to ensure the employee is adequately supported.
  • Practical experience. Opportunities to work on the kind of assignments that relate directly to their career goals and require them to add more skills that will help them on that journey, such as stretch assignments and heat experiences. (For more on heat experiences, see “Heat Experiences: A Career Accelerator” on p. 50).
  • Networking opportunities. Chances to form connections with industry peers at in-person or virtual conferences
    and seminars.
  • Access to educational materials. Books, manuals, and subscriptions to industry journals.


Different people require different types of support at various points in their career. Recent graduates or early-career accounting and finance professionals, for instance, benefit enormously from training and certification. Mid-career employees might get a boost from networking opportunities and the chance to be mentored by one of the senior financial officers.


If you’re worried that upskilling your top performers will cause them to outgrow your organization, you’re missing the bigger picture. In one scenario, your upwardly mobile employees stick around, adding value to the company and helping with succession planning. In another, they gratefully take their new skills elsewhere and become brand ambassadors for your organization, making it easier for you to attract the next generation of talent. Hence, strategically, investing in professional development is a win-win.


  1. Establish a culture of growth.
    Organizational culture plays a crucial role in retention. If the culture is minutely focused on short-term business results, professional development can get pushed into the background. Such companies may find that they’re keeping clients happy, but their employees are stagnating.


Successful companies make growth a central plank of their culture. You can encourage this in your team by doing things like:


  • Blocking out time in each person’s schedule for professional development.
  • Celebrating as a team when someone reaches a milestone, like achieving certification.
  • Encouraging people to share their career maps and to support their colleagues in chasing their goals.
  • Actively listening to team members when they say they don’t have adequate support for their development.


It’s hard to stay focused on professional growth when dealing with tax and closing deadlines, customer demands, and other time-critical tasks. That’s why it’s always worth taking a step back and talking about why growth is so important. Remember, you aren’t just trying to improve your staff retention rates; you’re investing in a skilled, motivated team that will deliver long-term success for your organization.


Paul McDonald is a senior executive director at talent solutions and recruiting firm Robert Half and a member of IMA. You can follow him on LinkedIn.
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Tools of Trade: October 2021

By Michael Castelluccio

1. Samsung Galaxy Z Fold3

Samsung has improved the physical operations of its two foldable smartphones and also designed a new user interface, UI 3.1.1, to take advantage of the devices’ large screens and unique form factors. The goal is an intuitive user interface for foldables. Eight new functions work with many popular apps. If there’s a link you want to open, Drag & Split will let you tap and move the link to the part of the screen where you want it to open alongside your current view. Multi-Active Window lets you use up to three apps simultaneously on your screens, and Natural Window Switching lets you drag apps to rearrange the screen with a touch. You can use the Rotate All Apps feature to switch from portrait to landscape even in vertically fixed apps, and you can customize aspect ratios for all. With the Messages app, you can use App Split View to put the message list on the left and a selected conversation on the right. A button on the top of the conversation can open it to full screen. You can pin favorite apps to a taskbar and have the cover screen mirror the inside main screen. All of these functions make the foldable phones even more distinct and useful. Samsung has apparently decided the Galaxy Z Fold and Z Flip weren’t a one-off experiment. The Samsung website lists the other improved specs of the new Samsung Z Fold3 5G.


2. Samsung Galaxy Z Flip3

The new Samsung Galaxy Z Flip3 5G has a significantly improved case design and user interface with a 6.7″, 1,080 x 2,640-pixel foldable dynamic AMOLED screen. When open, the phone is 6.5″ x 2.8″ x 0.3″; closed, it measures 3.4″ x 2.8″ x 0.7″. It weighs 6.5 oz. The Qualcomm Snapdragon 888 mobile platform runs Android 11, with the new Android 12 expected soon. Memory is 8GB RAM, with 128GB to 256GB internal storage. The new cover screen is four times the size of the original Flip, and it can run six widgets. The cover screen and rear glass are Gorilla Glass Victus, and the Flip comes in seven colors.


3. Galaxy Watch4 Classic

The new Samsung’s Galaxy Watch4 Classic has Samsung’s most advanced health sensors yet. When you use the watch with a Samsung Galaxy smartphone, the BioActive sensor can measure your heart rate and electrocardiogram through bioelectrical impedance analysis (BIA). The watch offers readings for water retention, basal metabolic rate, BIA body fat percentage, and skeletal muscle. Using the phone, the watch can check blood oxygen levels and do sleep tracking. Both the Galaxy Watch4 and Watch4 Classic now use Wear OS. The Watch4 Classic has a rotating crown to scroll through notifications and menus. The watch is available in 42mm and 46mm cases with 1.2″ and 1.4″ displays and has built-in GPS, microphone, speaker, and 16GB of storage. The watch is available in black or silver.

4. Dell Portable Monitor

Dell’s first portable monitor, the C1422H, is a slim, 14″ laptop companion with USB Type-C datapower connectivity. The LED-backlit IPS panel features 1,920 x 1,080 pixels with a built-in blue light filter setting, and it weighs 1.3 lbs. The hinge base adjusts from 0° to 90°, and there’s a USB Type-C port on each side as well as buttons for brightness and power. Both USB connections can receive and pass through power. A protective sleeve is included. The $349.99 price is a little steep, but it includes a three-year advanced exchange service that will ship a new monitor the next day if you encounter a defect within the three-year warranty period.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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Cultural Communication and the Small Business

By Yvonne Barber and Manny Sicre, CMA

Understanding the language and culture of your organization is a prerequisite to business success.


Within a small organization, it’s quite common for team members to wear multiple hats. One of the biggest challenges we face as financial leaders of small businesses can be the degree of close collaboration among cross-functional teams. Translating complex financial concepts to team members who aren’t trained in accounting or finance terminology can be tough. Good communication is critical for developing a unified leadership team working toward the same goals.


It’s important to find ways to bridge any barriers that exist. When you take the time to develop cross-functional skills that facilitate communication, you can help your team deliver better results and meet any organizational goals. By being the type of small-business leader who promotes open communication, you help your team feel connected and unified by shared goals.




When we set out to bridge communication gaps, there are a few questions to ask: What are the primary goals to be accomplished? How are we accomplishing those intended goals? What is our organizational culture? Does senior management encourage an open style of communication? What are we trying to realize through our communication channels?


When leading a team of professionals within a department in a small business, you may have shared values, similar priorities, and a common language that make things easier. When you’re working with a cross-functional team, though, you’ll need to work harder to develop good, inclusive communication. Professionals across different teams often have common terminology used within their department, and some of the words or phrases used might be very similar to those used in another department yet have subtle or very different meanings.


A key ingredient to being a good communicator is a high degree of empathy. The definition of empathy is straightforward: Empathy is the ability to emotionally understand how other people feel, see things from their point of view, and imagine yourself in their place. Essentially, it’s putting yourself in someone else’s position and understanding what they must be feeling.




