Driving innovation in management accounting | December 2019

MAPPING THE FUTURE Preparing for Industry 4.0

• Using ‘white-hat’ hackers to secure your data 8 • The pros and cons of blockchain adoption 16 ’Tis the season to give. Throughout the year, CIMA members have had an impact on organisations, communities and economies. They’ve also made a difference to individuals through the CIMA Benevolent Fund.

As we reflect on 2019, let’s continue to help each other while driving the future of the profession.

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1910-50210 CONTENTS

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5 THE GREAT EQUALISER 8 WHAT TO KNOW CIMA President Amal BEFORE HIRING A Ratnayake, FCMA, CGMA, says ‘WHITE-HAT’ HACKER the organisation will continue White-hat hackers can help to work to prevent barriers to nance departments protect entering the profession. their companies from data breaches, but management 6 PREPARING FOR THE accountants must tread FUTURE carefully to avoid problems. Andrew Harding, FCMA, CGMA, chief executive– 12 5G's BIG ROLE IN 22 RESILIENCE: 34 THE FORGOTTEN Management Accounting at DRIVING EXPANSION OF INSTITUTE STUDENTS HISTORY OF the Association of AUTONOMOUS VEHICLES AS POWs IN GERMANY ACCOUNTING WORDS International Certi ed A look at the connectivity The stories of CIMA’s students Common accounting terms Professional Accountants, between G and self-driving who took Institute exams in used today have a rich, useful, describes the work to vehicles. Germany’s prisoner-of-war and sometimes surprising future-proof management camps during the Second heritage. accounting. 16 THE PROS AND World War. CONS OF BLOCKCHAIN ADOPTION 28 CHANGING TRACK ON 34 16 Blockchain may be a SKILLS technology of the “future”, but Traditional project nance it’s already in use today. This roles in the rail and other article explores its strengths infrastructure-based and things to watch out for. industries are broadening and encompassing new skills.

22 ON THE COVER: IMAGE BY SMIRKDINGO/ISTOCK; ONIMAGE THIS PAGE, BY FLAVIO COUNTERCLOCKWISE COELHO/GETTY FROM IMAGES; TOP RIGHT: PHOTO PHOTO BY COURTESY SEONGJOON CHO/BLOOMBERG OF THE NATIONAL VIA ARCHIVES GETTY OF THE IMAGES; UK; PHOTO IMAGE©IMPERIAL BY NICK DIGGORY/IKON WAR MUSEUM(HU 21013); IMAGES; IMAGE BY SCIENCE SOURCE/GETTY IMAGES; PHOTO BY WILLIAM87/ISTOCK

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 3 36 6 ELEMENTS 42 WHAT IF YOU 60 INSTITUTE NEWS OF PROFESSIONAL DON’T WANT TO BE A 50 Get updates on issues aecting JUDGEMENT MANAGER? the profession and your High-quality professional Not everyone wants to be the membership. judgement can pave the way to boss. Read advice on how to becoming a nance leader. remain successful while 62 FARMING GETS Here’s what it is and how to turning down a management 50 WHAT I LEARNED VERTICAL pursue it. position. BEING THE CFO OF A Under ecient LED lighting, TECH STARTUP leafy greens are an 40 RELATIONSHIP- 44 EXCEL MOVES Heading the nance function of environmentally friendly food BUILDING ADVICE FROM TO MAKE AN ‘X’ OF a startup means facing source grown indoors in A CAREER DIPLOMAT VLOOKUP particular challenges. Here are containers stacked several The UK’s HLOOKUP and MATCH are some lessons a rst-time stories high. ambassador to primed for less usage as nance chief learned on the job. Poland has used Microsoft aims to make life his management easier for Excel spreadsheet 55 SPONSORED 62 accounting skills modellers with two new REPORT: YOUR to formulate functions: XLOOKUP and QUARTER-BY-QUARTER strategy, XMATCH. MAP TO SHARPER negotiate, and SKILLS manage Thought leaders and senior relationships. nance professionals weigh 40 in on how to approach improving key skills.

CIMA HONORARY OFFICERS United Kingdom Amal Ratnayake, FCMA, CGMA Nick Jackson, FCMA, CGMA The Helicon, One South Place. London EC2M 2RB Tel.: +44 (0)20 8849 2251 President, CIMA Deputy President, CIMA Chair, Association board United States Paul Ash, FCMA, CGMA 220 Leigh Farm Road, Durham, NC 27707-8110 Steven Swientozielskyj, FCMA, CGMA Vice-President, CIMA Tel.: +1 919-402-4500 Immediate Past President, CIMA www.aicpa-cima.com

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4 I FM MAGAZINE I December 2019 THE VIEW FROM THE PRESIDENT AMAL RATNAYAKE, FCMA, CGMA

e live in an unequal According to UNESCO statistics, Wworld. A world where sub-Saharan Africa has the the ability to jump highest rate of children excluded barriers to educational or from education across the world. nancial success can depend on Of those aged –, more than where you happen to be born. On  are not in school. The average it takes two generations portion rises to  for those for people born in low-income aged – and  for those families to reach average income aged –. levels in Denmark, and three Education, though, is not the generations in Norway, Finland, only challenge in Africa. Despite and Sweden, according to the great progress — consumer Organisation for Economic spending has grown at a Co-operation and Development. compound rate of . since In the UK it’s ve generations. In  and is estimated by the France, the move takes around Brookings Institution to reach six generations on average — the . trillion by  — there are same for Chile and Germany, and several macroeconomic risks to it’s seven generations for people The great equaliser be faced. in China and India. In South The chief economist for Africa Africa, nine generations is the ‘CIMA and our Association at the World Bank, Albert Zeufack, average, but in Colombia it will Ph.D., speaking earlier this year at take  generations — or more are part of the solution to the the World Economic Forum on than  years — to reach that Africa, said growing world trade point. inequality conundrum.’ tensions, continuing volatility in Social inclusion and mobility commodity prices, and debt were are concerns close to my heart, high risks for African countries. and I recently spoke at an event on this in London. He also identi ed “the challenge of inclusion”, which The CIMA quali cation I achieved has taken me to would be solved by jobs and opportunities — and three continents; it has also helped me navigate the sound scal policies. corporate world. But along the way I have faced In Sri Lanka, where I spent the early part of my life, barriers — and sometimes they have been there is a much-repeated saying: “CIMA changes unexpected. When I moved from Saudi Arabia to people’s lives.” And it does. You can see how our Canada and was looking for work, the question students from poorer backgrounds progress from one always on recruiters’ lips was, “Do you have Canadian income group to another as their careers ourish. experience?” Of course I did not, and during that Often, they support extended families; they may also dicult period I was kept buoyant by being part of be the only one from those families to have a the global CIMA family — the bonds that come built managerial role. into the ACMA or FCMA, and CGMA letters that follow As we prepare our members and students to thrive our members’ names. in the digital workplace, we are also dismantling the I believe education is a great equaliser: CIMA and barriers that prevent access to our profession — by our Association are part of the solution to the enabling non-university entry routes and removing inequality conundrum. I also rmly believe that the exemption fees for students who have already Association’s purpose — to drive trust, opportunity, studied accounting, for example. It means we can and prosperity — has a particular resonance here. create a profession that has the best people, At the CGMA Africa Conference in Cape Town in KEEP IN TOUCH irrespective of their socioeconomic background, who September, we heard about the challenges facing the Follow me have the skills and knowledge to lead organisations, continent’s education systems. I had a personal on Twitter: businesses, and ultimately communities across the interest here, as part of my schooling was in Nigeria. @CIMA_President world to prosperity and success. PHOTO BY FIONA HANSON/AP IMAGES

December 2019 I FM MAGAZINE I 5 Preparing for the future

By Andrew Harding, FCMA, CGMA

e are at the end of  greater problem-solving and strategic future-proof management accounting — a year when we thinking capabilities. for the next generation of members and looked back to  to To focus more on strategic tasks, we businesses. We are developing our own learn from the past  need to change our approach. Creativity thinking on areas such as resilience, W new business partnering models, years of CIMA and — connecting and synthesising management accounting’s history and seemingly disparate elds for a creative intangibles, and nonnancial reporting. looked forward to preparing our outcome — becomes increasingly The Future of Finance research is also members for the future. important. a springboard to research with external Technology is a key driver to Businesses also want to see their partners. Together with Maastricht that future. The skills required by ROI on training. That’s why our revised University in the Netherlands, businesses today are evolving at CGMA Competency Framework and the Essec Business School in France, an accelerating pace — we need to  CIMA Professional Qualication and Australia’s Monash University know more about AI, automation, Syllabus were developed from extensive working with Germany’s WHU–Otto blockchain, cybersecurity, and much conversations with employers as a part Beisheim School of Management, more. That’s on top of the traditional of our Future of Finance research. That we are researching aspects of “core” management accounting skills. has been described as a “game changer”, digital strategy implementation, Technology is making us more and I believe it is just that. management accountants’ role in connected and is also enabling us For decades, the professional digital transformation, and predictive to do more complex things. In this accounting qualication marked the analytics. shift, it is critical that businesses have entrance to our professional lives. This work is important for the future high-quality strategic thinking and Taken together with CPD or CPE, it was of the profession. It will ultimately decision-making capabilities if they enough to sustain a lifelong career. help ensure that future management are to be among the most successful However, as we move into the next accountants are equipped for sustainable organisations of the decade and beyond, we will need to long-lasting and successful careers. To future. challenge, rethink, and then develop make that future, we need to inuence Traditionally, businesses have this model. and create impact. We need to learn, focused on the issues close to certainty The professional qualication unlearn, and relearn. And we need to — what the Stacey Matrix, devised by is described by IFAC as “initial” be storytellers, not scorekeepers. professor Ralph Stacey, describes as professional development which the rational zone. Today, increasingly, forms the base for “continuing” decisions in this area are delegated to professional development as careers Andrew Harding, FCMA, CGMA, automation and AI, with humans — progress. Shaping both these elements is chief executive–Management augmented by technology — working is a crucial part of our work at the Accounting, at the Association of in the complex zone where issues Association. International Certified Professional are far from agreement and certainty. Today, we are building on our Future Accountants. Dealing with complexity requires of Finance research to ensure we PHOTO BY STEVE BY PHOTO FORREST/STEVE FORREST PHOTOGRAPHY

6 I FM MAGAZINE I December 2019 I am vital.

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1909-30844_CIMA-sub_FM-ad_full-page_Dec.indd 1 10/14/19 11:28 AM What to know before hiring a ‘white-hat’ hacker

These ethical experts can help prevent costly cybersecurity breaches, but finance departments need to engage with them carefully.

By Sarah Ovaska-Few and Drew Adamek

he global news cycle is a daily reputational damage that imperils could bring a corporation to its knees. reminder of the pervasive and relationships with customers, partners, But Chapman isn’t out to get you or the potentially devastating cyber and vendors, and are a reality that no organisation you work for. T risk facing businesses. Three nance department can ignore. Instead, he’s a member of a cadre of out of four businesses can “Cybersecurity is a hard trend, and it is “white-hat” hackers, computer systems expect to get hacked within the next year, going to continue to evolve,” said Steven analysts and programmers paid by according to the World Economic Forum’s Ursillo Jr., CPA/CITP, CGMA, partner and corporations and cybersecurity (WEF’s) Centre on Cybersecurity. national leader of Information Assurance companies to locate and shut down Hackers are exploiting digital security and Cybersecurity at Cherry Bekaert, a technology system vulnerabilities before aws to commit a dizzying array of US-based accounting and advisory rm. their more nefarious counterparts on the crimes. Cybercriminals are using stolen “Ultimately, it’s going to be a cat-and- black or grey markets can nd them. data to perpetrate business email mouse game.” “Everyone understands what the bad compromise, invoice, payroll, phishing, But it’s not a fair contest. Most companies version of a hacker is,” Chapman said. “I’m and ransomware scams that cost aren’t fully aware of how vulnerable to a good guy; I try to help organisations.” companies billions of dollars annually. cybersecurity breaches they are. Companies need all the help they can Data breaches have cost the global Hacker Alex Chapman knows. He get. The average global cost to companies economy trillions of dollars, according to spends his workdays combing the of a data breach is . million, with the WEF. It’s not just nancial: Data networks of global corporations in hope costs reaching . million per breach in breaches can cause signicant of nding security aws that, if exposed, the US, according to the Ponemon

8 I FM MAGAZINE I December 2019 IMAGE BY NICK DIGGORY/IKON IMAGES The business of bug bounties Types of white-hat hackers Matthew Southworth, chief information security ocer of Priceline, is charged with White-hat hackers work in myriad ways. Here are some of the common methods overseeing cybersecurity for the US-based used in the ethical hacking community: online travel website. He decided that hiring white-hat hackers made sense from Bug bounty programme both a security and a nancial viewpoint. With this approach, organisations, often working through third-party Before engaging with white-hat hackers, vendors like HackerOne, pay white-hat hackers for each code flaw Southworth began receiving “unsolicited or vulnerability discovered. Organisations can either leave their vulnerability reports” from hackers and bounties open, with expectations that vulnerabilities will be sought security researchers pointing out bugs in out on a rolling basis, or structure their bounty programmes to be the company’s cybersecurity. time-limited or offered to select groups of white-hat hackers. Costs “It made it much easier for me to tell my can vary for each vulnerability discovered, though companies with leadership that hackers are going to be lower profiles may need to offer more to drum up interest from the testing our website whether we invite them hacking community. The first hacker to make more than $ million or not,” he said. “We should want a in collective bug bounties was a self-taught -year-old Argentine. programme to capture their eorts in a way that we can triage, that we can somewhat Penetration tests control.” Also referred to as a pen test, this enlists in-house or contract Southworth reports directly to ethical hackers to simulate a cyberattack to examine how systems Priceline’s CFO, and he approached the CFO hold up and detect where problems may exist. These types of tests with the idea of oering a bug bounty. It are increasingly required for security compliance regulations and was not a tough pitch. certificates, including PCI DSS (payment card industry data security “The CFO is interested in managing risk, standards). and this is an extant risk,” he said. “So the bug bounty programme is ultimately his Back-hacks responsibility. He understands the budget, This comes into play after infiltration or a data breach has already and he understands how the programme taken place. Using white-hat hackers to re-create the path the illicit works. He’s an advocate for the programme hacker used, back-hacks examine system vulnerabilities, close any across the company.” doors that remain open, and trace the attack back to its source. In a bug bounty programme, companies invite white-hat hackers to poke around Red team and blue team exercises their system and agree to pay bounties to These cybersecurity approaches stem from military planning hackers, from  for a low-prole bug to exercises and call for white-hat hackers to look for issues, similar to  , or more for more critical issues, what happens in a penetration testing exercise. The red team said Laurie Mercer, a London-based groups will look to infiltrate a system’s defence, while blue team security engineer for HackerOne, which players play the part of defence, testing whether an organisation conducts bug bounty programmes. would respond adequately to an actual cyberattack. High-prole clients include Goldman Sachs, Starbucks, and Google. Midsize companies and startups may spend  , to , in total while Institute’s  Cost of a Data Breach know the vulnerabilities, and you don’t larger, multinational companies shell out Report. These are not just one-time know the assets, then you are going to hundreds of thousands of dollars, Mercer charges either; the Ponemon Institute have a hard time protecting those assets,” said. This investment often pays o by researchers found that breaches cost said Ursillo, who is also a white-hat hacker. preventing far costlier data breaches. The organisations millions of dollars for years “These assessments give organisations an company recently commissioned a study after the initial breach. understanding of what an attacker can see completed by technology and market That’s why corporations are from the outside.” research company Forrester that predicted increasingly turning to ethical hackers While hiring a white-hat hacker can a  return over several years for its like Chapman to run “penetration tests” to provide value, it is not a silver bullet, and clients. nd vulnerabilities before criminals do Ursillo cautioned that there is no single Companies can get bugs and problems and shield themselves from the security solution and the approach should be a reported on a rolling basis, as opposed to risks. White-hat hackers can oer insight part of a larger cyber risk management other types of security assessments that that routine cybersecurity audits can’t, programme. Finance departments, IT, and serve as more of a snapshot in time. with the ability to narrow in and notice those responsible for risk will need to “You’re not getting this time-limited problems embedded in network systems address signicant reputational concerns assessment with reports at the end,” or present in employee behaviours before and incorporate white-hat hackers into a Mercer said. “You’re opening yourself up to a costly attack occurs. larger cybersecurity strategy before a process that never stops” unless “If you don’t know the risks, you don’t engaging with them. companies choose a time-limited bounty.

