Contemporary Business Issues
Module 1: Future Accounting Skills
Part A: A Strategic Adviser and Decision Partner
1.1: Drivers of Change (p.2)
1. Technology-enabled innovation
2. Innovative business and finance models
3. Transforming workforce
4. Natural resource management
5. Stakeholder management
1.2: The Accountant as Strategic Adviser (p.5):
• Accountants will continue to be information providers, but their most valued skills are likely
to be insights, options and decisions derived from that information.
• Key requirements for accountants include:
Ø become a long-term partner in the strategic management of the business
Ø understand that the purpose of looking at the past and present is to predict and
shape the future
Ø communicate clearly
Ø can access expertise from a network of contacts
Ø respond in real time
Developing the skills of an adviser:
• Going forward, a successful accountant need understanding and skills beyond their
specialisation, as they are frequently required to collaborate across the organisation and to
communicate with other specialists.
• To provide strategic advice, accountants need a range of business, behavioural and
leadership skills, including business acumen, the ability to communicate, influence and
negotiate, and the ability to help shape organisational culture.
• 2 key expectations are that professional accountants:
Ø Make the right decisions about the services that they perform
Ø Deliver services with professional competence and due care.
,Providing and Implementing Advice:
• Organisations may also require advice on issues such as business efficiency and productivity
(through business process redesign), management information systems (for improved
reporting and decision making), as well as risk management and internal controls (including
fraud analysis and prevention).
• At a strategic level, advice is also required on selecting appropriate growth strategies (based
on acquisition or on organic, internally generated growth), identifying new products and
markets, and establishing a market position
• The ability to identify key stakeholders, determine their position and develop a plan to
engage actively with these stakeholders is essential in turning advice into successful action
1.3: Transforming the Client Relationship (p.10)
• The reality is that the accountant or firm needs to build up their client base — through sales
and marketing.
• To expand the service offering, accountants need to be able to communicate the new
services that they can provide, explain why these services are useful to the client, and
demonstrate that the pricing is appropriate.
• Marketing skills and non-billable time building client relationships become essential, and
these skills need to be developed and refined
,Understanding what SME clients want
• The opportunities to add value through advice are not only beneficial to clients, but also to
the provider, offering more interesting engagements and the ability to earn greater returns.
• Traditionally, accountants have billed based on the time it takes to do something, rather
than on the value of the answers or advice provided.
• Clients, however, are only interested in the value of the information and advice their
accountants provide in terms of helping the business succeed (E.g. Value based billing)
Aligning Strategic Advice to Client Behaviour:
• Strategic advice should, however, have the longer-term objectives of the organisation in
mind, while focusing on the various steps and initiatives that are required to achieve those
objectives.
• An accountant can add value by evaluating the financial consequences and strategic
outcomes of capital investments.
Supporting Entrepreneurial Activity
• The purpose of entrepreneurial activity is to generate new ways of doing things, which can
include starting up a new business venture, changing how a product is produced or sold, and
creating new services for customers
• This requires a very different type of support from accountants, with less focus on control
and more focus on the successful implementation of new ideas and change
Tailoring your Advice for Entrepreneurs
• Entrepreneurs, who are in the formation and growth phase, often have a different focus
compared to those that are now in the maturity phase with well-established products,
services, customers and markets (E.g. Airbnb)
• Access to funding is a difficult process for entrepreneurs and accountants can help to
identify and guide people through different sources (e.g. family members, banks, angel
investors and venture capitalists).
• Business plan documentation, revenue and cost forecasting, scenario analysis, risk
management, and identification and management of intangible assets are all essential
components of entrepreneurship for which support and advice may be beneficial.
Turning Advice into Results
• The recommendations contained in the advice need to be properly executed and deliver
results (E.g. Cash flow collection)
1.4: The Company Accountant as Adviser and Decision Partner (p.17)
• To ensure the investment in data and analytics leads to better-informed decisions, company
accountants need to help align the analytics work with the company’s business priorities.
The Future-Focused Company Accountant’s Skills
• The accountant as an internal employee provides a huge range of advisory roles from
creating strategy to costing analysis and restructuring, and from new product development
to pricing and revenue models for mature products.