Given today’s global economy and the increased diversity of various workplaces, communication sensitivity from a cultural perspective has gained tremendous importance. We need to recognize and appreciate the dynamics of communication across cultures and be cognizant that another person’s cultural, economic, and financial backgrounds have a significant impact on their method of communication. There are three main issues identified as the root of intercultural miscommunication:


Language as a barrier. Approaching challenges of this nature, the key is to put forth the effort to demonstrate your willingness to communicate with colleagues using the language and technology that they understand and work with.


Cultural and departmental diversity. Begin by developing a working knowledge of all areas of the business and discover the specific priorities of each department and the metrics that might be important to them. Take the time to understand both commonalities and differences so that you aren’t using terms in a way that might confuse the communication process. Many of the metrics that may be important outside of the accounting or finance department may seem to have nothing to do with the financial ratios that are used by accounting or finance professionals, so you will need to find a way to “connect the dots” so that everyone on the team understands how their piece fits into the overall strategy for reaching the organizational goals.


Learn to be open-minded and aware of the differences among team members. One of the advantages of cross-functional teams is the innovation that can come from the diversity of members. When you create a culture of equity and inclusion, you’re more likely to develop the trust that’s needed for a successful team. This culture of acceptance will also encourage healthy conflict that will inspire innovative solutions.


Ethnocentrism. Respect for and awareness of other cultures and their respective cultural codes are critical to effective intercultural communication. According to Patrick Lencioni, in his book The Five Dysfunctions of a Team, the absence of trust is one of the primary conditions that can cause teams to fail. Good communication builds trust, improving the team’s ability to problem-solve and resolve conflict.


By establishing trust, a fear of conflict can also be addressed. Healthy and respectful debate within a cross-functional team can produce innovative solutions to problems or obstacles the organization may face. When you develop an environment of trust and healthy debate, your team can unite and commit to reaching common goals that are specific and clearly communicated. You will need to foster an attitude of mutual respect to achieve this. Cross-functional teams are often derailed because members don’t appreciate or respect the tasks or responsibilities of members outside of their department.




There are some key differences in communicating within small and midsize organizations and large organizations. As a rule, communication in a larger organization becomes less frequent, with a greater reliance on memos, network communication, instant messaging, emails, and morning meetings. But if you’re looking at communication within a small to midsize company, strong communication becomes even more critical. Given fewer employees and smaller facilities, lack of communication can lead to gossip and rumors, which may have a significant negative impact on employees’ morale.


As a team, small business leaders need to hold one another accountable for results and work together to overcome any challenges. This means that everyone needs to be willing to ask for help or resources when needed. As a leader, the difference between success and failure can often be traced to a willingness or unwillingness to admit vulnerabilities and ask for help when the success of the team requires it.


You will also need to examine existing team dynamics when developing a plan to foster good cross-functional communication and collaboration. In addition to differences between departments that might contribute to cross-functional challenges, individual personalities and behaviors can strongly influence the success of a team. Being vigilant about blocking personalities who are either overly outspoken and dominant or relentlessly negative is key to preserving space for valuable ideas.


Once you have taken the time to learn about the team and the individual departmental priorities and developed a healthy collaboration style, you will have laid the foundation for good communication. When you understand the language and the culture of your audience or team, you’re in a better position to draw parallels to concepts they will appreciate when discussing complex accounting concepts.


Yvonne Barber is a fractional CFO/controller, small business specialist, and a member of IMA’s Atlanta Chapter. She can be reached at
Manny Sicre, CMA, is a full-time lecturer at the University of Miami, Coral Gable campus. He’s also a member of IMA’s Small Business Committee. He can be reached at
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Excel: Clean Data with Get & Transform

By Bill Jelen

One of the more powerful but overlooked data-cleansing tools in Excel can be found in the Get & Transform Data group on the Data tab in Excel. Each of these icons leads to the Power Query Editor, a data cleansing tool used in Power BI, Power Automate, and Excel.


Any cleansing steps that you perform with the Power Query Editor are saved as a procedure that can be run again the next time that you have similar data. For example, you might download a report each month that requires a half dozen cleaning steps. If you do those steps with this month’s file and save the list of steps in a workbook, you can easily run those same steps next month.


The Power Query tools weren’t developed by the Excel team. They were developed by a SQL Server team at Microsoft. When you first use the Power Query tools, it might feel like you’re in an alternate universe. Instead of “Text to Columns,” the equivalent command in the Power Query Editor is called “Split Column.” But if you open the Split Column drop-down in the Power Query Editor, you’ll see many extra options that are better than those in Excel.


This month’s article highlights some of the extra features that are in the Power Query Editor but not easy to do in Excel.




All transformations that happen in Power Query are nondestructive. The original data in the Excel worksheet remains unchanged. The “changes” that you make using Power Query are saved as a set of instructions. When you finish cleaning data in Power Query, the instructions are run in memory, and the output is a new worksheet with the cleaned data.


To get started, format your data as a table either using Ctrl+T or going to Home, Format as Table. Alternatively, you can use a named range for your data. Power Query only works with either a table or a named range.


On the Data tab, look for the Get & Transform Data group. In older versions of Excel, choose From Table/Range. In the latest version of Microsoft 365, this command was recently renamed as From Sheet (see Figure 1). Select one cell in your table (or the entire range if you’re using a named range) and select From Sheet on the Data tab.



The first 1,000 rows of your data are shown in the Power Query Editor. As shown in Figure 2, the Power Query Editor has a variety of tools on a ribbon, with tabs for Home, Transform, Add Column, and View.




Here are a few of the tools and features in Power Query that are better than their counterparts in Excel.


Fill Down: If you have a column that’s in outline form—for example, “East Region” is in cell A2 followed by blank cells in that column until the start of “Central Region” in row 200, followed by more blanks until “West Region” in row 500—you can quickly fill in the blanks using Fill Down.


Remove Rows: If the incoming data is double-spaced, the Remove Rows menu has an option to Remove Alternate Rows. The command is flexible, allowing you to specify something such as keep row 2, delete the next three rows, then keep one row, and follow that pattern through the data.


Split Column: This command allows you to specify that the split should happen at the change from text to numeric characters or vice versa. If you have part numbers like A123, BC234, or DEF111, this built-in split command will handle it easily.


Extract menu: This menu lets you choose all text after a delimiter, before a delimiter, or between two delimiters.


Information menu: Excel has functions to detect ISEVEN, ISODD, and SIGN, but you’ll find easier-to-use tools in the Information menu to perform the same actions.


Index column: You can quickly add an index column starting from either 1 or 0.


Some other useful commands not shown in Figure 2 are the unpivot command as well as the abilities to split a cell at each delimiter and to split the data to new rows.



Just like in Excel, many of the popular commands can be found by right-clicking on a column heading. If you’re used to Excel, using the Power Query Editor should be easy to figure out.