10 I FM MAGAZINE I December 2019 The case for white-hat hackers Bug bounties are just one component in a ‘These assessments give larger suite of cybersecurity approaches — from system penetration tests to red organisations an understanding team agent exercises (see the sidebar, “Types of White-Hat Hackers”) — that of what an attacker can see from white-hat hackers can perform to shore up a corporation’s security defences, the outside.’ potentially giving you the same view of your cyberdefences that criminals have. Steven Ursillo Jr., CPA/CITP, CGMA, on the value of using white-hat hackers That’s why employing or contracting with people with the same skillsets as hackers is increasingly becoming a key forensic evidence of who found this and vulnerable areas before guring out what component of a successful cybersecurity what they actually saw”. type of approach is needed. strategy, said Sherri Davido , founder and “It helps you set your priorities,” she CEO of US-based LMG Security, who The ROI of managing risk said. “You are not going to be able to tackle started her cybersecurity career nearly two Companies can also pour huge sums into all your security issues at once.” decades ago during her undergraduate cybersecurity e orts and still have no It’s important to know whom you’re years at Massachusetts Institute of guarantee that their data is safe, said hiring when putting out queries to Technology. Sandro Gaycken, the director of the Digital white-hat hackers, said José Esteves, an “We hack you before the real criminals Society Institute, ESMT Berlin and chief information systems professor and do,” she said. scientist at Hensoldt Cyber GmbH. associate dean for International MBA and “Prices range from , to millions,” Tech MBA programmes at Madrid’s IE Inherent risks he said. “It’s hard to say.” School of Business who has worked as a However, inviting hackers to poke around That means some, overwhelmed at the white-hat hacker for  years. your systems is, in and of itself, a prospect, end up doing very little to He suggests going through third-party potentially risky endeavour, according to develop their cyberdefences beyond basic consultant groups that have vetted hackers Peter Steel, vice-president–Professional network protections and the occasional and have legally binding pledges that they Standards and Conduct at the Association penetration test, something Gaycken won’t use information discovered for of International Certied Professional cautioned is not an option in today’s unethical purposes. Ursillo said it’s the Accountants. Companies should take world. risk management team and, in many special care that hackers, invited or not, “If you’re not taking this seriously and cases, the CFO’s responsibility to oversee don’t accidentally gain access to either something serious happens, you can be this process. customers’ or employees’ personally ruined in just a few hours,” he said. “If you have a CFO that’s responsible for identifying information in violation of It’s also nearly impossible to measure cyber risk in a broader level, the most various international laws in the course of how ethical hacking pans out, considering important thing is for them to take a step their work. the goal in most cases is to prevent data back and look at that whole governance “My main concern would be that you breaches or a similar disaster from taking programme,” he said. “It’s going to be are unintentionally exposing data, which place. predicated on making sure that the rules could lead to severe legal penalties,” said Davido has even incorporated that of engagement are established.” Steel. “Whether you wilfully expose paradox — “achieve nothing” — as LMG It’s an e ort well worth making, protected data or not, the risk is still Security’s corporate tagline, given that according to Priceline’s Southworth. there.” success for her and her employees means “A breach could be seriously disruptive Priceline’s Southworth recommends having her clients report back with no to our company,” he said. “People are adding controls to the bug bounty issues. trusting us with not only credit card programme prior to commissioning any “You are trying to make it so that numbers but information about travel: penetration testing to help ag and nothing happens, and that’s a hard thing to when they’re going to be where, [when] prevent accidentally risky data exposure. measure,” she said. they’re going to be out of their house. We “For example, we requested participants That said, the global market for have a duty to protect all their to add a special header to all of their cybersecurity continues to grow, with information.” Q requests when they’re testing our website technology research rm Gartner putting so we can identify them as a participant of the worldwide bill for security services at the bug bounty programme,” he said.  billion in . Sarah Ovaska-Few is a freelance While an unintentional sensitive data writer based in the US. Drew Adamek Have a plan exposure hasn’t happened in the Priceline is an FM magazine senior editor. To bug bounty programme, according to For nance departments considering comment on this article or to suggest Southworth, these controls give the engaging with white-hat hackers, the rst an idea for another article, contact company “strong attribution between step is deciding where to start. Davido Adamek at Andrew.Adamek@ trac coming in and the bug bounty suggests conducting a system-wide aicpa-cima.com. programme, and that gives us some assessment to identify the most

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 11 An autonomous 5G-connected bus, operated by the Korean telecom KT Corp., travels during a 2018 media event in Gangneung, Gangwon Province, South Korea. Instead of windows, the self-driving shuttle bus has interior video screens that display live coverage of events in 5G and uses 5G to navigate the roads. 5G’s big role in driving expansion of autonomous vehicles

ifth-generation cellular network technology, better known as 5G, is likely to play a major role in whether self-driving vehicles truly gain traction on a large scale. IT research and advisory firm Gartner Inc. predicts that by 2025, autonomous vehicles Fwill upload more than 1 terabyte of vehicle and sensor data per month to the cloud, up from 30 gigabytes of data from advanced connected cars in 2018. PHOTO BY SEONGJOON CHO/BLOOMBERG VIA GETTY IMAGES GETTY VIA CHO/BLOOMBERG SEONGJOON BY PHOTO ADVERTISING SUPPLEMENT Ask the Expert • TECHNOLOGY

Blockchain goes beyond disruption

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Copyright © 2019 Deloitte Development LLC. All rights reserved. The pros and cons of blockchain adoption

t has been more than ten years since “foundational” one with the potential “to The technology has the unknown developer or create new foundations for our economic streamlined transaction developers of bitcoin devised the and social systems”. They also suggest that I rst blockchain to facilitate and its adoption will be “gradual and steady”, a and product tracking record transactions of the nding in line with the Association of cryptocurrency. International Certi ed Professional in multiple industries, Since then, blockchain — a technology Accountants’  Future of Finance but it’s not without its that creates a digital distributed ledger of survey. Only  of those surveyed said records stored in blocks cryptographically their nance teams were currently using challenges. linked to one another in a way that makes blockchain, and only  were investing them virtually unchangeable — has been in it for the medium term. This shows a By Oliver Rowe developed across many sectors, including huge potential for growth in this area. consumer goods and retail, banking, Angela Preece, FCMA, CGMA, and manufacturing, oil and gas, trade, Mariusz Lesniak, a blockchain solution shipping, and property. architect, are two blockchain experts In their  Harvard Business Review working in IBM’s global innovation team. article “The Truth About Blockchain”, They are convinced of the technology’s professors Marco Iansiti and Karim potential to transform existing business Lakhani described how it is not a processes and oer new sources of value disruptive technology but rather a for companies. IMAGES BY FLAVIO COELHO/GETTY IMAGES COELHO/GETTY FLAVIO BY IMAGES

16 I FM MAGAZINE I December 2019 Blockchain’s additional value Preece believes that blockchain provides a ‘Because you are contributing better solution than a digital database not using blockchain. “You could use a data in an almost egalitarian way, database, but somebody has to own it. And the di erence between using a it’s your data that’s important, database that everybody contributes to and using a distributed network not your market power so much.’ [blockchain] is that e ectively nobody owns that [blockchain] ledger because Angela Preece, FCMA, CGMA, a blockchain expert for IBM you all have your own copy of it,” she said. “And that is part of how you build the trust that is central to its appeal.” Traditional databases, Lesniak said, are technology, like relational databases, She added that with a database solution, prone to fraud, malicious modications, invest a lot of money in security in order larger participants would use their market cyberattacks, and simple mistakes. With to make sure that role is closely power to inuence smaller participants. traditional databases, the administrator’s monitored.” With blockchain, “because you are role is a very powerful one. “[The] To “sidestep this problem”, blockchain contributing data in an almost egalitarian administrator is able to change anything relies on a decentralised data store (with way, it’s your data that’s important, not in the database, and this is why no centralised point of weakness for your market power so much”. organisations using traditional hackers to target), thereby building the

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 17 Mariusz Lesniak and Angela Preece, FCMA, CGMA, are blockchain experts working on IBM’s global innovation team.

security into its very fabric. Blockchain blockchain survey, Breaking Blockchain A costly proposition or value for fabrics such as the version of Hyperledger Open, the technology’s most signicant money? used by IBM o er PKI (public key advantages over existing systems are Blockchain does have some challenges, infrastructure) security as part of the improved trust and provenance, leading too. “This is not a particularly cheap framework — for managing users and to greater speed of business process technology, so … if you’re a founder or certicates, Lesniak explained. “Outside execution — cited by  of executives you want to start a consortium of some of blockchain you have to build it who had at least a broad understanding of sort, you’d be looking at a reasonable- separately and at additional cost.” blockchain. In the survey,  said sized investment,” Preece said. As an blockchain’s most signicant advantage estimate, Preece said a minimum viable Working to improve food safety over existing systems is its ability to lead ecosystem (MVE) implementing a small Blockchain, Preece said, can also be used to new business models and revenue number of use cases is typically in the in improving food safety and provenance, sources, and  said blockchain’s biggest hundreds of thousands of dollars. and reducing food wastage. When alerted advantage is the greater security or lower Scaling up to high-volume production to a safety problem with a perishable risk associated with the technology. While levels with condence for multiple product, you don’t have to throw away centralised databases, which are based on participants, including the creation, entire shipments if you can locate the a more mature technology, can be faster running, and ongoing support of exact pallet or box a ected. If, for in terms of transactions per second, they appropriate governance and operating example, someone falls ill from lose ground when evaluating the models, may start in the low millions of consuming green beans, traceability and end-to-end journey. dollars. removal-from-shelf time can be cut Some larger companies that have substantially. “At the moment, without a invested in blockchain make it available blockchain solution, it takes anything up throughout their supply chain network to six days to locate exactly where those — for processing accounts payable green beans came from. And, actually, in invoices, for example. One of IBM’s retail that period you’re potentially eating the clients, Preece said, had seen an rest of that shipment,” she said. approximate two-thirds reduction in the According to Deloitte’s  global number of disputes with a major PHOTO BY TIM IRELAND/AP IMAGES IRELAND/AP TIM BY PHOTO

18 I FM MAGAZINE I December 2019 supplier around the three-way matching attributes of consensus, immutability, reconcile those changes.” of invoices to purchase orders. In provenance, and nality [see the sidebar The blockchain solution applied is a addition, they have seen a substantial “ Properties of Blockchain”], which shadow chain, which runs in parallel to reduction in resolution days as well as [are] required with the engagement of each of the  systems that make up the sourcing new data trends in purchase multiple external participants. current set-up. This approach allowed orders. However, Preece said that Therefore, you cannot get the same level IBM to reduce the risk around this because of the costs, small companies of transaction veri ability as in the transformation, meaning that the IGF “are unlikely to be a [blockchain blockchain. So, it’s a world of production systems could still run as network] founder or rst in the game”. compromises. It’s a trade-o.” before — with only small changes She added: “We think it’s likely that required. the majority of companies will prefer to Managing risk “All that [is] needed is to slightly alter join an existing network, for which the Adopting blockchain need not be a risky the process … by allowing the invoice total costs are likely to be much lower. process, Lesniak said, using the example transactions to be mirrored at blockchain Leaving the innovation cost and risk to of IBM Global Financing (IGF), which has as well,” Lesniak said. others and consuming the bene ts of internally adopted a blockchain solution. This then helped to create a “single blockchain via a pay-as-you-go model This part of IBM is, in eect, like a large source of truth” separate to the IGF is likely to be a faster route to value. For bank with  billion of channel transactional system, allowing for a fast example, there are existing networks, nancing every year. and easy pull of the relevant information such as TradeLens — a blockchain IGF has many systems in place to help by the dispute resolution team. Overall, network for maritime logistics — where this to run. Overall, about  systems the problems now can be resolved much companies can subscribe to services underpin IGF, helping it to manage the more quickly — within a few days only. that leverage blockchain in a SaaS invoices and track the movement of This is really a good example of how a [software-as-a-service] consumption dierent parts and components, shadow chain can be used to monitor model.” (See the sidebar “TradeLens: internally and across the partner what’s happening in the production Blockchain in Action”.) ecosystem. The problem, Lesniak said, system and allow the relevant Blockchain isn’t always the right was with handling disputes, for example, information to be pulled rapidly without solution — a conventional, centralised when a customer has received an the production system having to be database maintained by an administrator incomplete delivery. In such cases it replaced, Lesniak said. can sometimes be a better t. “They would take about  to  days to resolve In time, the parallel process can be [conventional databases] can often prove the problem. He explained: “This would changed so that blockchain becomes the faster, allowing for higher transactional require going through all our internal primary technology “process by process throughputs. This is because they are processes and systems to try to … [which] gives you that springboard to centralised and because they typically understand what has happened with the manage such transformation very safely”, represent more mature technologies that missing item and why is it wrong. A part he said. have been evolving over a considerable of the problem here was that we had to Disputes now take fewer than  days time now,” Lesniak said. dive in separately into each of the to resolve, and an improvement of  “What [conventional databases] are systems involved in order to pull out the capital eciency in disputes has been lacking, obviously, are the trust relevant information and then to achieved, according to Preece.

properties of blockchain

yyy Consensus: The parties to the in the blockchain with the next block. blockchain agree on who within the This means that it’s impossible to business network gets to validate and tamper with the blocks once they are approve the transactions, ie, which written. This gives us the property transactions are considered legitimate of immutability, and this effectively and are therefore added to the boosts the trust across the network. blockchain. yyy Finality: Finality comes as a yyy Provenance: Represents effectively a consequence of the first three verifiable audit trail, a complete record attributes. When a transaction is of who owns what asset throughout its committed into the blockchain, it life cycle; and it is all recorded on the cannot be altered. History cannot be blockchain. rewritten for that transaction. The yyy Immutability: Blockchain privacy blockchain represents the single services are responsible for version of the truth for its contents and cryptographically linking one block its network participants.