, Part B: Business Skills
1.5: Customer Focus (p.21)
• Business acumen: The ability to understand how a firm works and how to make it work
effectively to achieve the business’s goals
• For accountants, customers include:
Ø Clients
Ø Others within the firm that rely on information and advice from the Finance team
Ø The firm’s customers
• Customer Focus: Every aspect of the business’s operations considers its role in providing
customer satisfaction and the business culture supports this
• Steps to understand customer’s needs and embed that focus into the culture and action of
the accountant’s work:
1. Work with the client to create a service plan
2. Meet with clients regularly to discuss what services or products the client wants
changed, improved, removed or added
3. Set up a formal feedback mechanism to measure client satisfaction
4. Continue to develop your skills and network with other professionals to enable you to
collaborate with experts and specialists outside the profession
1.6: Business Planning (p.22)
• A business plan is a comprehensive written document that explains and analyses a business
and its entire operations by explaining its goals, how it will operate and the likely outcomes
of the business
• It allows management and employees of the firm to work towards a set of clearly defined
goals, thus enhancing the likelihood of the goals being reached and allows the business to
take the initiative, rather than just reacting to events that occur in the outside environment.
• An effective plan demarcates responsibilities — spelling out the roles of key personnel; it
also helps clarify job expectations and improves the accountability of staff to the owner–
manager.
, • There is a significant positive correlation between business planning and business success,
but it is important to ensure the business plan is reviewed regularly to integrate the
changing environment in which the business operates.
The Accountant’s Input to the Business Plan:
Financial Projections:
• The formal financial content of the business plan will include financial documents, forecasts
and analyses, background notes, and other information that help decision makers make
sense of the financial forecasts.
Basic Assumptions and Information:
• The accountant will need to explain the assumptions made in estimating income and
expenses and in calculating the various figures and any unusual items, significant omissions
or unusual variations in the figures need to be justified.
• It may be useful to provide details about the bank accounts that the business operates —
what financial institution they are with, what type of accounts are they (savings, cheque or
cash management), and what fees are charged.
• The accountant should also provide an assessment of how well the financial institution’s
facilities meet the business’s needs
• If money is to be borrowed, information should be provided about the proposed lender,
total amount sought, date required, monthly repayments due, interest rate, loan conditions
and term of the loan.
Financial Forecasts:
• The required financial forecasts include the following.
Ø Sales mix forecast
Ø Cash flow forecast.
Ø Projected profit and loss statement
Ø Balance sheet reports
Ø Personal expenses, assets and liabilities
• Using the above data, one may perform ratio analysis including break-even point, fixed and
variable costs, contribution margins, mark-ups and margins, projected impact upon the
value of the business and ROI impacts
Beyond the Financial Projections:
Module 1: Future Accounting Skills
Part A: A Strategic Adviser and Decision Partner
1.1: Drivers of Change (p.2)
1. Technology-enabled innovation
2. Innovative business and finance models
3. Transforming workforce
4. Natural resource management
5. Stakeholder management
1.2: The Accountant as Strategic Adviser (p.5):
• Accountants will continue to be information providers, but their most valued skills are likely
to be insights, options and decisions derived from that information.
• Key requirements for accountants include:
Ø become a long-term partner in the strategic management of the business
Ø understand that the purpose of looking at the past and present is to predict and
shape the future
Ø communicate clearly
Ø can access expertise from a network of contacts
Ø respond in real time
Developing the skills of an adviser:
• Going forward, a successful accountant need understanding and skills beyond their
specialisation, as they are frequently required to collaborate across the organisation and to
communicate with other specialists.
• To provide strategic advice, accountants need a range of business, behavioural and
leadership skills, including business acumen, the ability to communicate, influence and
negotiate, and the ability to help shape organisational culture.
• 2 key expectations are that professional accountants:
Ø Make the right decisions about the services that they perform
Ø Deliver services with professional competence and due care.
,Providing and Implementing Advice:
• Organisations may also require advice on issues such as business efficiency and productivity
(through business process redesign), management information systems (for improved
reporting and decision making), as well as risk management and internal controls (including
fraud analysis and prevention).
• At a strategic level, advice is also required on selecting appropriate growth strategies (based
on acquisition or on organic, internally generated growth), identifying new products and
markets, and establishing a market position
• The ability to identify key stakeholders, determine their position and develop a plan to
engage actively with these stakeholders is essential in turning advice into successful action
1.3: Transforming the Client Relationship (p.10)
• The reality is that the accountant or firm needs to build up their client base — through sales
and marketing.
• To expand the service offering, accountants need to be able to communicate the new
services that they can provide, explain why these services are useful to the client, and
demonstrate that the pricing is appropriate.
• Marketing skills and non-billable time building client relationships become essential, and
these skills need to be developed and refined
,Understanding what SME clients want
• The opportunities to add value through advice are not only beneficial to clients, but also to
the provider, offering more interesting engagements and the ability to earn greater returns.