As you clean your data, a list of the applied steps you’re taking is created on the right side of the screen. Keep an eye on this list. If you make a mistake, use the “X” next to any step to delete it and try again. This panel provides an audit trail and the ability to look back at the interim results after any step.


When you’ve finished cleaning your data in Power Query, use the Close & Load command on the Home tab. Excel will insert a new worksheet with the cleaned version of your data.


The real benefit is the next time you update the original data, you can use the Refresh All command on the Data tab to clean the data again.


Bill Jelen is the host of and the author of 61 books about Excel. He helped create IMA’s Excel courses on data analytics and the IMA Excel 365: Tips in Ten series of microlearning courses. Send questions for future articles to
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Data Fabric Architecture

By Michael Castelluccio

Research and advisory company Gartner posted its “Top 10 Data and Analytics Trends for 2021” earlier this year, and there were some interesting shifts.


The top four influences accelerating change are focused now on small and wide data instead of Big Data resting in silos or data lakes, and data fabric was described as necessary architecture to support data analytics.


Gartner listed the need for smarter, more responsible, scalable AI as the number one trend. And as more is demanded of AI systems, it explained, the greater the need will be to scale the technologies supporting AI. That will mean the ability to operate with “less data via ‘small data’ techniques and adaptive machine learning.” Both of these will require “composable data and analytics” (trend number two). By composable, it means “to use components from multiple data, analytics and AI solutions for a flexible, user-friendly and usable experience that will enable leaders to connect data insights to business actions.”


Trend two leads directly to trend three: data fabric as the foundation. This is the architecture needed to support the new composable data and analytics and their components. Gartner claims that data fabric could reduce the time for integration design by 30%, deployment by 30%, and maintenance by a significant 70%.


And finally, trend number four calls for a shift from Big Data to small and wide data. Instead of relying on warehouses of Big Data, small and wide data solves “increasingly complex questions on AI and challenges with scarce data use cases…. Small data, as the name implies, is able to use data models that require less data but still offer useful insights.”


Gartner predicts these four trends will become significantly disruptive over the span of the next three to five years.




Thankfully, innovators have recently refrained from acronyms and dense technical phrasings in favor of metaphorical names for their efforts. The word “fabric” is a clue and also a way to remember what a data fabric is and does.


Gartner defines data fabric as “a design concept that serves as an integrated layer (fabric) of data and connecting processes. A data fabric utilizes continuous analytics over existing, discoverable and inferenced metadata assets to support the design, deployment and utilization of integrated and reusable data across all environments, including hybrid and multi-cloud platforms.” A weave of many threads then creates an interwoven warp and weft of data and tools.



Two of the advantages of the design are agility and ease of use, even for those who aren’t data scientists. Gartner offers an example very relevant to current supply line problems due to external forces like COVID-19. “A supply chain leader using data fabric can add newly encountered data assets to known relationships between supplier delays and production delays more rapidly, and improve decisions with the new data (or for new suppliers or new customers).” According to Ehtisham Zaidi, Gartner’s senior director analyst, data fabric “allows less technical users and subject matter experts to find and integrate data themselves without relying on expert data engineers and data system experts.”


Using a comparison with self-driving cars, Gartner describes two working scenarios for data fabrics. The first is a parallel to the autonomous car that runs with a fully attentive driver and then autonomously with a minimum or no intervention by the driver. Data fabric works in both modes. “It monitors the data pipelines as a passive observer at first and starts suggesting alternatives that are far more productive. When both the data ‘driver’ and the machine-learning are comfortable with repeated scenarios, they complement each other by automating improvisational tasks (that consume too many manual hours), while leaving the leadership free to focus on innovation.”


InformationWeek adds a different perspective on the value of data fabrics in “Why You Need a Data Fabric, Not Just IT Architecture.” It’s needed because it completes a necessary set of controls. “Data fabrics offer an opportunity to track, monitor and utilize data, while IT architectures track monitor and maintain IT assets. Both are needed for a long-term digitalization strategy.”


The data fabric market in the United States is estimated at $424.9 million this year, and the global data fabric market is expected to reach about $3.7 billion by 2026. If your AI needs are expanding, it’s definitely worth a look.




Gartner’s white paper Data Fabrics Modernize Data Integration is available online. Hitachi Vantara offers the e-book Data Fabric for Dummies for download. It includes chapters on how to effectively build and deploy a data fabric, how to optimize data access and support compliance, and how to modernize a data fabric with DataOps.


Michael Castelluccio has been the technology editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at

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Taxes: Taxpayer Relief from Net Operating Loss Changes

By J. William Harden, Ph.D., CPA, ChFC, and David R. Upton, Ph.D.

The CARES Act modifies the carryback rule for net operating losses and makes them fully deductible as they were before the Tax Cuts and Jobs Act.


One of the major tax benefits of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 (P.L. 116-136) was the modification of the net operating loss rules. In particular, it brings back the temporary ability to carry back losses from certain years and makes net operating losses potentially fully deductible for tax years beginning in 2018, 2019, and 2020.


Previously, the Tax Cuts and Jobs Act (TCJA) of 2017 (P.L. 115-97) had eliminated the ability of most taxpayers to carry back net operating losses from years beginning in 2018.


While exceptions were made for some farm and insurance companies, most taxpayers would only have been allowed to use net operating losses in future years. A net operating loss generated after this change would, however, have an unlimited carryforward. Before this change, most taxpayers could carry back a net operating loss to the two prior tax years and then carry forward any remaining net operating losses for 20 years.




The CARES Act has modified the carryback rule for net operating losses generated in tax years that begin in 2018, 2019, and 2020. A net operating loss generated in these years can be carried back for five years. Those losses that aren’t used in prior years will still have the benefit of an unlimited carryforward. The law change didn’t provide an option for taxpayers to elect a shorter carryback period if a five-year carryback isn’t preferred.


Thus, losses would need to go back the full five years if an election to forgo the carryback wasn’t made and there was income that could be offset in that fifth year prior.


This change should be quite helpful to taxpayers who had earnings drops in these years. The carryback can result in a current return of taxes when the net operating loss is applied to the earlier tax year’s income. This is in stark contrast to a carryforward that doesn’t generate a tax benefit until a future year generates income that it can offset. Additionally, the ability to utilize a net operating loss carryback may be particularly cost-effective for corporations. Since 2018, corporations have faced a flat 21% tax rate. Prior to this, they faced progressive rates in which some income might be taxed as highly as 39% on the margin.


For example, a corporation generates a $100,000 net operating loss in 2020 but has been highly profitable in all prior years and will be in subsequent years as well. The ability to carry back for five years will reduce 2015 corporate income by the $100,000. Assume that 2015 taxable income was originally $250,000. The reduction of $100,000 due to the carryback results in a tax refund of $39,000 due to the 39% bracket affecting this level of income.


Were this only allowed to go back to 2018 or only be carried forward, the tax savings would be limited to $21,000 due to the flat 21% corporate rate. Thus, the ability to carry back to pre-TCJA years has resulted in an additional $18,000 of refund.