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 19 TradeLens: Blockchain in action

TradeLens, jointly developed by IBM and shipping company Maersk, is a supply chain platform underpinned by blockchain. The companies started to work together in . In July  two more carriers, Hapag-Lloyd and Singapore-based Ocean Network Express (ONE) Pte. Ltd., joined existing consortium members Maersk, CMA CGM, and the Mediterranean Shipping Company (MSC). This move meant that TradeLens now extends to more than % of the world’s ocean container cargo by volume. It provides a framework for trade parties to share information that can be “tracked, stored, and actioned across the platform throughout a shipment’s journey”, according to the consortium. One example of its use is in automating records of shipments of green beans from Kenya to the EU. Blockchain solution architect Mariusz Lesniak said that traditionally the paperwork records for a shipment give rise to % of its cost, involving around  pieces of communication and numerous documents that have to be signed and countersigned by different participants. Lesniak explained: “You’ve got the farmer of the green beans, you’ve got the logistics provider in Kenya, you’ve then got the Port of Mombasa, you’ve then got the shipping line, customs, of course, in all of that. … If you’re going through the Suez Canal, for example, then that’s another set of records and so on.” Trust in each step is a fundamental requirement, often demanding expensive hand delivery of documents, Lesniak said. It means, he said, the process was “crying for being fully digitised and underpinned by blockchain”.

Implementation advice y Don’t let your technology people in metrics such as days sales Preece and Lesniak estimate that the lead the programme. Because outstanding or your supplier technology that underpins blockchain blockchain implementations are promoter scores. accounts for  of the total eort that only  technology v  business y Look at creating new sources of goes into a project. The other  of solutions, nance should work value. Blockchain implementation work is spent on the business operation hand-in-hand with the tech and is not only about revenue set-up, including, crucially, establishing business teams to ensure that generation and improving existing governance right at the start. business goals are met. processes. It can also improve Preece recommends spending time y Join a blockchain consortium your brand — for example, it can initially to think broadly about the (business network) early. In enhance trust in the provenance of business value you can create by most blockchain consortia, large a commodity such as diamonds or implementing blockchain, so that you companies join forces to build art works. “end up creating the right sort of network a blockchain. If you join late, it y Don’t be scared of the technology. with the right governance and the right can be dicult to change some Blockchain technology is a solid participation”. The process of of the consortium’s governance solution with many use cases collaboration among network fundamentals. There can also and successful implementations participants, who may also be be a nancial penalty in joining supporting millions of transactions. competitors, takes time: months rather a network late — there may be y Collaborate widely. Draw upon the than weeks. She said this cannot be no more space on the network knowledge of those with blockchain rushed because it is part of the process of directly and you would need experience to learn lessons and building trust and realising value for the to join in a more costly way. build on what is already operational whole network. This approach needs to Companies looking to implement a to create value. Q tap into a broad cross section of blockchain-based application may experience rather than the knowledge of not need to join a consortium. one or two people. y Examine current processes that Preece also recommends: create a lot of friction. Finance Oliver Rowe is an magazine y Find a sponsor and champion. For rules and regulations can be a FM senior editor. To comment on this example, a CFO, COO, or sales lead source of friction (eg, no purchase article or to suggest an idea for within the business to make it work. order, no payment). Blockchain another article, contact him at Without one, networks will struggle can make these processes more [email protected]. to go live and to scale. ecient. You can see results

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1905-46091 CGMA Store full page generic advert for FM magazine.indd 1 13/06/2019 3:53 PM Resilience: Institute students as POWs in Germany

During World War II CIMA made arrangements for its students in German prisoner-of-war camps to take the Institute’s exams. Here are their stories.

By Martin Farrar, Ph.D.

Stalag Luft III, near the Polish town of Zagan, housed airmen who were prisoners of war during World War II. RAF Sergeant Francis Walter Day, whose POW card is at right, was imprisoned there when he completed the Institute's Intermediate Examination Part I in December 1943. LEFT: PHOTO ©IMPERIAL WAR MUSEUM (HU ); RIGHT: PHOTO COURTESY OF THE NATIONAL ARCHIVES OF THE UK THE OF ARCHIVES NATIONAL THE OF COURTESY PHOTO RIGHT: ); (HU MUSEUM WAR ©IMPERIAL PHOTO LEFT:

22 I FM MAGAZINE I December 2019 he history of the Second World camps (see the sidebar “Successful War is full of many stories of Candidates”). tragedy and heroism. Yet for During the war more than , T every well-known story there British and Commonwealth servicemen are innumerable ones that are were taken prisoner by German forces, rarely retold. One of the lesser-known and . of those prisoners died while in human interest stories of the war involves captivity. In comparison,  million Soviet how dozens of Institute students took servicemen were captured by German their cost and works exams while held in forces, and it is estimated that  of German prisoner-of-war (POW) camps those prisoners died. The di erence in (see the sidebar “Di erent Types of mortality rates was in part down to Britain German Camps”). and Germany being signatories to the The Institute’s commitment to allow  Geneva Convention that laid out students to continue their studies went as standards on the treatment of POWs. far as to allow the Examinations Sitting a professional examination is Committee, between June  and June challenging under any circumstances. , to make arrangements for  But POWs who took the exams did so candidates to sit exams across four under circumstances much more examination sittings in German POW dicult than the average candidate back

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 23 Living through history A different kind of prisoner One of the students who sat the cost and works exams was located in one of the war’s most famous POW camps. Percy Alexander Etheridge, who The camp, Stalag Luft III, near the town of Zagan, Poland, was for airmen, and participated in the second round of is the one featured in the  film The Great Escape. The movie was based on the examinations, was born in  and real events of  March , when  men broke out of the camp through came from Southampton. What pre-dug escape tunnels. Of the escapees, three made the journey back to Britain, makes Etheridge different from the  were recaptured, and  were executed on the personal orders of Adolf Hitler. other candidates taking Institute While he was not one of the escapees, Royal Air Force (RAF) Sergeant Francis examinations in June  is that he Walter Day (service number  ) was held in the camp at the time of the wasn’t serving with the British Armed breakout, according to records in The National Archives in Kew, London. Forces. He had been working in Born in Driffield, Yorkshire, in  , Day was involved in a large RAF Bomber Germany at the beginning of the war Command raid on Berlin, on – November  . The raid consisted of more than as a civilian and was immediately  bomber aircraft, of which  were shot down or crashed. Day was in one of interned. Rather than a “prisoner of the  aircraft that failed to return to Britain, and he was captured in Germany on war”, Etheridge was classified as an  November  . On  November  , The Hull Daily Mail reported, in an article “internee” under the Geneva with the headline “Hull Man Prisoner”, that Day was amongst the  RAF men Convention. captured by the Germans following the air raid on Berlin. From his surviving German record Day was sent to Stalag Luft III, where he successfully completed the card, Etheridge (internee number Intermediate Examination Part I in December . By early , Stalag Luft III ) was sent to the Ilag XIII had become overcrowded and Day was one of about , prisoners transferred internee camp in Wülzburg, Germany, to Stalag Luft VIII-B, Lamsdorf. Then from –  July , he is listed on an RAF in October  . By the time he sat the roll call conducted at Stalag  in Thorn, Poland. He had been hurriedly moved Institute’s Final Examination he was from Stalag Luft , located in current-day Šilutė, Lithuania, because the in Ilag Kreuzburg camp, Poland. advancing Soviet forces on the Eastern Front got too close to the camp. It is an Etheridge was admitted as an early example of the “death marches” in which groups of prisoners were Associate member (member number marched away from the advancing fronts to camps inside Germany. It is ) of the Institute on  November estimated that , POWs were subjected to such marches at the end of war. . In the  List of Members, After the war, Day moved to Hull, Yorkshire, in the UK, and continued to study Etheridge was a “chartered secretary, for the Institute examinations. He passed the Final Examination in December and cost and works accountant” with , and was admitted as an Associate member (member number ) of the British American Tobacco. He had Institute on  October . In the s, Day was the manager of a ship repair started working for the company in yard and a marine superintendent. Then from the mid- s to the early s,  in his early s. The entry in the he was a lecturer at Hull College of Higher Education. He died in .  list suggests he was part of British American Tobacco’s “overseas staff”, and this could explain why he was in Germany at the outbreak of home. Rules of the Geneva Convention members’ stories alive for future war. on the treatment of POWs were not generations of management In , Etheridge took a ship to always followed, especially towards the accountants. This article details the Rio de Janeiro, Brazil, and by  end of the war. Noncommissioned POW camp exams initiative and was working in the accounting servicemen could be forced to work, highlights some of the personal stories department of Souza Cruz, a often as heavy labour. Prison food of those involved. (For a prole of one subsidiary of British American rations were paltry, and the prisoners student who was taken prisoner after a Tobacco, where he remained until the often were dealing with the trauma of daring raid, see the sidebar “Mission o mid- s. Then aged , Etheridge combat and feelings of shame from the French Coast”.) retired and returned to his home city their surrender and capture. Most of all, of Southampton. He died in . prisoners had to contend with the fact Professional exams in the camps that there was no end in sight to their By the beginning of  , to pick one imprisonment. As long as the war point in time over a year into the war, the continued without resolution, so did Institute had , members and ,  their incarceration. registered students. At that time an active captivity, see the sidebar “POW Student The Institute student-POW stories are service register kept by the Institute shows Proles”.) inspirational and demonstrate the that  members and approximately  In March , through the Joint War pioneering spirit of the Institute’s many registered students were attached with Organisation formed between the Red members and students over the past  British Armed Forces. (For brief proles of Cross and the Order of St John, POWs years. It is vitally important to keep past several POWs who took the exam while in were able to request, and have sent,

24 I FM MAGAZINE I December 2019 Mission off the French coast Different types of

Lieutenant William James Alexander Weir participated in a daring British mission German camps for which he was mentioned in dispatches. Captured, he successfully completed the Intermediate Examination Part II in December  while at the Marlag Und During World War II there was a Milag Nord (Marlag ) camp. The Marlag Und Milag Nord camp was located range of German camps where northeast of Bremen and housed British Royal Navy and Merchant Navy prisoners. personnel from the Allied forces were Weir was a lieutenant with the Royal Naval Volunteer Reserve (RNVR), which was a held. These were in addition to the reserve of professional seamen from the British merchant and fishing fleets. Nazi concentration, extermination, In June , Weir was a first lieutenant aboard the steam gunboat HM SGB, transit, and labour camps for based out of Newhaven, Sussex. On  June , HM SGB, along with HMS civilians. Albrighton and three other steam gunboats, was embarked on a scuttling Prisoners of war (POWs) were held operation. The operation was trying to intercept two German merchant vessels that in separate camps for the three had departed from Le Havre on the Normandy coast in France. The resulting British and Commonwealth armed skirmish in the Bay of Seine led to one German vessel being torpedoed and the services: army, navy, and air force. other being severely damaged by gunfire. HM SGB sank with Weir on board. Weir For army detainees there was a spent an hour in the water and was eventually picked up by the Germans. From further separation into “Oflag” camps France he was sent to the Marlag Und Milag Nord camp in Germany. for officers and “Stalag” camps for Weir was recorded as missing by the British government’s Admiralty office on noncommissioned soldiers. Navy  June . A week later, on  June, an Admiralty telegram was dispatched to his detainees were in “Marlag” camps, mother in Glasgow, reporting him as “missing on active service”. Remarkably, the and air force detainees were in Admiralty’s copy of the telegram still survives at the National Archives and is a “Stalag luft” camps, which were run reminder of the chilling effects such telegrams would have had on the families of by the German air force, the servicemen and servicewomen. Luftwaffe. British and commonwealth On  August Weir’s father received a letter, dated  June, from his son civilians who were in Germany at the explaining that he was a POW in Germany and in good health. Weir’s father then outbreak of war were interned in wrote to the Admiralty on  August  and informed it that: “Ilag” or “Jlag” camps.

I have received a further communication from him this morning, dated  July, stating that he is comfortable and well off in many ways and is taking up study courses in several subjects. A series of examinations The rst Institute examinations in a It appears that Weir was already studying for the Institute examinations. German POW camp involved four British After the war, Weir was admitted as an Associate member of the Institute Army ocers and took place in June  (member number ) on November . In the  Members’ List, Weir was at the Oag VI-B camp. The camp, located an accountant working for The Associated Portland Cement Manufacturers, near the village of Dössel in northwest London. He went on to become their group chief accountant before retiring to Germany, opened in September  and Scotland. housed both French and British ocers. A second set of examinations took place on , , and  June . The  candidates were spread across seven books from the New Bodleian Library, this country and in prisoner of war German camps. Of those sitting Oxford, on any educational subject in camps, from the giving of advice examinations,  were successful. The which they were interested. This and dispatch of books to prisoners Institute’s archive reveals the names of arrangement supplemented the books of war, to the sending of courses of the successful students only, so the four already being sent to camps by the study for university, professional, who failed will forever be only identiable YMCA (Young Men’s Christian technical and vocational as candidate numbers. Association) and prisoners’ next-of-kin. examinations, the organisation of The Examinations Committee made The combination of educational schools with qualied teachers and arrangements for a further sitting with  books, provision of stationery, and instructors in the camps, and candidates taking exams in camps on , , prisoners with cost accounting nally to the holding of and  December , with  successful knowledge conducting classes made the examinations, in which papers set candidates. study of professional examinations and the standards required are The logistics of getting examination possible. An article in The Cost identical with those at home. scripts from German POW camps, through Accountant in January  explained: Red Cross channels, back to the Institute Working with the British Red Cross, in London were immense. Six This work has undergone a natural the Institute was one of the rst examination scripts had failed to reach development, made possible by the professional bodies to hold London by the time the December  energy and goodwill of many in examinations in a German POW camp. examinations pass list was published in