• Traditionally, accountants have billed based on the time it takes to do something, rather
than on the value of the answers or advice provided.
• Clients, however, are only interested in the value of the information and advice their
accountants provide in terms of helping the business succeed (E.g. Value based billing)
Aligning Strategic Advice to Client Behaviour:
• Strategic advice should, however, have the longer-term objectives of the organisation in
mind, while focusing on the various steps and initiatives that are required to achieve those
objectives.
• An accountant can add value by evaluating the financial consequences and strategic
outcomes of capital investments.
Supporting Entrepreneurial Activity
• The purpose of entrepreneurial activity is to generate new ways of doing things, which can
include starting up a new business venture, changing how a product is produced or sold, and
creating new services for customers
• This requires a very different type of support from accountants, with less focus on control
and more focus on the successful implementation of new ideas and change
Tailoring your Advice for Entrepreneurs
• Entrepreneurs, who are in the formation and growth phase, often have a different focus
compared to those that are now in the maturity phase with well-established products,
services, customers and markets (E.g. Airbnb)
• Access to funding is a difficult process for entrepreneurs and accountants can help to
identify and guide people through different sources (e.g. family members, banks, angel
investors and venture capitalists).
• Business plan documentation, revenue and cost forecasting, scenario analysis, risk
management, and identification and management of intangible assets are all essential
components of entrepreneurship for which support and advice may be beneficial.
Turning Advice into Results
• The recommendations contained in the advice need to be properly executed and deliver
results (E.g. Cash flow collection)
1.4: The Company Accountant as Adviser and Decision Partner (p.17)
• To ensure the investment in data and analytics leads to better-informed decisions, company
accountants need to help align the analytics work with the company’s business priorities.
The Future-Focused Company Accountant’s Skills
• The accountant as an internal employee provides a huge range of advisory roles from
creating strategy to costing analysis and restructuring, and from new product development
to pricing and revenue models for mature products.
, Part B: Business Skills
1.5: Customer Focus (p.21)
• Business acumen: The ability to understand how a firm works and how to make it work
effectively to achieve the business’s goals
• For accountants, customers include:
Ø Clients
Ø Others within the firm that rely on information and advice from the Finance team
Ø The firm’s customers
• Customer Focus: Every aspect of the business’s operations considers its role in providing
customer satisfaction and the business culture supports this
• Steps to understand customer’s needs and embed that focus into the culture and action of
the accountant’s work:
1. Work with the client to create a service plan
2. Meet with clients regularly to discuss what services or products the client wants
changed, improved, removed or added
3. Set up a formal feedback mechanism to measure client satisfaction
4. Continue to develop your skills and network with other professionals to enable you to
collaborate with experts and specialists outside the profession
1.6: Business Planning (p.22)
• A business plan is a comprehensive written document that explains and analyses a business
and its entire operations by explaining its goals, how it will operate and the likely outcomes
of the business
• It allows management and employees of the firm to work towards a set of clearly defined
goals, thus enhancing the likelihood of the goals being reached and allows the business to
take the initiative, rather than just reacting to events that occur in the outside environment.
• An effective plan demarcates responsibilities — spelling out the roles of key personnel; it
also helps clarify job expectations and improves the accountability of staff to the owner–
manager.
, • There is a significant positive correlation between business planning and business success,
but it is important to ensure the business plan is reviewed regularly to integrate the
changing environment in which the business operates.
The Accountant’s Input to the Business Plan:
Financial Projections:
• The formal financial content of the business plan will include financial documents, forecasts
and analyses, background notes, and other information that help decision makers make
sense of the financial forecasts.
Basic Assumptions and Information:
• The accountant will need to explain the assumptions made in estimating income and
expenses and in calculating the various figures and any unusual items, significant omissions
or unusual variations in the figures need to be justified.
• It may be useful to provide details about the bank accounts that the business operates —
what financial institution they are with, what type of accounts are they (savings, cheque or
cash management), and what fees are charged.
• The accountant should also provide an assessment of how well the financial institution’s
facilities meet the business’s needs
• If money is to be borrowed, information should be provided about the proposed lender,
total amount sought, date required, monthly repayments due, interest rate, loan conditions
and term of the loan.
Financial Forecasts:
• The required financial forecasts include the following.
Ø Sales mix forecast
Ø Cash flow forecast.
Ø Projected profit and loss statement
Ø Balance sheet reports
Ø Personal expenses, assets and liabilities
• Using the above data, one may perform ratio analysis including break-even point, fixed and
variable costs, contribution margins, mark-ups and margins, projected impact upon the
value of the business and ROI impacts
Beyond the Financial Projections:
