Identifies the skills and competencies that accountants need in order to contribute to the strategic success of their employer in a complex, global business environment.

1. Kenneth Witt, CPA, CGMA
AICPA Technical Manager, Management Accounting
Accounting Skills at the Crossroads: Strategic Management Accounting for Business and Career Success
Beta Alpha Psi Annual Meeting
August 9, 2014

2. 2
Kenneth W. Witt, CPA, CGMA
Technical Manager, Management Accounting in the Business Industry and Government team at the AICPA.
Staff liaison to the Business & Industry Executive Committee which provides insight and guidance on professional issues and trends
Involved in thought leadership and professional development activities for the Chartered Global Management Accountant (CGMA) designation.
Managed the development of a portfolio of guidelines on strategy, risk and performance management topics
Launched the AICPA Sustainability Initiative
Created and manages the AICPA Business & Industry Economic Outlook Survey
Member of the task force for the COSO Internal Control over Financial Reporting – Guidance for Smaller Public Companies
BBA in accounting from the University of Iowa; Started career with Touche Ross & Co.

3. 3
Agenda
Complexity and Competencies
What is Management Accounting? What do Management Accountants Do?
Business Strategy Game – Kadgee Clothing
 Management Accounting – Skills at the Crossroads
Fast Track to Leadership - Challenges, Opportunities, Action Plan

4. Complexity and Competencies

5. 5
Complexity is increasing
AICPA Business and Industry Economic Outlook Survey Q2 2014
CPA decision makers (primarily CFOs, CEOs and Controllers)
Given the changing US and global economic and regulatory environment…

6. 6
…how would you gauge the change in the level of general business complexity that you and your business have experienced over the past 3 years?
Significantly more complex 30%
Moderately more complex 38%
Slightly more complex 25%
No change in complexity 7%
Slightly less complex 0%
More Complex = 93%

7. 7
Significantly more complex 32%
Moderately more complex 40%
Slightly more complex 22%
No change in complexity 5%
Slightly less complex 1%
Even More Complex = 96%
…looking ahead 3 years, how do you see the level of general business complexity changing?

8. 8
And… The role of finance is changing
In addition to traditional financial accounting and reporting…

9. 9
…what areas have become your focus?
39%
41%
43%
44%
46%
55%
58%
67%
0%
10%
20%
30%
40%
50%
60%
70%
Human Resources
Pricing and Cost Analysis
Tax Strategy and Planning
Legal and Compliance
Management/Governance
Acctg Information Systems
Strategic Business Planning
Risk Management and I/C

10. 10
And the role is changing Not just for senior executives
For recent graduates and new finance professionals, how important are…

11. 11
…business skills, people skills and leadership skills that you would not have expected or required in the past for the same role?
Somewhat important 22%
Not very important 2%
Very Important =
76%

12. What is Management Accounting?

13. 13
What do employers need?
Pathways Commission
Education

14. 14
Management Accounting
Management accountants combine accounting and financial expertise with strategic insight to guide better business decisions.
Management accountants are business professionals at the heart of decision-making, who “connect the dots” and recognize how the different parts of the business need to come together to create value.
Management accounting is the practical science of value creation within organizations in both the private and public sectors.
Their understanding and experience of business goes well beyond financial accounting

15. 15
What do management accountants do?
Leverage their expertise to help businesses by:
 developing business strategy
 making sound investment choices
 protecting corporate assets
 supporting the management of risk
 managing relationships – internal and external
 communicating with key stakeholders
 assuring high organizational integrity

17. 17
Game Plan for a Successful Finance Team

18. Business strategy game
Kadgee Clothing –
Red is the new black

19. 19
CGMA Business Game
Your Role
•You are the Senior Manager of Finance, reporting directly to the CFO Major Stakeholders
•CEO
•Board of Directors

20. Company Info
•US-based clothing manufacturer, est. 1952 - 6 manufacturing facilities in US selling directly to key customers
•Well-designed, well-finished ladies and children’s clothing at medium to higher end of market – quality is key which is main reason for keeping manufacturing in US
•Firm grew well until the 1990’s – Margins slipped due to changes in retailing and global competition -Losses until 2002 - efficiency measures and introduction of new design center in US increased profitability
•Facing hostile competitive environment – considerable buyer power of large customers driven by lower cost and increasing quality of imports, especially from China
Kadgee Clothing Pre-read info