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 25 Successful candidates Intermediate Examination Part II The following are all known Institute students who passed yyy William Riddle Coulson — Newcastle-upon-Tyne. exams while being held as POWs during World War II. The yyy Samuel Gordon Furniss — Altrincham. names were published in the Institute's journal, The Cost yyy David Salusbury Haig — Henley-on-Thames. Accountant , at that time. yyy William James Alexander Weir — London. yyy Allan Bernard Wiggins — Watford. June  Examinations yyy Francis Vittery Platel — Shrewsbury. Intermediate Examination Part I Intermediate Examination Parts I & II yyy David Salusbury Haig — Edgware, Middlesex. yyy Alfred Joseph Bradley — Birtley. Intermediate Examination Part II yyy William Alfred Brown — Drummoyne, Australia. yyy James Keith Smith — Hale, Cheshire. yyy Bertram James Leyland — Colwyn Bay. Intermediate Examination Parts I & II yyy Raymond Newton Reynolds — London. yyy yyy Charles Norman Hurst — Banstead. Percival Walter Shatford White — Camberley. Final Examination yyy Alfred Guest Metcalf — Birmingham. yyy Percy Alexander Etheridge — Southampton. June  Examinations yyy Edward Gerald Evans — Stratford-upon-Avon. Intermediate Examination Part I yyy Ronald Charles Mackenzie — Sydney, Australia. yyy Thomas Edward Brown — Dundee. June  Examinations yyy George Browing Byars — Montrose. Intermediate Examination Part I yyy Samuel Gordon Furniss — Altrincham. yyy Patrick Henery — St Mary Hoo, Kent. yyy Geoffery Ronald Hobsbawn — Santiago, Chile. yyy Charles Kober — Reading. yyy Allan Bernard Wiggins — Watford. Intermediate Examination Part II Intermediate Examination Part II yyy William Desmond Adams — Auckland, New Zealand. yyy John Edwards Conner — Nicosia, Cyprus. yyy Alexander Anderson — Motherwell. yyy Percy Alexander Etheridge — Southampton. yyy Kenneth Wardlaw Batchelor — Johannesburg, South yyy Edward Gerald Evans — Stratford-upon-Avon. Africa. yyy Ronald Charles Mackenzie — Sydney, Australia. yyy Robert Colville Bradshaw — Wellington, New Zealand. yyy Walter Charles Morris — Hamilton, New Zealand. yyy Walter John Daniel — Lower Hutt, New Zealand. yyy John Statham — Derby. yyy Robert Eric Glenn — Johannesburg, South Africa. Intermediate Examination Parts I & II yyy Harold Thomas Jenkins — Shirley, Warwickshire. yyy George Butterworth — Bury, Lancashire. yyy Robert Nixon — Birkenhead. yyy Gordon Alexander Donald — London. yyy Frank Alexander Robson — Leicester. yyy Ronald Henry Lewis Russell — London. yyy Alec Milne Shirras — Port Elizabeth, South Africa. Final Examination Intermediate Examination Parts I & II yyy Charles Norman Hurst — Banstead. yyy Albert F. Blanchard — Belvedere, Kent. yyy Alfred Guest Metcalf — Birmingham. yyy Frank Arthur Calverley — Batley, Yorkshire. yyy James Keith Smith — Hale, Cheshire. yyy William Mayer Henderson — Dumbarton. yyy Robert Mercer Pass — Kirkby, Lancashire. December  Examinations yyy Sidney Arthur Stevenson — Kettering. Intermediate Examination Part I yyy Neville Gardner Whitehead — Maybole, Ayrshire. yyy William Desmond Adams — Auckland, New Zealand. Final Examination yyy William Austin Daley — Ashford, Kent. yyy William Alfred Brown — Drummoyne, Australia. yyy Humphrey Fleetwood Luyna — Liverpool. yyy William Riddle Coulson — Cramlington, yyy Ernest Wilfred Penn — Ruardean, Gloucestershire. Northumberland. yyy Robert Hutton — Halifax. yyy Raymond Newton Reynolds — London. yyy Francis Walter Day — Hull. yyy Sidney Arthur Stevenson — Kettering.

26 I FM MAGAZINE I December 2019 POW student profiles

The following summaries provide additional details about in June . He was admitted as an Associate member in some of the British and Commonwealth soldiers who sat  and later served as a “consulting engineer” with the cost and works exams in German POW camps: Associated Industrial Consultants, based in Park Lane, Captain Robert Colville Bradshaw: Attached to the London. Australian Army, Bradshaw completed the Institute’s Major Francis Vittery Platel: Was awarded the George Intermediate Examination Part II at Oflag XIIB, Hadamar, in Medal for bravery while serving with the Royal Army June . Born in Sydney, Australia, he relocated to Ordnance Corps in North Africa, for leading a firefighting and Wellington, New Zealand, from where he was admitted as an rescue party after an explosion in an ammunition depot. Associate member in . Captured in Greece in February  , he died in a German Sergeant William Alfred Brown: Completed the POW camp before he got to complete his Institute studies. Institute’s Final Examinations at Stalag VII A, Moosburg, in Lieutenant Alec Milne Shirras: Attached to the South June . Born in Bega, New South Wales, Australia, he was African Union Defence Forces, he was captured in Italy and attached to the Middle East Force and captured by German spent time in the Italian POW camp  Modena. When Italy forces in July  . He was admitted as an Associate member surrendered in , he was transferred to the German camp in , then based in Melbourne. Oflag A, Weinburg, where he completed the Institute’s Lieutenant David Salusbury Haig: One of the first four Intermediate Examination Part II in June . He returned to British Army officers to sit examinations in a POW camp. It is his home town of Port Elizabeth, South Africa, after the war assumed he did not complete his cost accounting studies. and was admitted as an Associate member of the Institute in With the /th Battalion, Middlesex Regiment (Duke of . Cambridge’s Own), he was captured in Northern France at Captain James Keith Smith: One of the first four British the time of the Dunkirk evacuation in May . Army officers to sit examinations in a POW camp. He Lieutenant Charles Norman Hurst: One of the first four successfully completed the Institute’s Final Exam in June British Army officers to sit examinations in a POW camp. He , but his common surname makes his records difficult to completed the Institute’s Final Examination in June  and track. survived the war, but his details have not been found in Sergeant Sidney Arthur Stevenson: Attached to the  members’ lists, so it is presumed he did not go on to full Rd. Cons. Coy. Royal Engineers, he was captured by the membership. Attached to the Royal Engineers, he was Germans in June  while on Crete, Greece. After the war, captured during the battle for France in May . he returned to Kettering, Northamptonshire, and was Lieutenant Alfred Guest Metcalf: One of the first four admitted as an Associate member of the Institute in British Army officers to sit examinations in a POW camp. A September . In the  Members’ List he was working lieutenant with the Royal Corps of Signals, he was captured for Nottingham City’s Treasurer’s Department.

March . By October , the director POW candidates’ pass list was published, the Final Examination than any other of the Examinations Committee reported the Examination Committee was still student in the June  sitting. For this that scripts from just one camp were awaiting June  scripts from seven achievement Sidney Arthur Stevenson missing — Stalag Luft III (see the sidebar camps. It was assumed then that the was awarded the Institute’s S. Laurence “Living Through History”). By February papers from the candidates had been Gill Prize. Q  the scripts had arrived. irrevocably lost. Repatriated POWs from two camps reported to the Examination Impressive achievement in final Committee in July  that Martin Farrar, Ph.D., is an associate exams examinations had taken place. Of the ve technical director–Management The last POW camp exams were held camps where scripts were returned, there Accounting at the Association of on , , and  June  with  candidates were  successful candidates. (One International Certified Professional in camps. The examinations took place civilian internee who was stranded in Accountants. He is author of Leading at the time of the Allied D-Day landings Germany when the war broke out also the Transformation:  Years and on the beaches of Northern France. After passed the exam in an internee camp. For Beyond, a history of CIMA written to the events of D-Day, the chaos of an his story, read the sidebar “A Dierent mark its centenary this year. To ever-changing mobile military Kind of Prisoner”.) comment on this article or to suggest advancement across Western Europe Even with all the hardships and an idea for another article, contact made it impossible to oer further uncertainties of camp life, one POW Oliver Rowe, an FM magazine senior examination sittings in German camps. candidate reached higher marks for the editor, at [email protected]. As it was, in September , when the Intermediate Examination Parts I & II and

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 27 Changing track on skills

An evolving rail industry requires traditional project finance roles to broaden and encompass new skills.

By Olcay Yılmaz, FCMA, CGMA, Ph.D. PHOTO BY WILLIAM/ISTOCK BY PHOTO IMA marks 100 years of evolution this year, but the management accounting profession is not the only area to see rapid change over a long period. In the CUK and globally, the rail industry, which is around 200 years old, is currently going through a period of change that reflects a significant growth in demand and an evolving industry structure. It is also having to drive efficiencies and value for money (ie, obtaining the optimum commercially focused and Changes in the rail transport market collaborative. They also need to be equipped with a broader range of skills, require finance professionals to be such as an ability to perform complex data analysis, an in-depth much more commercially focused understanding of the risk-sharing arrangements associated with and collaborative. alternative business models, and the ability to educate a wide variety of stakeholders from dierent backgrounds. Given the worldwide increase in demand for new and enhanced rail balance between quality, across the globe are looking for greater infrastructure, the developments in sustainability, and price for goods and private-sector involvement to bring the UK are already being seen in other services) in the face of mounting innovation and provide investment parts of the world, most notably in the pressure on public nances. (see the sidebar “Private Finance US, and are changing the way nance These pressures are exacerbated by Poised to Play Larger Role”). teams work and support their the growth in urbanisation and the Because of these changes to the businesses. emergence of an increasing number of operation of the rail transport market, Similar transitions are also taking megacities (those with more than  the traditional project nance roles in place for nance teams working in million residents), which combine to organisations in the sector are also organisations supplying to other put ever more pressure on transport changing. Increasingly, they require infrastructure-based industries such as networks. As a result, governments nance professionals to be much more other transport types, general construction, energy, healthcare, and education, as well as those manufacturing both consumer and industrial products. In all of these, the changes are driven by ever-increasing customer demands, and a desire to obtain greater value for money.

Evolution of roles UK rail network: A brief history The skillset of the traditional professional in companies involved in The UK’s rail network is the oldest in the world, dating to the early 1800s when long-term rail construction projects has a number of small private companies operated local rail links. These isolated historically spanned a broad range of links were brought together into something resembling a network in the 1840s, activities, from supporting bids and and, over the course of the 19th and early 20th centuries, the railway expanded assessing estimates to reviewing project rapidly. progress against budget, and agreeing This golden era of rail expansion and popularity slowed considerably as the and collecting project overruns. motor car gained popularity. As mass car production increasingly made However, the varied and exciting independent travel an affordable option, public and private investment steadily roles that are available to the modern transferred from rail to road infrastructure. As the UK’s rail industry came nance professional require under increasing financial pressure, there was wholesale closure of rural additional skills and the ability to railway routes in the 1960s and 1970s to concentrate resources on core intercity embrace a much broader remit. Most lines. of these roles are driven by the The past 20 years have seen rapid population growth and a significant requirement for private-sector increase in the demand for all forms of travel globally. Major roads, railways, suppliers to have more “skin in the and airports worldwide are increasingly running at or near full capacity for game”, in terms of greater risk-sharing. longer periods — not just in peak hours. They are also driven by the need to With increasing road congestion and a drive towards more sustainable bring more private investment and/or transport solutions, the number of rail passenger journeys on the UK’s rail nancing into the infrastructure network has doubled in the past 20 years with some reports suggesting a procurement process. possible further doubling in freight and passenger traffic by 2030. This all adds up to a transport network that is under unprecedented levels of pressure, so further increases in capacity together with improved efficiencies are badly needed.

30 I FM MAGAZINE I December 2019 The key elements of these new factors to enable them to help roles include: demonstrate, quantify, and forecast the nancial bene ts of new Working collaboratively, with a technology (see the sidebar “New broader commercial focus Technologies”). Finance leaders also With the shift towards projects need to work together with users of delivering on outcomes and the focus that technology to determine which on realising bene ts, nance teams bene ts can actually be realised. New technologies need to understand inuencing Equally, when contracting under alternative business models, such as Much of the UK’s current service-based contracts or using infrastructure network is reaching future savings to nance initial the end of its operating life. However, investment, input will often be following significant investment in required from a number of R&D, the development of digital stakeholders working collaboratively technology is enabling the industry to to share information. cost-effectively squeeze more The commercial aspects of a capacity out of the existing network, project, in particular risk helping take pressure off the capacity management, and mitigation and shortfall. The UK rail industry management of costs over the whole The new digital signalling and model life of an asset, are just as important control solutions enable trains to as the traditional “ nancials”. These safely run more closely together, After its privatisation in the early complementary skills will grow allowing more trains (and therefore s, the UK rail industry became alongside traditional nancial and passengers) to be on the track at any fragmented, with many stakeholders accounting expertise. given time. They also allow traffic to and different private organisations Professionals will also need to have be managed more effectively operating trains and managing a greater understanding of new following a disruption, and even infrastructure. technologies and their organisations’ enable trains to operate automatically Private train and freight operating business strategies, enabling them to through the most heavily congested companies operate the trains — understand whether all the risks have areas. some with the support of government been considered. This will involve In the future, collaboration subsidies. Almost all of England’s, working closely with non nance between industry stakeholders will Scotland’s, and Wales’s fixed colleagues, such as engineers, other be improved by plans to more closely infrastructure, including the track, technical specialists, and lawyers. align track infrastructure and train stations, signalling, and train control operating companies’ strategies and equipment, is owned, operated, and Data analysis and modelling skills also their investment programmes. maintained by Network Rail, which Advanced data analysis and modelling Network Rail and the train operators then charges operators to use its skills, utilising complex formulas and will work together to implement the assets. developing appropriate estimates, are right technology solutions in their Network Rail is also responsible vitally important in a number of areas: local geographical area, which will for upgrading, renewing, and yyy Identifying trends in equipment involve investment in both the trains expanding the infrastructure, a task performance data, obtained to (so they have enough capacity and made more difficult by economics. It predict how and when it might are compatible with the new is not always easy to recover the fail in the future — so that equipment) and the new technology investment from the end users (the corrective action can be taken in being implemented in the fixed fare-paying passengers and freight advance as well as for planning infrastructure. users), due to the fragmented nature and pricing maintenance of the industry and the fact that most regimes over time. This is more passenger fares are set by the challenging for new technologies, industry regulator. as limited historic data is help build business cases over These financial pressures were available. the life of an asset that enable exacerbated from  , when yyy Determining suitable suitable payment mechanisms Network Rail was re-classified as a probabilities, indices, and to be designed that meet their central government body, meaning mitigation costs to price future objectives and constraints. that its debts became part of the UK risks appropriately, so that public finance deficit. The move also margins can be protected and Engaging and educating key put an end to the legacy practice of risks can be better managed stakeholders borrowing to finance investment. whilst remaining competitive. Increasingly, new technologies are yyy Working with customers to more and more complex and the

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 31 Private finance poised to play larger role

Technology for the rail industry is now so advanced that this can be used to pay for both the initial investment and infrastructure owners worldwide are looking to identify the associated finance costs over time, delivering a truly supply partners to help share the risks associated with the “self-funded” project. design and construction of new systems. Often, these This approach also has the advantage of possibly keeping suppliers are best placed to manage and mitigate the risks the investment off the UK public balance sheet — involved. This approach can also provide them with an something the UK government is keen to achieve. This is incentive to successfully deliver on new projects. only possible if most risk is transferred to the private sector As a result, the industry is beginning to make decisions on (which may be difficult in practice, as some risks — for a longer-term basis, taking into account the costs of an asset example, demand risk — cannot currently be controlled by over its whole life. In the past, short-term decision-making the supplier). In the past, lease accounting rules could often led to infrastructure being procured on the basis of its sometimes be used to achieve an off-balance-sheet initial purchase price, without consideration of the costs of treatment by structuring the risk-sharing, so that an operating and maintaining it, or the potential it provided for operating lease was achieved. However, this “loophole” future upgrades. has now been closed following the introduction of the new Whilst affordability (the ability to spread the cost of accounting standard for leases, IFRS 16, effective from upgrades) over the short term is now less of a focus than January 2019. Network Rail still is — and always has been was previously the case, private finance can be an attractive since privatisation — a private company in the UK, option to support much-needed upgrades when they are although it receives almost all its funding from the UK required, rather than having to wait until funding becomes government. It has a UK regulatory requirement, however, available. Upgrade programmes can then bring the benefits to report in the manner of a UK-listed public company, and of reduced operating and maintenance costs and, ultimately, so from 1 April 2005 it has been reporting under the increased revenue from passengers and freight. In turn, EU-adopted IFRS.

supplier tends to be the “expert” on continue to be innovative and exploit This all makes for a rewarding these, with other stakeholders, new technologies in today’s digital career in infrastructure. Those who including the customer and potential world. take this path are helping to solve nanciers, only having a limited As solutions become more some of the world’s most challenging understanding of the new complex, there is a much greater focus problems and improving the overall technologies and the risks that these on collaborative working and experience for people going about bring. balanced risk-sharing between the their daily lives. Q Therefore, a good deal of education public and private sectors, resulting in is required both within supplier alternative business models being organisations and with the wider developed, which include the stakeholder community to ensure that introduction of private nance. Olcay Yılmaz, FCMA, CGMA, Ph.D., is the best overall solution to the The evolving structure in the rail finance director at Siemens Rail problem statement is achieved. Often, industry requires nance Automation, a part of Siemens Mobility this involves taking into account professionals to step up and support Ltd, where he heads a -strong dierent, sometimes conicting, their business partners more finance team across the UK. The Rail objectives. In addition, guidance will holistically. Finance roles are Automation business unit has , be needed for those stakeholders who continuing to develop, providing specialist employees including an R&D are not used to looking at a long-term exciting and varied opportunities for team of around  people and or whole-life perspective when modern nance professionals to manufacturing facilities in the UK. To making decisions. broaden their skillset and become comment on this article or to suggest much more commercially focused, an idea for another article, contact Solving challenging problems collaborating with a wider set of Oliver Rowe, an FM magazine senior In summary, organisations providing stakeholders and undertaking editor, at [email protected]. infrastructure across the globe need to complex data analysis and modelling.