Given the March 27, 2020, enactment date of the CARES Act, there was a potential timing issue with respect to choosing to forgo a carryback for years 2018 and 2019. To mitigate this, the CARES Act allowed additional time to forgo carrybacks from years 2018 or 2019. The period to make this choice was extended until the due date of the return for the first tax year that ends after the enactment date.


This includes the extension period of the return. Thus, a calendar year taxpayer (normal due date of April 15) who extended the return for six months would have until October 15, 2021, to make the election for 2018 and 2019. For a net operating loss generated in 2020, the election to forgo would have to be made by this date as well.


This occurs because, in general, a net operating loss election to forgo must be made by the due date of the return, including extensions. If the election isn’t made to forgo the carryback, the taxpayer would be expected to carry back any net operating loss generated in these years. (See Revenue Procedure 2020-24.)




Taxpayers usually file for net operating loss carryback benefits using the Application for Tentative Refund (Form 1045 for individuals and 1139 for corporations). These forms normally need to be filed within 12 months of the end of the year in which the net operating loss is created, which caused issues with using these forms for 2018 net operating losses.


The Internal Revenue Service, however, issued Notice 2020-26, which extended this time window by an additional six months for 2018 carrybacks. The benefits of a net operating loss carryback can also be claimed on an amended return (Form 1040-X for individuals and 1120-X for corporations).


The time limit for these forms is generally three years from the due date of the loss year. This latter method is now the only option for those who missed the tentative refund form deadlines.




The CARES Act also changed the rules regarding limiting net operating loss deductions to 80% of income. The TCJA created this limit of 80% of income that could be offset in future years by net operating losses generated beginning in 2018. Thus, an entity that had in a future year income of $100,000 before any net operating loss deduction and significant net operating loss carryforwards from years after 2017 would only be able to offset $80,000 of that income even if larger net operating loss carryforwards existed.


The CARES Act eliminated this 80% limitation for tax years that begin in 2018, 2019, and 2020. The limitation is reinstated for tax years that begin after 2020 and would apply to any carryovers that were generated beginning in 2018 or later.


For net operating loss carryforwards that were generated in years prior to 2018, the 80% limitation still wouldn’t apply. So, the effect of the CARES Act is to allow 2018, 2019, and 2020 net operating losses to be able to 100% offset income, but only in 2018, 2019, and 2020.


After 2020, the 80% limit is applied for net operating losses from 2018 onward as per the TCJA. Net operating losses from before 2017 can fully offset income in future years, either before or after the TCJA or CARES Act.


While it’s always preferable to avoid losses, for those businesses that incurred losses in recent years, the CARES Act’s changes to the net operating loss rules provide some welcome relief.


© 2021 A.P. Curatola


J. William Harden, Ph.D., CPA, ChFC, is an associate professor of accounting at the Bryan School of Business and Economics at the University of North Carolina Greensboro. He can be reached at
David R. Upton, Ph.D., is an associate professor of accounting at the Bryan School of Business and Economics at the University of North Carolina Greensboro. He’s also a member of IMA’s Piedmont Triad NC Chapter. David can be reached at
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New MAQ Issue Is Online

By Christopher Dowsett, CAE

The latest issue of Management Accounting Quarterly (MAQ) is out now.


It includes a survey of management accounting systems and performance measurement at Lean companies, a review of the research and practices around real earnings management, and an Excel exercise on using simulation in management accounting.


IMA® members can find the current and past MAQ issues here.


Christopher Dowsett, CAE, is editor-in-chief/vice president, Publications, at IMA. You can reach him at
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Vrije Universiteit Amsterdam’s CMA Program Turns 30

By Alain Mulder

September 2021 marked the 30-year anniversary of the CMA® (Certified Management Accountant) program at the Vrije Universiteit Amsterdam (VU) in the Netherlands.


To commemorate the anniversary, IMA® and VU organized a celebratory event for September 16, 2021. Elbert de With, the program’s coordinator in 1991, was presented with the 2021 Leading Influencer for the Management Accounting Profession Award, and Robert H. Mars, a board member of IMA’s Amsterdam affiliate in 1991, was recognized with the IMA Service Award.


Elbert de With (left) with Brigitte de Graaff, a member of the IMA Global Board of Directors, and Alain Mulder, senior director of Europe operations at IMA.


The development of VU’s CMA program began in December 1989, with support from Lou Traas, founder and coordinator of the Dutch Registered Controller program at VU, who believed that the Netherlands was in need of an internationally oriented program. The program launched in September 1991 with approximately 30 individuals taking review courses for CMA Parts 1 and 2 (at the time, the CMA exam had four parts).


The decision of the VU to focus on an international program was well-timed, coming right before the European single market came into existence in January 1993. With that, the need for finance professionals with a global perspective became particularly urgent. There were plenty of large companies in the Netherlands, such as Shell, Unilever, and Philips—and many with subsidiaries in the United States. Having an international perspective proved to be of vital importance for Dutch financial professionals. The CMA program provided these professionals with new expertise that allowed them to be competitive globally in the field of financial analysis.


Alain Mulder is Amsterdam, The Netherlands-based senior director of Europe operations at IMA. You can reach him at
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Books: Becoming More Agile

By Kimberly Todorovich, CMA

Professionals who emphasize agility in market ­intelligence, decision making, and execution give their organization a boost.



The Agility Advantage: How to Identify and Act on Opportunities in a Fast-Changing World by Amanda Setili is a well-written, well-paced explanation of how organizations of any size can grow and thrive by being agile. Agility is the ability to quickly identify and capitalize on opportunities within the core business that can drive growth, productivity, and efficiency.


Three key facets of agility are market intelligence, decision making, and execution. Market agility involves finding new opportunities with existing customers and products to increase demand. Decision agility involves creating strategies to take advantage of new opportunities by maximizing growth and minimizing risk. Execution agility involves motivating your employees to adopt the new strategic direction, employing your best tactics, and experimenting to find out what works and shedding what doesn’t.


The book explores how organizations can become complacent and offers advice on how to counteract that complacency by truly getting to know your customers and other stakeholders. A stakeholder-driven focus with a growth mind-set that’s open to change allows a company to find and retain its competitive advantage. This leads to growth and innovation. Employees at all levels, from the CEO and CFO down, need to interact with their customers and other stakeholders to truly understand them and react nimbly to their needs and wants.


The Agility Advantage provides examples of companies of all sizes from a range of industries that have succeeded by being agile and explains why others have failed. Thinking outside the box is critical to finding new and unique opportunities and avoiding stagnation. Setili uses real-world case studies to explain the principles of agility and show how these companies served stakeholders more effectively and found new markets or expanded existing ones.


In the future, many industries will continue to see more competition and commoditization of their products and services. Companies that can adapt and find niches in these markets will survive. The Agility Advantage is a good read for management accounting and finance professionals and anyone wanting to discover what really drives business development and how to adapt quickly to better serve their stakeholders.