21. New Resource – Trigger 1
Email from Sales Director Dieter Kubiak
Second major customer withdraws contract

22. “Red is the New Black”
Business Scenario
•2nd largest client withdraws its contract
•34 lay offs already – more to come?
•Morale is low, quality is falling Current Strategy
•Depending on small number of key contracts
•Responsive action to competition is to increase efficiency
•Price is main bargaining tool

23. Task
Prepare a presentation for the CFO to present to the CEO prioritizing the 3 main challenges facing Kadgee Clothing, and make appropriate recommendations on how to proceed.
15 mins

24. Kadgee Clothing – possible issues and recommendations
•Wage cuts / layoffs
•Factory closings
•Outsourcing / offshoring
•New product lines / new target markets
•Sell directly to public – online
•Other
What are the implications?
Costs? Competitors? Potential Revenues? Risks?

25. 25
The CGMA Exam Process - 2015
Trigger #1
New Resources
Tools
Task #1
Pre-Exam Research
Case Study Examination
Response
# 1
Role Simulated
Stakeholders
Company Information
Scenario
Trigger #2
New Resources
Tools
Task #2
Response
# 2
Trigger #3
New Resources
Tools
Task #3
Response
# 3
6 weeks prior exam
0-1 hour
1-2 hour
2-3 hour
Illustrative process only.
Pre-read timing may change. Number of ‘triggers’ or tasks that are presented to students in the three hour exam may be between three and six and various length.

26. Management Accounting - Skills at the Crossroads

27. 27

28. 28
Strategy and The Business Model
How do we make money?
Customer Value
Profit Margin
Processes

29. 29
Building World Class Businesses: For the Long-term
World-Class Businesses focus on:
 Clear Strategy
 Satisfied Customers
 Cost Leadership
 Durable Supply Chain
 Motivated Staff
 Innovation

30. 30
Managing Innovation and Risk
Finance as business partner throughout the innovation lifecycle

31. 31
The role of finance throughout the innovation lifecycle
Leading innovation and managing risk
Managing Innovation- 2013 CGMA

32. 32
Big Data and Business Intelligence
From Insight to Impact: Unlocking the opportunities of big data
Focuses on finance role in linking decisions to data
Key questions:
What drives the business?
What do customers care about most?

33. 33
What is Big Data?
Levels of Analysis
Scale and Complexity of Data

34. 34
Managing Big Data
The three Vs
Volume
Velocity
Variety
SAS.com
Also
Variability
Complexity

35. 35
Management Accountant and Big Data
Reduce Costs
Increased Efficiency
Driver –Based Forecasting
Develop and Monitor KPIs
Increase Revs – Customer Segmentation
Monitor External Risks

36. 36
Data Quality – An obvious concern

37. 37
Risk Management and Internal Control
Who is COSO?

38. 38
COSO Internal Control – 2013 Update
Why the update?
Expectations for governance and oversight are greater
Globalization
Complexity
Technology
Expectations for fraud prevention and detection
2013 COSO CUBE

39. 39
COSO Enterprise Risk Management -ERM
Aligning risk appetite and strategy
Enhancing risk response decisions – risk avoidance, reduction, sharing, and acceptance
Reducing operational surprises and losses
Identifying and managing multiple and cross- enterprise risks
Seizing opportunities
Improving deployment of capital
ERM Cube

40. 40
Sustainability Accounting and Reporting
Triple Bottom Line
 Economic viability
 Social responsibility
 Environmental responsibility

41. 41
Integrated Reporting
Key Concepts of Integrated Reporting
 The use of “capitals”
 The creation of value
 The definition of the organization’s business model
International Integrated Reporting Committee

42. 42
Traditional Financial Statement Model

43. 43
Integrated Reporting Model
International Integrated Reporting Committee

44. 44
Redesigning with the whole lifecycle in mind – Levi Strauss & Co. Paul Dillinger, Head of Global Product Innovation
SustainableBrands.com

45. 45
Life Cycle of a Pair of Levi Jeans

46. 46
Puma– Monetizing its Impacts
Environmental P&L by Supplier

47. 47
How Emotional Intelligence Drives Performance
Daniel Goleman Hay McBer
Personal Competence
How we manage ourselves
Social Competence
How we manage our relationships

49. 49
How to develop EQ

50. Fast track to leadership
The challenges, opportunities and action plan

52. 52
CFO of the Future will create strategic impact

53. 53
The action plan

54. TWTCPA Case Competition

55. Questions?
Thank You
CGMA. org
kwitt@aicpa.org