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1906-63508 IFRS Certificate advert - reversion from AICPA version - FINAL.indd 1 19/06/2019 9:53 AM The forgotten history of accounting words

Accounting terms commonly used today have a rich, useful, and sometimes surprising heritage.

By Paolo Quattrone, Ph.D.

ccounting is often described symmetry of the tablets (what we mirror. It’s not by chance we use the word as the “language of business”, nowadays would symbolise in the form of “speculation” (from speculum, ie, “mirror” made of words that we now a T account) was an indication of ethical in Latin) in nance. Accounting was a A associate exclusively with conduct. This is also reected in the word mirroring exercise, an opportunity to monetary calculations and “equity”, which does not simply show the reect on one’s public image and actions economic interests. But words have a balance between debits and credits but is a and interrogate oneself on whether such history that is too easily forgotten. Bringing symbol of aequitas, that is, of fairness. image and actions were appropriate or not that history back can help us understand Accounting for the Romans was an in ambiguous and changing how rich the nature of accounting was instrument to assess the moral position of circumstances. — and still is. Every nancial transaction is a citizen in relation to the others in the Making an “inventory” was a way also always beyond nance: It often implies same community. of nding new solutions, of “inventing” moral, social, political, and even religious The role of accounts and accounting as them by recombining and reclassifying meaning (hence the increasing call for a compass for moral conduct becomes accounts in order to get a new view on greater exchanges between Western even more evident in the Renaissance, problems, as another etymological insight accounting and nance traditions and where ratio as “account” is explicitly linked reveals. Islamic nance). to the idea of proportionality. Not by The advent of the accounting Take the word “rationality”, for chance, Luca Pacioli — often described as profession, with its ethics and codes of example. We associate it with intellectual the Father of Accounting — places conduct, in the late th century somehow abilities, mainstream economics, and the accounting along with arithmetic and augmented the moral dimension of idea of making the most of your money. A geometry in his text Summa de arithmetica, accounting. However, it also mixed it with dierent association emerges though if geometria, proportioni et proportionalita. other trends including the UK and US we look at its etymology: Ratio in Latin Double-entry bookkeeping for him and industrial revolutions in the Western means “calculation”, “schema”, various other religious authors of world. Accounting also became “proportion”, and, surprisingly, “account”. accounting treatises of that time was an secularised. With the separation between The Romans knew this well when they instrument to make sure that decisions ownership and management, at least in asked citizens to present their accounts in were wise, as wisdom was considered to some parts of the world, it became an symmetrical tablets, in order to parem lie in the middle (in medio stat virtus), not instrument of measurement rather than of rationem, that is, to make sure that credits in the maximisation of pro ts and judgement: a tool for representation rather and debits were accurately accounted for minimisation of costs. than one for reection. and were in balance. For the late medieval and early modern With the development of the nance For the Romans, the aesthetical accountants, accounting was viewed as a function within organisations, numbers IMAGE BY SCIENCE SOURCE/GETTY IMAGES SOURCE/GETTY SCIENCE BY IMAGE

34 I FM MAGAZINE I December 2019 A portrait of the Father of Accounting, Luca Pacioli, circa 1495–1500, attributed to the Italian Renaissance artist Jacopo de’ Barbari.

have been produced by professional data, arti cial intelligence, and various organisational purposes, and for accountants and are often viewed and kinds of data visualisation, where inventory, invention, and compromise is a used by other managers in the wider accounting numbers are often viewed as reasonable and achievable goal. It is within business. This process exponentially grew having a higher status than previously. our reach as it has always been, in Roman with the advent of information Accounting, once used to question the as much as in digital times. Q technologies such as enterprise resource morality of behaviours, is now under planning (ERP) systems, where central scrutiny because it is not able to produce databases now make accounting data objective knowledge and facts. The Paolo Quattrone, Ph.D., is professor available across functions and often in real paradox is that it was not designed for this and chair of accounting, governance, time to all. purpose in the rst place. It was instead and social innovation at the Accounting numbers are not “facts” designed for interrogating the mystery of University of Edinburgh Business (factum in Latin means “made”), and there value, as the religious link of the early School in the UK. To comment on has been a failure to make the public (a accounting authors shows. By preaching this article or to suggest an idea for consumer of accounting gures) aware of the ambiguity of nancial data, the another article, contact Oliver Rowe, the controversial nature of accounting accountant can regain centre stage. an magazine senior editor, at numbers. This is even more evident with Recovering accounting space for FM [email protected]. the expansion of business analytics, big dialogue, for questioning individual and

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 35 elements of professional 6judgement PHOTO BY BAONA/ISTOCK BY PHOTO

36 I FM MAGAZINE I December 2019 High-quality professional judgement can pave the way to becoming a finance leader. Here’s what it is and how to improve it.

By Sir Andrew Likierman, FCMA

more important. AI will enhance being perceptive about how things are management accounting capabilities, said and what is not said, for example, disrupt existing practices, and take over areas not covered in an email or a report. many routine tasks. A higher proportion Take, for example, monthly of the remaining tasks will require management information reports judgement, with AI providing better data. incorporating both nancial and After looking at professional and non nancial information. There is often academic sources and discussions with dissatisfaction about quality — too much, many senior gures in the profession, I too dicult to understand — and there is a have de ned professional judgement as need to pick up such signals even without “the combination of personal qualities colleagues complaining. Knowing what to with relevant knowledge, experience, and look for is another part of judgement, such professional standards to form opinions as which variances to follow up on and and make decisions”. whether to use any additional non nancial To give an idea of the personal qualities measures. These measures may form part involved, they include acumen, character, of a balanced scorecard, where any common sense, discernment, emotional additional information has to be weighed intelligence, insight, intelligence, against the dangers of excessive intuition, gut feel, perceptiveness, reason, complexity. Finally, there is the ability to risk awareness, and wisdom. Under understand what colleagues need when professional standards come the qualities acting as a business partner. associated with integrity and ethical Three ways to improve include: behaviour. yyy Seeking feedback from a coach or Professional judgement isn’t about mentor on your listening skills. Test being judgemental (“You ought to …”) or yourself regularly by asking, “So what nowledge and experience are being cautious. It is very much in tune you are saying is …”, to double-check of course essential for with the profession’s ethical principle of whether you understood correctly; management accountants, objectivity — not allowing bias, conict of yyy Being aware of any tendencies K but it is those with good interest, or the inuence of other people you have to ignore or suppress professional judgement who to aect your decisions or actions. inconvenient information; and are likely to be part of the management yyy Insisting on clarity in the way team. elements that determine information is presented. Take the budget, for example. judgement Professional judgements are necessary at The following six elements determine Whom and what to trust all stages: To determine whether revenue whether you, or someone else, has Management accountants are and cost estimates are credible; which judgement. Each element includes three  rightly seen as trustworthy capital projects to include; whether to illustrative examples for improvement. professionals, so it is particularly recommend that a struggling project be important that when they use given more time; how tight or loose the What you take in information from others, there are budget should be; the balance between This is a measure of the quality of processes in place to know whom and investment and consumption; whether comprehension in both reading and what to trust. cost-cutting will jeopardise long-term listening, which requires taking in Professional judgement will help to prospects. It could be a long list. information but also evaluating, spot techniques such as low-balling in With arti cial intelligence (AI), analysing, and putting it into context. project proposals or setting easily professional judgements will be even Quality of listening and reading includes reachable targets.

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 37 Three ways to improve include: which is designed to reduce bias, when y Clearly presenting choices, y Understanding the perspective and quantication may not be appropriate particularly of qualitative elements. motivation of the person providing may itself be an expression of bias. the information; Three ways to improve include: How you implement it y Making clear that in sta hiring, y Training in understanding the A choice is not the end of the story appraisal, and promotion, good common forms of bias;  — successful implementation is also judgement is seen as important; and y Having greater awareness of your part of good judgement. Increasing the y Verifying information through own biases, including your risk frequency of management reporting, for corroboration and comparison. tolerance or risk appetite; and example, comes with the potential y Welcoming diverse views and trade-o that an early closing may a ect What you know about this perspectives to meetings and the quality of the gures. In Knowledge has to be combined discussions. implementation, too, there are often risk with judgement in applying management issues, such as new IT management accounting techniques. One How you choose applications, which can lead to great ideas example might be deciding whether to There are many sources on the in principle not being delivered in practice, apply a technique such as zero-based  mechanics of decision-taking, but it or projects that run late and over budget. budgeting to any part of an organisation. will be the management accountant’s Three ways to improve include: Another could be deciding whether a professional judgement through y Identifying reasons for past choice of performance comparators is experience, knowledge, and personal problems in implementing plans justied. Or there is a decision on the risk qualities that come together to formulate (especially projects); of introducing AI to marketing set against and present the choice. This includes y Training using cases to improve the risk of not introducing it. recognising whether choices have been the probabilities of success in Experience is a key element in the appropriately framed, whether certain implementation; and judgement of how to apply that alternatives (including more radical y Using pre-mortems to anticipate the knowledge, but while experience is rightly options) have been excluded, and whether implications and risks of variations valued, it is not enough. It must also risk has been appropriately considered. from plan. involve learning about people, not only Judgement is needed at every level of (Timing issues will need to be processes, systems, and technology. An decision-making. The basis of cost addressed as part of elements ve and six. example here is understanding how allocation, for example, will normally be a An example would be whether to colleagues will react to changing market logical connection — time spent, undertake more work to verify conditions or adverse variances in setting numbers of people involved, volume, etc. information on a project proposal. Risk targets and controls. Poor judgement may For expenditure without such a assessment will form part of elements mean missed deadlines and cost overruns connection — research and development two, four, ve, and six.) or may result in the organisation running or product-range marketing — the out of cash. question may be whether to use The key role of judgement Three ways to improve include: activity-based costing and/or take into Good judgement turns a management y Seeking information to question account wider implications, such as the accountant from a skilled technician into whether analogies and lessons e ect on incentives. With a new a potential nance leader. It is particularly drawn from experience are correct, transfer-pricing system, the e ects on important for those who want to move appropriate, and complete; internal motivation will need to be into CFO and general management roles. y Using mentors and coaches; and considered if the organisation is In this, as in many other areas, y Gaining additional perspectives by a prot-centre-based. understanding human behaviour as well secondment to another function or Judgement is also central to nancial as techniques is central to the quality of location. reporting and then the audit — management accounting. Q assumptions based on forecasts and How you feel about this probabilities have to be made about all Accountants are as prone to bias as key elements of the balance sheet and  any other group, and they need to prot and loss account. Conspicuous Sir Andrew Likierman, FCMA, is be aware of what their biases are. Caution among these are decisions about writing professor of management practice at, is ne, but risk aversion carried to o goodwill, capitalising costs, and the former dean of, the London extremes is not. depreciation rates, revenue recognition, Business School. He is a past Keeping to a plan when circumstances and bad debt provisions. president of CIMA, was head of the UK have changed (anchoring) is one kind of Three ways to improve include: Government Accountancy Service, and bias. Using an inappropriate analogy y Training in advanced decision was a director of the Bank of England. (representativeness) is another. Seeing analysis, for example, risk To comment on this article or to what we want to see (conrmation) is a assessment and scenario building; suggest an idea for another article, y third. Or it may just be strong preferences, Recognising problems and learning contact Sabine Vollmer, an FM as when it is tempting to prefer to deal with problem conditions for magazine senior editor, at performance measures that are choices, such as time pressure, or [email protected]. quantiable. Pushing for quantication, high emotions such as anger; and

38 I FM MAGAZINE I December 2019 RE IMAGIM INE FINANCE.

Future-ready finance professionals leading the transformation.