Kimberly Todorovich, CMA, is a cost estimating specialist at Magna Seating headquarters in Novi, Mich., and a member of IMA’s Detroit Chapter. You can reach her at
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Welcome, New CMAs: August 2021

By Dennis Whitney, CMA, CFM, CAE

The following IMA members became CMAs between August 1 and August 31, 2021.


For more information on CMA certification, visit


Tarek Hassan Abd Elkader

Ahmed Sami Mohamed Hashem Abdelatti

Ahmed Elsayed Abdelnaim

Mohamed Abdou Ahmed Abdou

Amr Abdelrahim Abdullah

Ahmad Said Abu Dalleh

Sara Majed Sabri Abujuma

Marah Mustafa Abulfeilat

Eslam Ahmed Abul-Hassan Makhlouf

Odayy M. Aburmais

Kalpavalli Adavikolanu

Aditi Agarwal

Akshat Agarwal

Mohit Agnihotri

Abhishek Agrawal

Charlie Glenn Saulog Agripa

Abdelrhman Hussein Mohamed Ahmed

Mohamed Abdelhamid Khalil Said Ahmed

Shakil Ahmed

Aya Hossam Ahmed Reda

Mohammad Mustafa Salameh Al Karowf

Faisal Alalaiwi

Mohammed Nasser Soliman Alamri

Abdelrahman Mohammad Said Tahsin Alaskar

Abdulaziz Albassam

Nathaniel Balon Alcotas

Mohammed Aldrees

Duaa Ebrahim Alhamad

Haifa Abdulaziz Alhumaid

Ibrahim Abdaljaleel Ali

Samar Ali Elsayed Ahmed Ali Andria

Rayan Abdulrahman Alkhunani

Alicia Ann Allen

Kristi N. Alles

Afnan Almahdi

Rabab Zakaria S Almeer

Daniel Almeida Couri Ribeiro

Abdu Alah Attallah Alnawaiseh

Loai Fawzi Aloumi

Ra’ed Alsafadi

Ahmad Alsagarat

Abdullah Alsalman

Alanoud M-S-A-N Alsanafi

Qais Al-Tarazi

Nasri Tahsin Jad Ammari

Guanfei An

Joshua Aaron Anderson

Parker Anderson

Sathya Sivagurunathan Andivel

Angela Anka

Sai Sankeerth Naga Pavana Srinivasa Annamraju

Takayoshi Aoki

Marivic Domincil Arcilla

Kalen Arugay

Abin Augusthy

Samuel Ausdemore

Sahithi Avva Balaji

Ousama Omar Awad

Emad Awadallah

Ghaida Mohammed Ayidh

Anna Ayson

Yazen Anis Ayyad

Muhammad Azeem

Mohammad Yama Azimi

Ruud Van Baal

Daliya Babu

Hussein Mahmoud Bachir

Nadine Backleh

Dongling Bai

Hui Bai

Lijie Bai

Yuzhu Bai

Ammar Baig

Daniel Vittori Baker

Dhakshay Balachandran

Lakshmy Balasubramanian

Alina Balonuskova

Lijuan Bao

Lilian Baraki

Tahereh Bastani

Brandon A. Beeman Knepper

Mary Jane Bolima Belizon

Kelly Bennett

Portia W. Benson

Peter Berardi

Peter Bergstrom

Jacob Thomas Bering

Barry Bandiola Bernasol

Josef Theodorus Bervoets

Erica Besso

Vinayan Bhasurendrakurup

Chandranath Bhattacharya

Okan Bilen

Dan Carlos Tarun Binag

Huiyu Bondehagen

Janine Marie Bongot

Tyler Scott Borst

Charbel Youssef Bou Mrad

Alessandro Bovolenta

Jonathan Braddock

Matthew Brodowski

Michiel Brouwer

Janet Brown

Paul Brown

Lashonda Bunker

Thomas Buys

Julian Eduard Bayani Cabarle

Jiuxian Cai

Shaoshan Cai

Yan Cai

Yue Cai

Zhen Cai

Joanna Carpo Calayag

Brooke Antonia Campos

Hong Cao

Maoxi Cao

Xueyun Cao

Rodrigo Casiano Jr.

