Question 1.1
What types of activities or roles could a professional accountant provide to improve productivity for an organisation?
Professional accountants can provide several roles in improving productivity, including:
data capture Both of physical and monetary flows, to enable an accurate vi...
,Question 1.1
What types of activities or roles could a professional accountant provide to improve
productivity for an organisation?
Professional accountants can provide several roles in improving productivity, including:
data capture Both of physical and monetary flows, to enable an accurate
view of current operations
Analysis Both of financial and non-financial information, to enable
identification of activity drivers
Performance Includes establishing benchmarks and measuring progress
measurement towards goals and targets
Process redesign By applying process improvement tools to identify
inefficiencies and bottlenecks, and reconfiguring activities
Resource control Through budgeting and forecasting, as well as designing and
implementing internal controls
Question 1.2
For each of the characteristics listed in Table 1.1 (i.e. organisation, strategy,
customer/community, financial, governance, work force and information
technology processes), list one example of the type of strategic advice that
professional accountants may be able to provide.
There is a wide range of business advisory services that professional accountants may be able
to provide, including:
Strategy
• Business planning process, including linking budgets to organisational objectives.
• External environment information and analysis.
• Specific growth strategies (acquisition, joint venture, partnership).
• Performance measurement systems design, evaluation and implementation.
Customer/Community
• Customer profitability and segmentation.
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,• Sustainability improvements and reporting.
Financial
• Capital structures and sources of funding.
• wealth maximisation strategies (dividends, buy-backs, reinvestment).
• Finance function (budgeting, payroll, accounts payable/receivable, inventory, taxation,
reporting).
• Costing and pricing, and leasing versus purchasing of assets.
Governance
• Governance structures (board composition, committees).
• Independent director role.
• Risk management and internal controls.
Work force
• Organisational structures (in-house, outsource).
• Performance measures and links to remuneration.
iT processes
• Management information systems (reviews, scoping, implementation, testing).
• Project management services.
Question 1.3
Do you believe professional accountants are well placed to provide strategic
advisory services (outside the traditional areas of cost accounting, financial
accounting and taxation) to organisations? Justify your position.
Professional accountants, both internal and external to organisations, are well placed to
provide strategic advisory services to organisations for a number of reasons, including the
following:
• The professional approach of the accountant—such as having a service ideal, honesty,
integrity and not acting in their own self-interest.
• The technical abilities of accountants are based on a systematic body of theory and
knowledge. They have gone through rigorous education and training, which provides a
base level of knowledge that leads to competence in delivery of services.
• Many technical skills are transferable—for example, the technical requirements of an
audit (including setting the scope, determining the approach to sampling, and obtaining
and reviewing data) are often similar, despite the reviewed data being of a different nature
(i.e. physical measures instead of financial measures).
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, • Accountants are often exposed to the whole of an organisation—finance, sales,
marketing, human resources, IT, legal, production, logistics and after-sales services. This
knowledge is invaluable when assessing the impact of potential decisions across different
parts of an organisation, as well as its industry supply chain.
• Accountants are often exposed to several industries, and similar problems that arise
in different organisations. The ability to transfer their knowledge of how similar
problems have been resolved provides a valuable resource to clients who may have never
experienced such problems.
Question 1.4
‘The business advisory industry thrives during periods of business change and
hardship’ (iFAC 2008, p. 26). Explain why this may be the case.
In periods of change and hardship, many organisations realise that they cannot continue
operating as they have done previously. Business models that worked in the good times may
not be relevant when times get tougher. Many organisations find that, in difficult times, there
are additional pressures from:
• shareholders—to continue generating sufficient returns;
• employees—to provide tolerable working conditions and guarantee security of work;
• suppliers—to increase/maintain orders and margins; and • customers—who are
buying less, and on reduced margins.
In addition, regulatory changes (e.g. new licensing regimes or new taxes) and changes in
community expectations (e.g. relating to the environment) can also have a significant impact
on organisations.
Organisations may not have sufficient resources or expertise to solve the underlying
issues, or make the required changes, and so typically request assistance from external
sources.
By obtaining that expertise externally, both the adviser and the organisation should benefit.
Question 1.5
1. Soft skills, especially communication skills, networking and the ability to manage
relationships, are extremely important to progress to senior roles in
accounting/finance. At the CFO level, how important do you think it is to be
technically competent in the finance role, compared to actually managing the
finance role? Explain your reasoning.
2. A contemporary business and social issue is maintaining work–life balance. What
risks does an accountant providing strategic advice face in this area?
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