Discover more: cimaglobal.com/reimagine PHOTO BY JACEK TURCZYK/AP IMAGES By Oliver Rowe skills toformulatestrategy, negotiate,andmanagerelationships. The UK’s ambassadortoPoland hasusedhismanagementaccounting 40 from acareer diplomat Relationship-building advice head ofinvestment andtrade andthento South Korea asdeputyambassadorand accountant oftheyear award in. newly qualiedUKgovernment recognised byhisbeingawarded the management. information, businessplanning,andrisk how toimproveitsmanagement nd sostimulating”. was exactly whatIwas afterandwhatI needed torunlargeorganisations, “which qualication. study fortheCIMAprofessional nance director—anopportunityto France, KnottbecametheFCO’s deputy and inUKembassiesCuba,Mexico, and on improvingwhatIcando.” really …appreciateopportunities tokeep people”, hesaid,“don’t stoplearning. I version oflifelonglearning. “Successful committed toCPDandamuchwider for any diplomat,Knottremains jobs andotherroles. training —bothincommerciallyfocused has reliedonhismanagementaccounting J A series of other jobs followed — in A seriesofotherjobsfollowed— in Knott’s success inthisrolewas The FCO atthattimewas lookingat It provided,hesaid,therange ofskills After aseriesofearly jobsinLondon And whilelanguagetraining isastaple I FMMAGAZINE Commonwealth O ce (FCO) in theUK’s Foreign & throughout asuccessful career is acareerdiplomatwho onathan Knott,FCMA, CGMA, I December 2019 changes thatIneedto.” feel condentaboutintroducing the review howmy organisations look,andto Very regularlyIhave felt the needto gone throughaseriesofmajorchange. … have beeninvolved with…andledhave been useful.“MostorganisationsthatI absolutely crucial.” of identifyingandmanagingriskis every majorprojectthatwelead …therole skills. “Everymajorprojectthatwedo, particular issue. engage withaforeigngovernmenton a communicationsplanorhowbestto example, working out thestrategy behind of hiscurrentroleincentral Europe—for accountancy teams”. getting goodanswersfrommy the rightquestionsandknowwhenI’m nancial issues, theskills“helpmetoask to decisions”, hesaid.Andonspecic framework andbodyofevidence tocome have provideda“really important Queen’s Birthday Honours. St MichaelandGeorge(CMG) inthe appointed Companion oftheOrder director forcentral Europe. Hewas ambassador toPoland andtheFCO’s he worksfromWarsaw astheUK’s and trade workforcentral Europe. Today, Hungary andleading theUK’s investment Budapest astheUK’s ambassadorto Change managementskillshave also Knott alsouseshisriskmanagement Strategic thinkingisakey component His managementaccounting skills side of the table needs, what they are side ofthetableneeds, whattheyare understanding whatthepersonon theother really allaboutestablishingtrust, building andmaintainingrelationships: is intheplace whereyouwork.” those key relationshipsinLondonjust asit organisation, andit’s importanttoestablish UK. Governmentisanenormous and governmentrelationshipsbackinthe also usedthemwhenitcomestobusiness in Hungary, inKorea, whereI’veworked. I’ve with veryseniorbusinesspeopleinPoland, can helpyouachievewhatwant to.” helps tohave structuresinyourmindwhich straightforward, butI’vefoundthatitreally and maintainingarelationshipisn’talways management. “Establishingarelationship fundamentally aboutrelationship International relations, Knottsaid,is Relationship management y y y y y yy yy yy yy yy “As fornegotiations”, Knottsaid,“it’s with. Pickcarefully. can havereallystrongrelationships There’s alimitednumberofpeopleyou for afewweeks,checkin. relationships. Ifyou’vehadnocontact Don’t neglectevenstrong these reallystrengthensarelationship. Do afavour/askfavour.Eitherof the basisforrelationship. professional andpersonal.Theywillbe Identify mutualinterests— survive ifit’sbasedonanact. Be yourself.Norelationshipwill Knott sees the following as key steps in Knott seesthefollowingaskey steps in He added:“I’veused[thosestructures] ‘Successful people don’t stop learning. I really … appreciate opportunities to keep on improving what I can do.’

Jonathan Knott, FCMA, CGMA, the UK’s ambassador to Poland, on his commitment to lifelong learning

looking for out of this negotiation, so that you can navigate a way to a result which works for both of you.” Knott’s advice to get the best result from a negotiation is to: y Create a relationship. y Understand clearly what you want from this negotiation — and what is not acceptable. y Understand what the other person wants — and what they can’t accept. y Establish a pace of discussion the other person is comfortable with. Don’t rush them. y Check in with them to make sure you stay on the same page. y Respect emotion as well as logic: You need both to get to a successful outcome. Q

Oliver Rowe is an FM magazine senior editor. To comment on this article or to suggest an idea for another article, contact him at Oliver.Rowe@ aicpa-cima.com.

Interview with UK Poland ambassador_QUAD.indd 41 11/4/19 2:54 PM What if you don’t want to be a manager?

You can take several steps if you don’t consider yourself management material or would prefer to continue on your own path.

By Rhymer Rigby

42 I FM MAGAZINE I December 2019 t’s a myth that everyone wants to you’re a manager invested in getting the It can be thankless, and it is the idea of become a boss at work. It’s also a best out of your team? Can you also dealing with dicult underlings that myth that those who don’t want a convince yourself that management is a puts many people o. But once you get I management position have reached skill you need to learn and that your through the middle and into senior their career ceilings. So what expertise combined with this will be a management, it tends to be more about happens if you don’t want to become a powerful combination? strategy, vision, and corporate direction. manager? Are you stuck at the same level The drudgery and people stu falls away. forever — or are there other ways to climb Become a specialist If you are suciently ambitious, you the corporate ladder? This is a good time for those who are not may be able to put up with this. keen on climbing the traditional career Don’t worry — this issue is ladder. On one hand, today’s atter, more Consider changing jobs surprisingly common distributed companies are far less It’s possible the role you want does not You get a job because it’s what you love hierarchical than they once were. On the exist in your business but is available and what you’re good at. You progress other, businesses recognise this and want elsewhere. If you are in a small company, quickly and get promoted, and soon to retain talented people. So, they may you may discover that large businesses you’re not doing the work that attracted oer alternative career paths, which allow have plenty of space for big jobs outside you to the industry in the rst place. those with high degrees of expertise to the traditional hierarchy. Similarly, in Rather, you’re managing people — which progress without becoming managers. An certain sectors, like the creative and tech can be very similar in any industry. alternative version of this is to become industries, high performers are viewed as such a technical expert that you are “the talent” and there are often two tracks Ask yourself if it’s just fear of the indispensable and nobody would dream to the top — one managerial and the unknown of making you a boss. other expertise-based. Switching You may be brilliant at whatever it is you companies can also be good for your CV do but have no management experience. Plan how you will refuse if not done too often. At the very least, it What’s more, the technical skills (that management offers can be an eective way of putting o make you a good salesperson or coder or Most moves into management will be becoming a manager for a couple of chef) are very dierent from people seen as a promotion and a reward by those years. management skills. If you suspect that above you. There is an expectation that you are going to be approached for a you will be delighted to be oered the job Become a consultant management job at some point soon, ask and will happily accept. Refusal can make Consulting is often the ultimate your company for training and coaching. you look ungrateful, unambitious, and nonmanagerial job. Companies hire you Can you get a small sample by shadowing uninterested in the company. It may be for expertise and employ you on a project a manager, working as a deputy, or lling received badly. So, you need to have a basis. When the project is nished, you in for a boss who is away? You may diplomatic rationale ready that leave, having gained even more expertise. discover that, once you try it, you really demonstrates you are still invested in Nobody pressures you to make the move like running a team. your job and the business. You might say up to management. Q that you think your current role can be Reframe the way you view expanded, or you could ask for greater management responsibility or personal development. Many high-level technical people are seen Be very careful here, though. Refuse more as experts and are aorded considerable than one promotion and you are likely to Rhymer Rigby is an FM magazine status and respect. Colleagues seek out start getting passed over. Soon, you could contributor and author of The their views and ask for their advice. They nd yourself looking older and more Careerist: Over  Ways to Get will be asked to give talks and do expensive than younger peers. Ahead at Work. To comment on this presentations. It’s quite egocentric, and article or to suggest an idea for these people often view management as a Ask yourself if you can stick it out for another article, contact Neil Amato, a few years kind of dull support function. So, can you an FM magazine senior editor, at shift your mindset away from the idea that Lower and middle management tends to [email protected].

you’re the talent and towards the idea that be about people and looking after teams. MATDESIGN/ISTOCK BY IMAGE

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 43 Excel moves to make an ‘X’ of VLOOKUP

Microsoft looks to simplify life for spreadsheet modellers with two new functions: XLOOKUP and XMATCH.

By Liam Bastick, FCMA, CGMA IMAGE BY REHABILIR/ISTOCK BY IMAGE

44 I FM MAGAZINE I December 2019 sk any accountant and they will tell you two “truths”: For certain selections of the final . They are a better-than- A average driver, and argument (search_mode), you everyone else is an idiot on the roads. . They are a better-than-average Excel don’t need to put your data in user because they know how to use VLOOKUP. alphanumerical order. While it will be at least a few years before driverless cars render the rst truth moot, Microsoft has unveiled a new function that may soon make an “ex” of VLOOKUP. Actually, Microsoft has added many arguments, but often you will use Q : Wildcard match. You should two new functions, XLOOKUP and only the rst three: use the special character ? to XMATCH. For reasons that will become y lookup_value: This is required and match any character and * to clear, here we will mainly consider denes what value you want to look match any run of characters. the former function — because once up. What’s impressive, though, is that for you understand XLOOKUP, XMATCH y lookup_vector: This reference is certain selections of the nal argument becomes obvious. required and is the row or column of (search_mode), you don’t need to put data you are searching to look up your data in alphanumerical order! As Meet the new boss, not the same as lookup_value. far as I know, this is a rst for Excel. the old boss y results_array: This is where the y search_mode: This argument is XLOOKUP has been released in what corresponding item you wish to also optional. There are again four Microsoft refers to as “Preview” mode; return is and is also required (even choices: ie, it’s not yet “Generally Available”, but if it is the same as lookup_vector). Q : Search rst to last (default); it is something you can hunt out. You This does not have to be a vector (ie, Q -: Search last to rst; need to be part of what is called the one row or one column of cells); it Q : What is known as a binary “Oce Insider” programme, which is an may be an array (with at least two search, rst to last (requires Oce  fast track. You can register in rows and at least two columns of lookup_vector to be sorted). Just File > Account > Office Insider. cells). The only stipulation is that so you know, a binary search is Unfortunately, registration does not the number of rows/columns must a search algorithm that nds guarantee you a ticket to the ball, as equal the number of rows/columns the position of a target value only some will receive the new function in the column/row vector. In other within a sorted array. A binary as Microsoft slowly rolls out these words, if lookup_vector is a row search compares the target value features and functions. Also, be aware vector, then the number of columns to the middle element of the that Microsoft could change details must be equal; if lookup_vector is a array. If they are not equal, the about these functions at any time before column, then the number of rows in half in which the target cannot they become generally available. both must be identical. lie is eliminated and the search y match_mode: This argument is continues on the remaining half, XLOOKUP basics optional and oers four choices: again taking the middle element XLOOKUP has the following syntax: Q : Exact match (default); to compare to the target value Q -: Exact match or else the and repeating this until the target XLOOKUP(lookup_value, lookup_ largest value less than or equal to value is found; and vector, results_array, [match_mode], lookup_value; Q -: Another binary search, this [search_mode]) Q : Exact match or else the smallest time last to rst (and again, this value greater than or equal to requires lookup_vector to be On rst glance, it looks as if it has too lookup_value; and sorted).

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 45 XLOOKUP v VLOOKUP XLOOKUP compares favourably with VLOOKUP While VLOOKUP is the third-most-used function in Excel (behind SUM and AVERAGE), it has several well-known limitations that XLOOKUP overcomes. Speci cally, VLOOKUP: yyy Defaults to an “approximate” match: Most often, users want an exact match, but this is not VLOOKUP’s default behaviour. To perform an exact match, you need to set the nal argument to FALSE. If you forget (which is easy to do), you’ll probably get the wrong answer; yyy Does not support column insertions/deletions: VLOOKUP’s third argument is the column number you’d like returned. Since this is a hard-coded number, if you insert or delete a column, you need to increment or decrement XLOOKUP v HLOOKUP the column number inside the VLOOKUP — hence the need for the COLUMNS function (and the corresponding ROWS function for HLOOKUP); yyy Cannot look to the left: VLOOKUP always searches the rst column, then returns a column to the right. There is no way to return values from a column to the left, forcing users to rearrange their data; yyy Cannot search from the bottom: If you want to nd the last occurrence, you need to reverse the order of your data; yyy Cannot search for next largest item: When performing an “approximate” match, only the item less than or equal to the searched Arguments for XLOOKUP item can be returned and only if correctly sorted; and yyy References more cells than necessary: VLOOKUP’s second argument, table_array, needs to stretch from the lookup column to the results column. As a result, it typically references more cells than it truly depends on. This could result in unnecessary calculations, reducing the performance of your spreadsheets. Let’s have a look at XLOOKUP versus VLOOKUP. You can clearly see in the screenshot “XLOOKUP v VLOOKUP” that the XLOOKUP function is shorter:

=XLOOKUP(H52,F41:F47,G41:G47)

46 I FM MAGAZINE I December 2019 Only the rst three arguments are Match_mode v search_mode needed, whereas VLOOKUP requires both a fourth argument, and, for full exibility, the COLUMNS function as well. XLOOKUP will automatically update if rows/columns are inserted or deleted. It’s just simpler. HLOOKUP has similar issues, as shown in the screenshot “XLOOKUP v HLOOKUP”. That example highlights what happens when trying to deduce the student name from the Student ID number. HLOOKUP cannot refer to earlier rows, just as VLOOKUP cannot Searching from the end consider columns to the left. Given that any unused elements of the table also are ignored, it’s just good news all around. XLOOKUP changes all that. Indeed, things get even more interesting when you start considering XLOOKUP’s nal two arguments, namely match_mode and search_mode, as shown in the screenshot “Arguments for XLOOKUP”. Notice that we are searching the “Value” column, which is neither sorted nor contains unique items. However, we can look for approximate matches — impossible with VLOOKUP and/or HLOOKUP. Do you see how the results vary depending upon match_mode and search_mode, as shown in the screenshot “Match_Mode v Search_Mode”? The match_mode zero () returns #N/A because there is no exact match. When match_mode is -, XLOOKUP seeks an exact match or else the largest value less than or equal to the lookup_value (.). That would be  — but this occurs more than once (B and D both have a value of ). XLOOKUP chooses depending upon whether it is searching top down (search_mode that cannot be relied upon. spurious. This is seeking wildcard , where B will be identi ed rst) or With match_mode , the result is matches, but there are no matches, bottom up (search_mode -, where D more clear-cut. Only one value is the hence #N/A for the only search_modes will be identi ed rst). Note that with smallest value greater than or equal to that may be seen as credible ( and -). binary searches (with a search_mode .. That is , and is related to A. Again, Clearly binary searches are higher of  or -), the data needs to be sorted. It binary search results should be ignored. maintenance. In the past, it was isn’t — hence, we have rubbish answers The match_mode  results are worth investing in them as they did return results more quickly. However, Microsoft says this is no longer the case: Apparently, there is “no signi cant bene t to using the binary search options”. If this is indeed the case, then I would strongly recommend not using them going forward with XLOOKUP. To show how simple it now is to search from the end, consider the screenshot “Searching From the End”.

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 47 This used to be an awkward An XMATCH example calculation — but not anymore! The formula is easy. To pull the date into cell H , you use:

=XLOOKUP($G$130,$G$113:$ G$125,H$113:H$125,,-1)

To pull the payment into cell I , you simply copy the formula across one cell. This will replace the H’s with I’s:

=XLOOKUP($G$130,$G$113: $G$125,I$113:I$125,,-1)

This is a “standard” XLOOKUP formula, with a “bottom up” search coerced by using the nal value of - (forcing the search_mode to go into “reverse”). XLOOKUP has tons of potential uses — too many to cover in this article — but rest assured we will take another look at XLOOKUP soon. But before you go, let’s take a quick look at the other function that debuted with XLOOKUP.