Benjamin Chace

Saleel Chakkarakkadan

Grace Shirley Chan

Him Lok Chan

Hui Ping Chang

Chubin Chen

Dan Chen

Gaohong Chen

Hao Chen

Hui Chen

Huijie Chen

Jie Chen

Lei Chen

Liyi Chen

Lu Chen

Min Chen

Mingyan Chen

Ning Chen

Peiqi Chen

Peng Chen

Ruilin Chen

Shuang Chen

Siqing Chen

Wei Chen

Xiaoshan Chen

Xiongwei Chen

Xu Chen

Yan Chen

Ying Chen

Yuqing Chen

Zhiying Chen

Zhiyu Chen

Zhiyue Chen

Xiaomeng Cheng

Yanru Cheng

Juichiao Chin

Eunho Cho

Kyuha Cho

Yuen She Choy

Qihua Chu

Rui Chu

Travis Colf

Jerrie Mae Abuya Conde

Joshua Consier

Toni Lee Coomer

Earaluz Alaina Cubacub

Hongxin Cui

Xueyin Cui

Neha Cyriack

Qing Dai

Yuelin Dai

Bao Ngoc Dang

Haya Dar Abu Qare

Arianne Bondoc David

John P. Davis

Gerrit Jan De Heer

Eunice Claire Domingo Dela Cerna

Patricia Nicole Diaz Dela Cruz

Brandon S. Delrow

Juan Deng

Skylar Dennerlein

Mohamed Samy Ibrahime Desouky

Ajinkya Dhabe

Ariel Maximiliano Diaz

Michele Dicuonzo

Moling Ding

Qilu Ding

Rong Ding

Yingying Ding

Matthew Ryan Dixon

Qian Dong

Tatiana Doubko

Colleen Mairead Dour

Krijn Jan Driessen

Stanzia D’Souza

Congcong Du

Cathy S. Duffy

Derrick Durbin

Sumit Kumar Dutta

Hannah Willis Echeverria

Maya El Khatib

Sahar El Kobersy

Ahmed El Sayed Abd Eltawab

Jad Elattar

Mohamed Eltabie Mosaad Elbana

Mohamed Belal Ragheb Elbaz Ghonim

Ahmed Hassan Elfeshawy

Tosha Nicole Ellis

Ahmed Fayez Elshawadfy Abdelbaset Abo Elkhier

Anne Zoe Rose Gilbuena Enclunar

Jobelle Nicole Primavera Enriquez

Salman Esaf

Donna Belle Evangelista

Matthew Evans

Jonathan Everette

Sherry Everhart

Feili Fan

Yanhui Fan

Mengyuan Fang

Shengyuan Fang

Mohamed Ali Farag

Kellie Farber

Carlos A. Faria

Michael Farneti

Mamdough Magdy Saad Fayek

Tao Feng

Xinyi Feng

Yuancheng Feng

Jordan Ferguson

Marissa De Los Reyes Ferrera

Robert Filipp

Tomas Finol

Jeremiah Fisher

Jithin K. Francis

Jidi Fu

Jinghan Fu

Junke Fu

Liping Fu

Arianna Fuller

Mark Alan Fuller

Ka Kit Fung

Rogerio A. Furlan

Huihui Gao

Ling Gao

Mengsi Gao

Pan Gao

Wenjing Gao

Tyler Gardiner

Kevin D. Gardner

Steven Gearhart

Antony George

Christopher Julian Ghansam

Harikrishnan Gokuldas

Elena Golden

Shanshan Gong

Wonjun Gong

Yanping Gong

Ying Gong

Kellen Gove

Hugh G. Graham

Kyrsten Donielle Gray

Jiebing Gu

Xinyue Gu

Yining Gu

Qianqian Guan

Hongjie Guang

Jonathan Emile Guel

Jiayu Guo

Jing Guo

Minhua Guo

Yuhan Guo

Yulu Guo

Uttarayan Gupta

Jinyu Han

Yan Han

Yanjie Hao

Josh Harrel

Erik Harris

John Benjamin Harris

Luke S. Harris

Yehia Zakaria Abdeltawwab Hassan

Chunru He

Chunyang He

Haoxian He

Jiangyun He

Qian He

Rui He

Yaran He

Michael A. Henry

Jarod Hogan

Olivia Holbert

Kodanda Ram Honappa

Dongchun Hong

Shuling Hong

Derek Hopper

Jun Hou

Yipeng Hou

Shihhao Hsu

Bing Hu

Jialin Hu

Ning Hu

Qiong Hu

Xiaosi Hu

Yuancui Hu

Jiahui Hua

Fusheng Huang

Guohao Huang

Jinmeng Huang

Lixiang Huang

Ruofang Huang

Shengnan Huang

Yijie Huang

Yilin Huang

Ying Huang

Yongmei Huang

Yunxiang Huang

Ziyang Huang

Zhaojun Hui

Olga Alexandra Iancu

Ammar Ilyas

Karen Anne Madulid Inguengan

Vishal Rajaraman Iyer

Aman Shrenik Jain

Jyoti Jain

Piyush Jain

Hoisuk Jeong

Guilian Ji

Menglian Jia

Zhen Jia

Chendi Jiang

Lingzhi Jiang

Sai Jiang

Yue Jiang

Yun Jiang

Mohammad Ali Jilani

Jing Jin

Linling Jin

Miao Jin

Shuangshuang Jin

Xiaohang Jin

Sincy John

Sneha John

Brian Charles Johnson

Daniel Johnson

Landon Tyler Jones

Chandra Prakash Joshi

Cedric Castillo Josue

Jack Joswick

Jayashree K. N.

Muhammad Kabir

Ravinder Singh Kainth

Mubthaseem Kakkottakath Valappil

Nidhi Rao Kalmadi

Mufeed Kamil

Shinichiro Kanaya

Yanna Kang

Rand Hazim Karaki

Hafil Karayil

Jeremy Kaufman

Parto Kavoosian

Kushal Kedia

Bonnie B. Kennedy

Rami Khalaf

Adeel Ahmed Khan

Nawaf Khayat

Tiko Kheladze

Byung Gil Kim

Chong Tae Kim

Brandon Michael King

Danielle Lagdameo King

Jacob Klein

Maikel Martinus Klein Swormink

Adam Kleinman

Roy Knaven

Muataz Hassan Komi

Jiaming Kong

Jie Kong

Zhiying Kong

Kenneth R. Konicki

Steve George Konnully

Devon Doll Korff

Michael James Kostrewa

Alexander Kudinov

Beena Kulkarni

Kiran Srinivas Kulkarni

Jiah Kwon

Leigh Anne Cook La

Alexa-Rose Jimenez Laduan

Patrick Shaughnessy Lake

Deepak Lakhera

Swarna Lakshmi

Ruifang Lan

Tingyu Lan

Michael Lassaline

China Lau

Kara Law

Olasunmbo Lawal

Yaxin Le

Seung-Chul Lee

Jesssica Leggett

Xueqin Lei

Kristine Lemanski

James Lentz

Chuanchuan Li

Chunmin Li

Dandan Li

Fan Li

Haiping Li

Hao Li

Jia Li

Jianming Li

Jing Li

Juanjuan Li

Junbo Li

Lishi Li

Mengchen Li

Mengqiong Li

Qinyuan Li

Qiyu Li

Rong Li

Rongrong Li

Rui Li

Ruibing Li

Shanglun Li

Shanjun Li

Shaoting Li

Shengbin Li

Shiwen Li

Sifan Li

Simin Li

Wei Li

Xiaoli Li

Xing Li

Xinyong Li

Xuan Li

Yangyang Li

Yanli Li

Yijia Li

Yuanwenjie Li

Yuge Li

Zhaoqin Li

Zuanfei Li

Cuifeng Liang

Jing Liang

Wuxie Liang

Hsuan-Tzu Liao

Ning Liao

Haijin Lin

Jing Lin

Wenbin Lin

Xinge Lin

Yiyang Lin

Yuan Lin

Chang Liu

Chao Liu

Cuiqing Liu

Dan Liu

Dandan Liu

Danni Liu

Deqian Liu

Fang Liu

Hongni Liu

Jialin Liu

Jiao Liu

Kai Liu

Li E Liu

Lihong Liu

Lu Liu

Lulu Liu

Meng Liu

Mingchang Liu

Qianyi Liu

Qin Liu

Qiuhong Liu

Tianrong Liu

Ting Liu

Xiaojing Liu

Yelin Liu

Yizhuo Liu

Yuzhen Liu

Zhaojun Liu

Jhoanna Ramirez Lorenzana

Nichole Anne Loritsch

Chengliang Lu

Hai Lu

Jiao Lu

Junjie Lu

Qingping Lu

Suhong Lu

Xueyan Lu

Yanjing Lu

Min Luan

Ruben Ludwig

Dandan Luo

Linfen Luo

Yameng Lv

Michael Francis Lynch

John Amutha Selvam M

Fengxia Ma

Huiqun Ma

Xiaoxu Ma

Yanqun Ma

Yongliang Ma

Yu Ma

Samantha Maas

Daryll Joyce Maddara

Tijs Jan Maes

Bashar Ahmad Fuad Mahameed

Anjana Maheswar

Hisham Qablan Mahfouz

Samir Ahmed Mahmoud Osman

Alec Main

Sebastian Maju

Yasir Munir Malik

Oleg Maliutiak

Martin Yongzon Manalo

Methyl Magboo Manalo

Ahmed Kamel Abdelaziz Mansour

Akash Prakash Manwani

Qi Mao

Williard Alcaraz Maquirang

John Kenneth Alla Maralit

Thomas Marattil Thomas

Regina Masciotra

Irin Ann Mathew

Sarveshkumar Harikrishna Maurya

Andrew McCarthy

Tushar Mehta

Jeremy Menard

Shang Meng

Xuexia Meng

Ziqi Meng

Grace Guishuang Li Menze

Yang Mi

Lu Miao

Ioana Michka

Timothy Millea

Caleb Jansen Miller

Natalia Mintchik

Xuejun Mo

Devarsh Modi

Ahmed Fekry Abdelmotaleb Mohamed

Mohamed Abdelhady Mohamed

Fahad Salim Mohammed Alfarsi

Melissa Molinski

Lisa M. Morgan-Klepeis

Allan Morris

Jina J. Morris

Nicholas Morrison

Ranjita Morton

Xiaozhen Mu

Sari Mufti

Arifa Mulla

Sherri Mundo

Tinghe Na

Samer Ghazi Naffaa

Alexander Nageli

Arun Gopalakrishnan Nair

Mariam Tarek Najuib

Sugantha Nallambakkam

Siriwetti Mohottige Muditha Hasthila Nanayakkara

Sreelalitha Nandigama

Mohammed Naseef

Hossam El-Din Nassef

Prabodh B. Nayak

Kirk Nebel

Don Needs

Michael R. Nelson

Taylor Nelson

Yunbo Ni

David Nieto-Heurtebis

Hong Niu

Zachary Nix

Samuel Aaron Nordquist

Bruce Obog

Willemijn Odekerken

Hiroaki Okabe

Karim Fadl Abdelsalam Mohamed Omar

Razel Boyore Ompoc

Devan O’Neil

Justin Joe Ong

Michel Oppermann

Manfred Ortmaier

Abdelrhman Heshmat Osman

Mohammad Mahmoud Oukal

Akin Oztuna

Elaine Feranze Pagdilao

Jacob Page

Cara Palidar

Guoming Pan

Huijun Pan

Jie Pan

Jingwen Pan

Sneha Paravila Saji

Himanshu Pareek

Abdul Naser Parkar

Katrina Isabel Caterial Pasia

Kata Pasztor

Chirag Kishor Patel

Mitesh Patel

Chandrashekhar Patil

Samantha Savia Pearl

Lonnie Pederson

Tiantian Peng

Xiuhua Peng

Brunelle Perez

Changyu Pi

Andrew Pietrobon

Grace Ann Caguicla Piol

Lester Murillo Pobar

Nicholas David Podlogar

Fabio Previtali

Henning Pubanz

Dongdong Qi

Wenxi Qian

Li Qin

Xiaoyun Qin

Hongmei Qiu

Lie Qiu

Sijia Qiu

Yao Qiu

Yishi Qiu

Yu Qiu

Yuping Qiu

Wesam Qtieshat

Ge Qu

Zhixian Qu

Mohamad Alaa Rahima

Kavita Rajshekar

Hussain Ahmed Ramadan

Venkat Raman

Visalakshi Ramanathan

Mohasin Ramkunnummal Puthiyapurayil

Mohamed Samier Rashed Mahmoud

Kamlesh Mangilal Rathod

Randy Reeder

Sarah Reith

Caiyang Ren

Li Ren

Yijie Ren

Camela Marielle Escalante Reyes

Remedios Mamangun Reyes

Kareem Rifky

Noah Gary Rischitelli

Skylar Wayne Ritchie

Kristina Rogers

Bailey Rother

Nathaniel Royer

Kishore S

Srour Abdelmohaymen Elsayed Sakr

Atef Mohamed Salama

Mohamed Adel Salama Abdelgawwad

Farid Samadov

Allen Nicole Cuisia Santos

Carl Angelo Semilla Saribay

Saleh Mohammed Maher Sawan

Alex Schmelzer

Kiefer Schoelch

Paula Schuler

Ahmed Mohamed Abdelwahab Sedek Abdelrahman

Lindsey Semko

Sunjay Serrao

Kshitij Shah

Mohamed Shaaban Shahat

Azharuddin Mohiuddin Shaikh

Ahmad Mohammad Shaker Abushaheen

Xijuan Shan

Ahmed Shawqy Shabaan Elnagar

Mohamed Abdellatif Mohamed Shehata

Fei Shen

Yaqi Shen

Yufeng Shen

Yunfei Shen

Zhuo Shen

Li Sheng

Jinquan Shi

Linyan Shi

Mengmeng Shi

Qian Shi

Xiaojun Shi

Yan Shi

Katherine Shikles

Chang Shu

Ruixia Si

Shuangyu Si

Xinlin Si

Mary Simes

Meity Yokhebed Sinaga

K.S.K Sindhoora

Navjot Singh

Ankit Singla

Kaustabh Sinha

Priti Sitaraman

Oscar Sloep

Eric Smail

Hande Solmaz

Karolina Spychalska

Vinaya Srinivasan

Maximilian Staritz

Uno Steffensen

Payton Steward

Taylor S. Strader

Cuigai Su

Liyuan Su

Ajith Sugathan

Emad Sukkar

Cheng Sun

Guijing Sun

Jianhua Sun

Jiawei Sun

Jun Sun

Lele Sun

Lijun Sun

Qifan Sun

Xuan Sun

Yini Sun

Yue Sun

Rahul Sunkari

Vasundara Suresh

Saikrishna Suvvari

Ali Hassan Tahtah

Gabi Georges Tajra

Mary Grace Eligio Tala

Majd El Deen Weisam Talas

Douglass Talbot

Jaya Talreja

Sha Tang

Wanqing Tang

Xurong Tang

Yanzhi Tang

Yue Tang

Zhenqi Tang

Feiran Tao

Nawar Zeyad Tareq

Ozgun Taskiran

Dominic Covita Teodosio