A quick glance at XMATCH XMATCH has arrived with a similar signature to XLOOKUP, but instead it returns the index (position) of the matching item. XMATCH is both easier to use and more capable than its predecessor, MATCH, as shown in the match any run of characters. As you can see, it’s a fairly screenshot “An XMATCH Example”. Again, for certain selections of the straightforward addition to the MATCH XMATCH has the following syntax: nal argument (search_mode), you family. It acts similarly to MATCH — just don’t need to put your data in with heaps more functionality. XMATCH(lookup_value, lookup_vector, alphanumerical order. [match_mode], [search_mode]) y search_mode: This argument is Word to the wise also optional. There are again four XLOOKUP and XMATCH open up Where: choices: new avenues for Excel to explore, y lookup_value: This is required and Q : Search rst to last (default); but it must be remembered they denes what value you want to look Q -: Search last to rst; are still in Preview and may only up. Q : This is a binary search, rst to be accessed by a lucky few on the y lookup_vector: This reference is last (requires lookup_vector to be Insider track. Feel free to download required and is the row or column of sorted); and and play with the Excel le that is data you are referencing to look up Q -: Another binary search, this available at tinyurl.com/xfunctions, lookup_value. time last to rst (and again, this but don’t be too perturbed if your y match_mode: This argument is requires lookup_vector to be version of Excel does not recognise optional. There are four choices: sorted). these functions yet. Q Q : Exact match (default); Q -: Exact match or else the largest value less than or equal to lookup_value; Liam Bastick, FCMA, CGMA, FCA, is director of SumProduct, a global consultancy Q : Exact match or else smallest specialising in Excel training. He is also an Excel MVP (as appointed by Microsoft) and value greater than or equal to author of Introduction to Financial Modelling. Send ideas for future Excel-related lookup_value; and articles to him at [email protected]. To comment on this article or to Q : Wildcard match. You should suggest an idea for another article, contact Jeff Drew, an FM magazine senior editor, use the special character ? to at [email protected]. match any character and * to

48 I FM MAGAZINE I December 2019 ADVERTISING SUPPLEMENT Ask the Expert • FINANCIAL SERVICES

The Open Banking framework

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A Banks have traditionally been very protective of their data. So, in the past, LI\RXZDQWHGWRKDYHDVHFXUHÁRZRILQIRUPDWLRQEHWZHHQ\RXUEDQNDFFRXQW and your accounting software, you would have had to build a custom integration Ed Molyneux between them — or use a third-party “screen-scraping” tool to move data. With CEO and co-founder 2SHQ%DQNLQJDQGZLWKWKHFXVWRPHU·VDXWKRULVDWLRQEDQNVDUHPDQGDWHGWR FreeAgent make that information available for other services to access. This means small EXVLQHVVRZQHUVFDQKDYHGHHSHUPRUHLQWHJUDWHGLQVLJKWVLQWRWKHLUÀQDQFHV Ed Molyneux is the CEO and across all the systems they use. co-founder of FreeAgent. After completing his degree in Q Why is Open Banking important for accountants? Engineering and Computer Science, KHVSHQWDGHFDGHÁ\LQJMHWVLQ A $PDMRUEHQHÀWIRUDFFRXQWDQWVLVWKDW2SHQ%DQNLQJPLQLPLVHVWKHULVN the RAF before taking the plunge RIGDWDHQWU\PLVWDNHV$VFOLHQWV·EDQNLQJGDWDLVGHOLYHUHGVWUDLJKWLQWR into freelance IT consultancy in WKHLUDFFRXQWLQJVRIWZDUHDFFRXQWDQWVGRQ·WKDYHWRZRUU\DERXWZKHWKHU 2003. He co-founded FreeAgent in transactions are accurate — which makes it quicker and easier to review the 2007 with the aim of democratising GDWDDQGVSRWSRWHQWLDODFFRXQWLQJLVVXHVWKDWQHHGWREHDGGUHVVHG$VWKH\·UH accounting for small businesses and able to review information quickly, accountants have more time to delve deeper to help them work better with their LQWRWKHLUFOLHQWV·DFFRXQWVDQGSURYLGHYDOXDEOHLQVLJKWVDQGDQDO\VLVDERXWWKHLU accountants. EXVLQHVVÀQDQFHV

Q What impact do you think Open Banking will have on small businesses and accountants over the coming years?

A I think Open Banking is going to be the gateway for a lot of innovation in WKHÀQWHFKVHFWRU:LWKHYHULQFUHDVLQJYLVLELOLW\RILQIRUPDWLRQDQGDPRUH HIIHFWLYHÁRZRIGDWDIURPEDQNDFFRXQWVLQWRDFFRXQWLQJVRIWZDUHDQHZZDYH RIDSSVDQGVHUYLFHVFRXOGEHGHYHORSHGWKDWPDNHWKHSURFHVVRIÀQDQFLDO FreeAgent is award-winning cloud management — and running a business in general — much easier. This could accounting software designed for small OHDGWRLQVLJKWVWKDWKHOSLGHQWLI\ZKHQDEXVLQHVV·VFDVKÁRZLVUXQQLQJORZ businesses, freelancers, contractors, and a tax bill is coming up, and then provide the option to facilitate a loan, or and accountants. More than 90,000 the ability to identify late or nonpaying clients in advance and enable business customers currently use FreeAgent to owners to secure insurance against these invoices. This will help accountants manage and maintain their business provide the best service for clients. Through Open Banking, clients will be able accounts, track time, log expenses, to stay on top of their daily admin more effectively, giving accountants more time create and send invoices, forecast their to provide in-depth analysis. tax bills, and file their Self Assessment and VAT returns directly to HMRC. Find out more about FreeAgent at www.freeagent.com. What I learned being the CFO of a tech startup

A first-time finance leader shares on-the-job lessons from getting a fledgling company off the ground.

By Kunwar Chadha, FCMA, CGMA

or any rst-time CFO, getting They tend to raise funds to develop numbers accurately and make timely the top job in nance is both products and/or services by selling payments to employees and suppliers. exhilarating and frightening. stakes of company equity to investors. This freed up my time to take on more F For all things nancial, the As cash reserves decrease, additional strategic tasks and to help our CEO grow buck stops with you. The CEO rounds of fundraising are required to the business. and the board depend on you to ensure continue development. Traditionally, These are the lessons that I’m sharing basic obligations such as reporting and investors hope to sell their equity stakes in the hope that others in a similar compliance are being met. They also at a premium following an initial public situation might nd them useful. expect you to be a value-adding business oering or when the startup is acquired. partner. Since I had no mentors who had gone Lessons learned When I became CFO of ChannelSight, a through a similar experience, and external To become the value-adding business Dublin-based technology startup, the training was impractical, I had to learn on partner your CEO and the board hired you company was growing fast, and it the job. to be, you need to quickly bring under required funding. The rst task was to ensure I had a control basic operational responsibilities, Startups often don’t generate pro ts. fully trained team that could report such as reporting, compliance, and cash PHOTO BY CRISPIN RODWELL/AP IMAGES RODWELL/AP CRISPIN BY PHOTO

50 I FM MAGAZINE I December 2019 Kunwar Chadha, FCMA, CGMA, had to learn some critical lessons on the job as a first-time CFO with a fast-growing technology startup. planning; and strategic responsibilities of nance team. If you are unable to do this, Cash planning capital allocation, including pricing you could struggle to nd the time for This is an important topic for a startup strategies, a sales compensation plan, and strategy planning and execution. A strong CFO. If the company is cash rich or process improvement for sustainable and nance team at ChannelSight allowed me protable, cash planning could be e cient growth. to step back and focus on helping to grow considered part of the day-to-day the business. operations described above. More often, Delegate day-to-day operations Hiring and onboarding can take cash in startups is a scarce resource and In the beginning you may need to roll up considerable time and eort, so be careful has to be carefully managed. your sleeves and do the day-to-day in your selection, training, and retention In , ChannelSight raised  nance work yourself. This is ne if the of sta. Choosing a strong nancial million in a series B funding round, which situation is temporary. However, for you controller whom you can trust might be is being invested towards future growth, to be able to work as a strategic leader, you the most important decision you make in but when I joined the company, it was should look to negotiate a budget to hire a this role. nearing the end of its runway of available cash. Cash management quickly became one of my top priorities. Through rigorous forecasting and control we were able to extend our runway by three months, which gave us enough time to close the funding round successfully. Here are some tips for eective cash management during di cult times: Make sure forecasting is accurate. To ensure all spend is captured accurately in your forecasts, meticulously analyse the company’s creditor payment patterns. This will ensure that your forecasts are accurate and help you avoid nasty surprises — for example, an annual vendor payment you didn’t anticipate. It’s a good idea to go through a full annual cycle of spend to ensure an ironclad forecast. Minimise waste/unnecessary spend. PODCASTS Ensure that your limited cash resources are deployed eectively on the company’s strategic objectives, such as revenue Do you wonder about the best growth. Any wasteful or unnecessary way to build your personal spend should be scaled back and brand? Are you hoping to remediated. assume a leadership role but Improve credit and collections unsure about how to become process. A lower days-sales-outstanding a better leader? Listen (DSO) metric will improve cash ow. Try to insights from a global to focus on improving this number. It can collection of finance leaders make all the dierence when you are

and other experts in the FM struggling to pay salaries near the end of magazine podcast. your runway. At ChannelSight, we re-engineered the Stream episodes at collections process by improving fm-magazine.com/podcast communication with clients and by or subscribe on incorporating a process of escalation — "QQMF
1PEDBTUT or from automated reminders for payment Google Play. to management (or even executive) team escalations. Where we saw clients fall outside of their normal payment pattern, we contacted them to mitigate potential payment delays. These process changes reduced our DSO by  — from  days to  days. Negotiate payment arrangements with key vendors. Try to negotiate

52 I FM MAGAZINE I December 2019 temporary payment arrangements with key vendors. However, where payment Choosing a strong financial delays are expected, vendors generally prefer upfront honesty — as this gives them time to plan for the corresponding controller whom you can trust shortfall. Think about trade nance. You can might be the most important consider trade nancing options such as invoice discounting or factoring. Consider decision you make as a CFO. carefully the impact of doing this, as your clients can get rattled when a third-party lender gets involved in the invoicing and payment process. Have open conversations with your clients, through sales quotas, commission rates, and department but across the organisation. the right channels, before rolling this out. sweeteners such as accelerators or sales An argument can be made that each performance incentive funds (SPIFs), department is responsible for its own Growth strategies which oer incentives for sales performance or that these Apart from the operational representatives. Especially for a software- responsibilities fall within a COO’s responsibilities of the nance function, as-a-service business startup, which domain. The point here is not for the another role that a CFO has is partnering delivers and licenses software online and nance department to take ownership with the CEO in growing the business. is paid for by a subscription fee over time, of non nance processes but to lead by This entails formulating and executing another important point to consider is the example, provide guidance, and company strategy — which is a vast timing of commission payouts. For champion process improvements subject in its own right. Although an example, consider whether you should across the organisation. in-depth analysis of this is beyond the pay the sales rep when a contract is At ChannelSight, the nance scope of this article, I will touch upon booked, the service is delivered, the department set an excellent example for some key components that need to be in invoice is issued, or the invoice is paid. the rest of the organisation by place to grow the business: Pricing strategy. This is an important showcasing improvements in the Capital allocation. In order to make topic that requires a CFO’s attention. month-end reporting timeline, credit decisions on where the company’s funds When considering a pricing policy, and collections, KPI reporting, and should be deployed, a CFO should be consideration needs to be given to trialling cutting-edge automation involved in strategy formulation. This company strategy, competitive technologies. Outside of nance, we requires an understanding of how the conditions, unit economics of the worked with client onboarding and sales business works, its value proposition to business, and the market environment. departments to bring visibility into their clients, and its market/competitive In the long run, a business should processes and drive improvements — for landscape. price products above the variable costs of example, by remediating bottlenecks in For a startup, gaining an producing and delivering them. client onboarding (thus shortening lead understanding of the company’s cost Otherwise, the bigger the business grows, time to revenue) and improving lead drivers and unit economics is also the higher its losses will be. Sometimes, a generation and sales funnel important. This is necessary to ensure business will be aggressive and set a performance. that the company grows in a sustainable price below its variable costs. This could Fundraising. A CFO is a key and pro table manner. Once strategy is be done to gain market share, with a view participant in raising long-term funding agreed upon and allocation decisions are to reducing costs through economies of for the business. At a minimum, this can made, budgets can be set and scale at a later stage. involve preparing and pitching nancial performance measured through monthly Don’t be afraid to look at alternatives projections to potential investors. As management reporting, key performance to cost-plus pricing, such as value investors need to be convinced on the indicator (KPI) reporting, and pro t and pricing. You could be leaving money on reliability of these projections, the CFO loss forecasting. the table if your product’s value should be prepared to defend the forecasts Sales compensation strategy. An proposition is not being monetised and any assumptions. Q eective sales compensation strategy eectively. A strategy of dierentiation should motivate the sales team to hit in a commoditised market can increase targets and encourage positive behaviour your product’s value proposition to aligned to the company’s interests. There clients, allowing you to charge premium Kunwar Chadha, FCMA, CGMA, is is no one-size- ts-all policy, and what prices. the CFO of ChannelSight and is based works for one company might not be Process improvements. Finance and in Ireland. To comment on this article suitable for another. accounting professionals are trained to or to suggest an idea for another Due to the dynamic nature of business, be analytical and critical thinkers. Due to article, contact Sabine Vollmer, an it is important for a CFO to regularly this skillset, CEOs often rely on their FM magazine senior editor, at review this policy and ensure its CFOs to champion process [email protected]. eectiveness. Things to consider include improvements not just in the nance

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 53 NOW THAT’S ROCK ‘N’ ROLL

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FLOQAST Full-Page-FINAL PRESS.indd 2 4/29/19 2:53 PM map to sharper skills map to sharperskills Your quarter-by-quarter T LQFUHDVHVWUHVVRQÀQDQFHSURIHVVLRQDOV will alsoraiseproductivityexpectations, whichcould today willbecomecommonplace. These developments disappear, otherswillgrow, androlesthatdonotexist intelligence (AI),andmachinelearning.Somejobswill XVKHULQJLQDGYDQFHVLQDUHDVVXFKDVURERWLFVDUWLÀFLDO By Tim Cooper By Tim to deepenandexpandyourskillset. The yearaheadoffers opportunities aplenty FM MAGAZINE.COM FM hascreatedadevelopment outline for2020based thrive inthenewworld. set tospend2020sharpeningtheirskills the waywework.Financeprofessionalsare he FourthIndustrialRevolutionistransforming The revolution,knownasIndustry4.0,is Sponsored Report FloQast •SageIntacct Sponsored by manager at Tullow Oil. WR/RQGRQEDVHG+DQV'MDED)&0$&*0$ÀQDQFH the organisationinwhichhe orsheworks,according underlying mindsetandvalues oftheprofessionaland WKH\UHÁHFWQRWMXVWWKHWHFKQLFDOVNLOOVEXWDOVRWKH groups havebecomesupremelyimportantbecause OHDGHUVDQGVHQLRUÀQDQFHSURIHVVLRQDOV one foreachquarteroftheyear, withtipsfromthought Industry 4.0. The approachissplitintofourskillsgroups, (WEF) hasrecommendedareneededtosucceedin largely aroundtheskillsWorld EconomicForum Technology changes meanthatthesefourskills December 2019 I FMMAGAZINE I 55

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Steve Saah, executive director, Robert Half Finance 6DDK·VWLSIRUGHYHORSLQJSHRSOHVNLOOVLVWRZRUNRQD & Accounting, said advances in technology such as better teamwork approach by taking training courses on DXWRPDWLRQDQG$,DUHDQRSSRUWXQLW\IRUÀQDQFH communication and collaboration. He also recommended professionals to enhance the way they work. “While that new managers use a mentor, which can be “a great DSSOLFDWLRQVRIQHZWHFKQRORJ\ZLOOIUHHXSZRUNHUV·WLPH resource and sounding board”. from routine tasks so they can focus on more strategic Also ask for feedback regularly from direct reports or initiatives, many will need upskilling to be successful,” project collaborators to assess what is working well and he said. what needs improvement in real time, Saah said. Industry 4.0 could upgrade your career, but only if you

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 57 SPONSORED REPORT

UK-based Joe Anichebe, FCMA, CGMA, the CEO at Emizar Associates, suggested improving cognitive Podcasts to make your   more ÁH[LELOLW\DQGDJLOHOHDUQLQJE\UHDFKLQJRXWWRDUHDV productive beyond your sector and profession — for example, by DWWHQGLQJQRQÀQDQFHUHODWHGFRXUVHV Analyse Asia With Bernard Leong Fung said learning critical thinking is crucial. Finance The Bottom Line, BBC professionals need to be objective and able to make FM, Association of International Certified Professional nonbiased recommendations after analysis and Accountants exhausting all options, he said. Go Beyond Disruption, Association of International Certified ´7KHUHIRUHLW·VLPSRUWDQWIRUWKHPWREHDEOHWR« Professional Accountants take a step back and assess the situation,” he said. To HBR IdeaCast, Harvard Business Review develop in this area, practise by getting involved in any Inside China, South China Morning Post project — inside or outside of work — or looking for a Inside the Strategy Room, McKinsey & Company secondment where such skills are needed. The World of Business, BBC

QUARTER THREE: BUILD CREATIVE MUSCLE Use the third quarter of 2020 to work on three more WEF-recommended skill areas — creativity, emotional intelligence, and resilience. These are all essential for ÀQDQFLDOSURIHVVLRQDOVDVWKH\LQFUHDVLQJO\FROODERUDWH iOpener Institute for People and Performance, said across their organisations and have to adapt to new emotional intelligence also helps build trust amongst situations. Matrixed organisations and multiple reporting reports and colleagues. His advice is to focus on having lines can put additional demands on professionals. regard for other people. This means being sensitive to Creativity and emotional intelligence are also their needs and concerns, which may be different from important because they remain outside the scope of yours, and having a duty of care towards them. robots and other machines. Plus, they are useful in 5HVLOLHQFHLVDQRWKHUFUXFLDOVNLOOIRUDOOÀQDQFHUROHV telling the stories behind the numbers, which every but particularly as you gain more responsibility. Many of accountant needs to do. the other WEF skills will feed into resilience as you gain 6RPHPD\ÀQGFUHDWLYLW\FKDOOHQJLQJEXW+DLQHV PRUHFRQÀGHQFHLQ\RXUDELOLWLHV VDLGLW·V´HDVLHUWKDQLWVRXQGVDVWKHUHDUHSUDFWLFDO Haines said he has found mindfulness techniques methods for being creative — individually and in groups. and the teachings of the Stoics — ancient philosophers ,UHFRPPHQGUHDGLQJVRPHRI(GZDUGGH%RQR·VPDQ\ LQÁXHQFHGE\6RFUDWHV³KHOSIXOIRUEXLOGLQJUHVLOLHQFH books on this topic.” Anichebe suggested that, to build creativity, you .RNNRQHQ·VDGYLFHLVQRWWRUHVWULFWWKHFRQFHSW should put yourself in different situations outside of of creative development and how you can do it — accountancy. He gave the example of recent work he did DQ\WKLQJWKDWVWUHWFKHVWKHFUHDWLYHPXVFOHLVEHQHÀFLDO with a data and analytics team to learn more about those “Developing creativity can be undertaken in many areas, which are growing in prominence and may soon different forms from sport, hobbies, and even social underpin the creation of business insights. situations,” she said. %URGLHVDLGFUHDWLYLW\PXVWVWDUWLQWKHÀQDQFH QUARTER FOUR: MASTER DECISION-MAKING function, by looking continually for alternative and better In the last stretch of the year, focus on decision-making, ways of doing things. problem-solving, and negotiation — three more skills that ´7KHUH·VDOVRDUROHWRSOD\LQEUHDNLQJGRZQWKH ZLOOEHFUXFLDOIRUDQ\ÀQDQFHSURIHVVLRQDODV,QGXVWU\ barriers to change,” he said. “I think the challenge is the 4.0 takes over. mindset and perhaps not recognising just how much we “Decision-making is a process,” Kokkonen said. can offer.” “Different situations, industries, and cultures often Emotionally intelligent professionals are collaborative require or lean to different decision-making processes. and better able to work with and lead others. Will decision-making change due to AI? The decision Haines said emotional intelligence is key in managing required will change, though the decision-making others, and there are techniques that can be learned to process(es) involved may not per se. The tools, data, assist with this, such as active listening. and techniques involved and utilised will evolve, 'DYLG/LQGVD\$&0$&*0$ÀQDQFHGLUHFWRU however.”

58 I FM MAGAZINE I December 2019 -point plan

Connect

Learn

Deepen

Influence

Connect Learn Deepen Influence Commit to training and Test approaches to Develop the resilience Hone your ability to teaching, develop complex problems, needed to maintain persuade, practise strategies to motivate evaluate needed skills, pace and manage the art of negotiation, yourself and others, focus on manageable change, and value and refine your and define your value goals, and adjust creativity and emotional decision-making drivers. frequently. intelligence. process.

Brodie said the way to get better at decision-making muscle, decision-making experience, and critical LVWRJHWUHDOOLIHH[SHULHQFHLQLW´&RQFHSWXDOO\LW·VQRW thinking, among others. As you explore these skillsets GLIÀFXOWEXWLQUHDOOLIHLW·VDZKROHORWWRXJKHUµKHVDLG more deeply, you will often see that many of them are So the best development activities in this area will be interrelated. highly practical. You will also start to see underlying themes that feed To build negotiation skills, Anichebe recommended into your overall career development. As Djaba said: attending courses aimed at other professionals, such as “Underpinning these with an enduring focus on solving salespeople. problems for others, internal and external clients, will )XQJVDLGFRPSDQLHVLQFUHDVLQJO\ORRNWRWKHÀQDQFH DOZD\VUHQGHURQH·VUROHDVKLJKO\UHOHYDQWDQG function to solve problems: “The current tough economic sought-after.” climate with Brexit and slow growth prospects for the foreseeable future has forced many organisations to turn Tim Cooper is a freelance writer based in the UK. Q WRÀQDQFHSURIHVVLRQDOVµKHVDLG 'HPDQGVRQÀQDQFHWREHHIIHFWLYHEXVLQHVVSDUWQHUV solving problems for organisations are leading to requirements to GHYHORSSHRSOHVNLOOVDORQJVLGHÀQDQFH H[SHUWLVHDQGWKHQHHGWRHQJDJHQRQÀQDQFHFROOHDJXHV RESOURCES: Human Intelligence Series more than ever. The Association of International Certified Professional BRINGING IT ALL TOGETHER Accountants, the unified voice of CIMA and the American Reading extensively and deeply; engaging with other Institute of CPAs, has created learning opportunities to help sectors and functions; and maintaining interest in you prepare for the future workplace. Through our Human relevant industry, social, and professional changes will Intelligence Series, thought leaders provide information all help expand your range of skills to help you thrive in about the competencies that will be most valued for our Industry 4.0, Djaba said. profession moving forward. See what we have to offer at Taking on such a broad range of self-development aicpa-cima.com/learning/human-intelligence.html. activities will help build resilience, persistence, creative IMAGE BY SURFUPVECTOR/ISTOCK BY IMAGE

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 59 INSTITUTE NEWS

CIMA’s centenary celebration Election to Council notice

in Myanmar s the term of o ce of the council member in each of the Afollowing CIMA electoral constituencies (EC) expires at the end n event to celebrate CIMA’s centenary and the of the Institute’s Annual General Meeting in , elections will be A exam high achievers was held in Yangon, held in February . Nominations for candidates (fellows) to ll Myanmar, at the end of September. It was attended by the vacancies must be made by six or more members (three of whom  members, students, and guests, including guest of must be fellows) whose registered addresses are in the constituency honour professor U Maw Than, Ph.D., union auditor concerned. general. The Association’s head of South East Asia, Ginny Lim, Constituency Current member said that in serving members and students, CIMA and EC Central London and North Thames Mustafa Muchhala the Association are driving “a dynamic accounting EC South West England and South Wales Elaine Richardson* profession” that is “ready to meet the demands of a EC West Midlands Hasmukhl Mistry constantly changing, disruptive digital world”. EC North East England Janet Brown EC North West England and North Wales Anthony Boey* EC North West England and North Wales John Cottam EC Scotland Stephen Milne EC East, West Central and Southern Africa Yolanda Don-Pierrot* EC Central Southern England Sarah Ghosh EC South East England Vacancy EC South East England Kelly Essayah EC South East England Jannette Watson

* Members not eligible to stand again, having served on Council for nine or more years.

A nomination form for election candidates and other information is available to download at tinyurl.com/yapoyoh. The form may also be obtained from the Corporate Aairs department at CIMA by emailing corporate.a[email protected]. Please read the rules carefully before completing the form. The nomination must be received on the prescribed form by . hours GMT on Thursday  January  and should be clearly marked for the attention of the Corporate Aairs manager. A scanned or a faxed copy of a signed and completed form is acceptable. The Corporate Aairs team will acknowledge receipt of the nomination form promptly, either through an automated process or by individual acknowledgement. It is, however, the candidate’s responsibility to ensure that his or her form has been received. To avoid uncertainty, it is recommended that, if candidates do not receive this conrmation, they contact the Corporate Aairs team directly at Ginny Lim (left), the Association of International corporate.a[email protected] before the closing date, to seek Certified Professional Accountants’ head of Southeast conrmation. Asia, presents a token of appreciation to professor If there is more than one candidate for a vacancy, a ballot will be U Maw Than, Ph.D., union auditor general, at the conducted. The Corporate Aairs team will contact you if an election is CIMA centenary celebration in Yangon, Myanmar. required. PHOTO BY ZAYAR MIN ZAYAR BY PHOTO

60 I FM MAGAZINE I December 2019 Cape Town hosts 2019 CGMA Africa Conference

IMA president Amal Ratnayake, FCMA, CGMA, opened the  CCGMA Africa Conference: Finance Transformation in the Digital World in Cape Town, South Africa, in September. Around  delegates from across Africa and beyond heard expert speakers, including Gbemi Adelowore, ACMA, CGMA, head of nance at the West African branch of global software company SAP (see tinyurl.com/ yyoobra), and Bob Osho, FCMA, CGMA, managing director of Metrole Nigeria (see tinyurl.com/yyftks). Noel Tagoe, FCMA, CGMA, Ph.D., academic and consultant on the future of nance, spoke about the digital transformation of nance and the wider organisation. The Association’s then Africa regional vice-president, Tim Simba, said CIMA President Amal Ratnayake, FCMA, CGMA, the conference “challenged all that attended to make bold decisions about speaks at the CGMA Africa Conference, attended themselves, their career paths, and their career objectives”. by around 400 delegates. Mind the skills gap

ecent research by the Association of company is responsible for training while  RInternational Certied Professional of SME employers feel it is their responsibility. Accountants has shown that nearly one in ve Andrew Harding, FCMA, CGMA, the () UK workers hasn’t prioritised learning Association’s chief executive–Management and practising new skills in the past  Accounting, said the solution to the UK’s months. This gure is down from  in a productivity puzzle was not in sight. “One similar  Mind the Skills Gap survey. problem is the gap in understanding around This year,  of workers said they felt they who bears responsibility for employees’ needed to learn new skills because new learning and upskilling; another is the technologies are changing their roles. Despite nancial burden that is often associated with this, only  of employees said they want to further education and professional training.” acquire new digital skills to help them in their He added: “Many employers are already jobs. Additionally, the research revealed that responding to the demands of digitisation, but there is confusion about who has more needs to be done by government and responsibility for employee training and businesses.” development —  of employees believe their

New Code of Ethics comes into eect Preparing 1 January 2020 members for the digital world IMA members and registered students Care required to abide by the Code of he CGMA Mindset for a Digital Ethics. The Code has been updated to TFuture (tinyurl.com/yvccw) ensure it remains relevant and takes introduces members to the account of the di erent ethical challenges technologies disrupting nance members and students could face in their and nance roles, how these roles. The new Code will be enforced from technologies impact business  January . models, and why professionals Ahead of that date you can familiarise available at tinyurl.com/yyzl. need to develop a growth mindset yourself with it on the Code of Ethics The ethics pages of the CIMA website to succeed in the digital world. webpage at tinyurl.com/ygnvca. The key (cimaglobal.com/ethics) contain resources At the end of the report, changes to the Code are outlined in an to help you understand the Code of Ethics members can use the code October  FM article, “New Code of and develop the knowledge and skills you BENEFIT to obtain their free Ethics Is True to CIMA’s Core Principles”, need to handle ethical dilemmas. Digital Mindset Pack. Q FROM TOP: PHOTO BY ANTHEA DAVIDSON/ANTHEA DAVIDSON PHOTOGRAPHY; PHOTOGRAPHY; DAVIDSON DAVIDSON/ANTHEA ANTHEA BY PHOTO TOP: FROM AKINBOSTANCI/ISTOCK BY IMAGE WILDPIXEL/ISTOCK; BY IMAGE

FM MAGAZINE.COM December 2019 I FM MAGAZINE I 61 gets vertical Farming A ecient use of water and land. ecient useofwater andland. to feedingtheworld’s risingpopulationthroughits traditional farming. pesticides, andafraction ofthelandrequiredfor digitally, andthemethoduses lesswater, no photosynthesis. Growingconditionsare controlled don’t needthefullspectrumofwhitelightfor LED lightstosave onenergycostsbecauseplants Many consider vertical farming a viable solution Many considerverticalfarmingaviable solution Plants are placed under red and blue Plants areplaced underredandblue containers stacked afewstorieshigh. farming ofleafy greensinhydroponic possible thecommercial-scaleindoor dvancements intechnologyhave made at the 2019 International Consumer at the2019International Consumer Vertical farming was demonstrated Electronics Show Asiain Shanghai in June. Shanghai inJune.

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