Saju Thomas

Fanghui Tian

Xue Tian

Yiting Tie

Uros Todorovic

Matteo Toffol

Juan Ignacio Tosto Valenzuela

Manon Yumi Trelut

Kyzel Kim, Santos Trono

Uriah Tryon

Chin-Tzu Tsai

Xiaoni Tu

Lola Tunwashe

Julius Cezar Biwang Ulili

Ashish Upasani

Aditya Uprety

Kevin Van Zelderen

Jyll Marie Vanderhoef

Akhil Varghese

Zina Sarah Varkey

Neeraj Vasudevan

Sumona Velvadapu

Francisca Venema

Petrus Johannes Hubertus Verhart

Daan Vredevoort

Umair Waheed

Bhalchandra Uday Wahegavkar

Joshua Waller

Kai Wan

Anqi Wang

Baishi Wang

Chengcheng Wang

Chin Ting Wang

Chongying Wang

Chuanqiang Wang

Guixia Wang

Heling Wang

Huifang Wang

Huiwen Wang

Jia Wang

Jingjing Wang

Lei Wang

Lingling Wang

Mengmeng Wang

Ruifang Wang

Runze Wang

Shukai Wang

Tao Wang

Wei Wang

Wenjuan Wang

Wenling Wang

Wenyan Wang

Wenze Wang

Xia Wang

Xiaohui Wang

Xiaolong Wang

Xin Wang

Yahong Wang

Yang Wang

Yanqi Wang

Yinxue Wang

Yuanyuan Wang

Zehui Wang

William Ward

Kevin Waycaster

Wuqing Wei

Yufang Wei

Guangbi Wen

Hongwei Wen

Jing Wen

Yaqing Wen

Yujie Wen

Emily Wilkinson

Tyler Wilson

William Jacob Winship

Quinton Michael Wolf

Ryan Woodbury

Christopher Woodland

Aiwei Wu

Daiyi Wu

Dandan Wu

Di Wu

Fengqin Wu

Guilan Wu

Huawei Wu

Jiahui Wu

Jianfen Wu

Jianying Wu

Jingling Wu

Jun Wu

Min Wu

Peijia Wu

Tianhao Wu

Tingting Wu

Xiao Wu

Yalin Wu

You Wu

Cecile Wyard

Meng Xi

Ruiting Xi

Guiying Xia

Junfang Xia

Caihong Xie

Ping Xie

Ruonan Xie

Xiuzhi Xie

Weiwei Xin

Hui Xing

Wanhui Xiong

Jianlan Xu

Jianping Xu

Jianying Xu

Jun Xu

Lanlan Xu

Mei Xu

Shehai Xu

Xiaomin Xu

Xiaoqing Xu

Yingyi Xu

Yuchen Xu

Zhaoyang Xu

Zheng Xu

Meng Xue

Huseyin Umit Yakut

Huan Yan

Hui Yan

Jiabei Yan

Jinping Yan

Aidan Yang

Bin Yang

Feng Yang

Hairong Yang

Han Yang

Shiyi Yang

Siyuan Yang

Song Yang

Soo Jeong Yang

Weiqin Yang

Wuting Yang

Xiaodan Yang

Ying Yang

Zunfu Yang

Zuobin Yang

Jianqiang Yao

Liantong Yao

Rui Ye

Xing Ye

Youqing Ye

Siyang Yi

Fengming Yin

Jinxia Yin

Miao Yin

Qiurong Yin

Ryan Yoeckel

Kristine Young

Guangping Yu

Li Yu

Mingfeng Yu

Pengyu Yu

Shuying Yu

Xiaoxing Yu

Yunjie Yu

Hang Yuan

Shan Yuan

Shuangna Yuan

Qingfeng Yun

Abdul Zafar

Ahmed Mohamed Zaki Mohamed Hussein

Sadat Ibne Zaman

Tarek Zarkawi

Ahmad R. Zedan

Li Zeng

Chunmei Zhai

Simin Zhai

Aiwan Zhang

Chen Zhang

Ge Zhang

Jiahe Zhang

Jianpeng Zhang

Jingyi Zhang

Jun Zhang

Junyue Zhang

Kexin Zhang

Le Zhang

Likun Zhang

Mengnan Zhang

Min Zhang

Qi Zhang

Qun Zhang

Ran Zhang

Rongshu Zhang

Saisai Zhang

Shan Zhang

Shulan Zhang

Wei Zhang

Weidi Zhang

Weiping Zhang

Weiyang Zhang

Wenkai Zhang

Yan Zhang

Yichi Zhang

Yixin Zhang

Youling Zhang

Yu Zhang

Yuqi Zhang

Zhipeng Zhang

Benlin Zhao

Hui Zhao

Jing Zhao

Liling Zhao

Mengzhen Zhao

Minjie Zhao

Na Zhao

Qing Zhao

Xiyang Zhao

Yan Zhao

Yang Zhao

Yanmei Zhao

Yingyun Zhao

Yongmei Zhao

Zhan Zhao

Zhifu Zhao

Jiayu Zhen

Hongming Zheng

Linyi Zheng

Ningning Zheng

Tongling Zheng

Yanrong Zheng

Yidan Zheng

Yile Zheng

Yulong Zheng

Nan Zhi

Jingyi Zhong

Qiuling Zhong

Xiumei Zhong

Ailin Zhou

Baobao Zhou

Hanxun Zhou

Hengchang Zhou

Hong Zhou

Junfeng Zhou

Tao Zhou

Ya Zhou

Zhenglong Zhou

Chunying Zhu

Hongjuan Zhu

Jinfeng Zhu

Limin Zhu

Lina Zhu

Shanshan Zhu

Shiyi Zhu

Shuyi Zhu

Qinghua Zou

Xue Zu

Yetong Zu


Dennis Whitney, CMA, CFM, CAE, is senior VP, certification, exams, and content integration at ICMA® (Institute of Certified Management Accountants). You can reach him at
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Forecasting The Future

By Kip Krumwiede, Ph.D., CMA, CSCA, CPA; Lawrence Serven; and Robert Liou, CMA, CPA
September 1, 2021

Easily the biggest financial planning and analysis (FP&A) challenge for most companies is predicting future revenues and cash flows—a challenge that became much harder during the COVID-19 pandemic. Past results and old assumptions may no longer be sufficient, and new market factors need to be considered. How can we prepare for different scenarios?


The purpose of predictive analytics is to improve forecasting and the ability to course correct more quickly. Contrary to what you hear and read, predictive analytics doesn’t have to be super complex and require a data scientist or expensive software, at least at first. This article shares five ways that any company can use basic predictive analytics to reduce uncertainty and improve forecasting. It’s adapted from the recent IMA® (Institute of Management Accountants) Statement on Management Accounting (SMA) Overcoming FP&A’s Biggest Challenge: Predicting the Future, and it’s been edited and abridged to fit in Strategic Finance. (See “A Guide to Predicting the Future.”)





SAS defines predictive analytics as “the use of data, statistical algorithms and machine learning techniques to identify the likelihood of future outcomes based on historical data,” noting that the goal is to go beyond knowing what has happened to decrease uncertainty about the future and associated risk (see “Predictive Analytics: What it is and why it matters,” SAS Insights). Predictive analytics can be used to get clarity on what the future can look like. In its simplest form, it’s the science (and a little art) of taking historical data and using it to project future results.


Keep in mind that the ultimate goal of forecasting is to prepare for future outcomes by reducing uncertainty and associated risk. Outcomes could include a new product or service taking off much higher or lower than expected. Risks include not having enough capacity to meet demand, missing market opportunities altogether, overinvesting in new assets such as people and equipment, and so forth. Thus, any information that can be potentially useful to reduce uncertainty can add value to predictive models.





Effective predictive analytics needs data, tools, model building, and skills. The SMA presents nine ways to facilitate effective predictive analytics. In this article, we briefly describe five of them.


1. Expand the data available.


Good predictive analytics requires that a wide range of data be available. As a management acc