FP&A – DO WE FACE A FINEXIT?

Being in the back office has never limited my opportunities, if anything, the evolution of systems has meant I have worked on major companywide projects and change management. I am sure I am not alone here. These opportunities are growing even further, as cloud solutions and integrated systems become faster and cheaper.

This dawns an exciting time for accountants and we are already seeing companies where finance staff can spend 2 core days on month-end and spend the rest of their working month on interdepartmental projects, business partnering, forecasting, budgeting and strategy. In recent FSN research, 77% of senior finance professionals believe the finance function will have fewer staff but with higher skills. Though we do have a way to go, as the research also revealed, 52% of CFO feel they are struggling to get support for system investment.

So while a time of unity would be expected within finance to make the case for investment, there has been a rumbling in our finance function. Our colleagues in FP&A are trying to FINEXIT. Sorry if you are tired with Brexit, but I can’t help but draw the parallel.

There is a growing worry among qualified accountants about this shift. FP&A are often working from data drawn from legacy systems that have multiple charts of accounts, born out of M&A activity. How many times has a management accountant pointed out a flaw in a projection because a cost centre they manually journal, was missed?

This knowledge from within the financial team means, that if we got our systems and processes streamlined, our qualified colleagues can take their in-depth knowledge and combine with data analytics to produce insightful budgets, plans and forecasts, no need for a separate FP&A department. To assume that classically trained accountants cannot do this work is somewhat condescending. More to the point if FP&A work outside of finance they will never know their figures are missing this vital journal.

To segregate a function so much from finances’ governance is dangerous. In large organisations FP&A often have their bonuses tied to forecasting accuracy. Therefore if they have access to journals, they could manipulate results and hence the argument for segregation of duties. Now, does this not contradict the role of finance to be objective?

Logically if companies want realistic and deliverable projections, there should be no ‘incentives’? Shareholders look to the CFO to provide integrity, do we really want another Enron? What about Tesco’s overestimates? I really believe the governance of financial data has to be owned by finance and externally by the accounting standards boards and regulators, we need the improvement of standards at that level, not another level of complexity added by a satellite FP&A board.  

Our accounting bodies are far from perfect, but a sticking plaster of yet another formal body, is only addressing the short term needs of a group who will be marginalised in the future. Why would marketing or cost centre wait for FP&A when they can run the number themselves, if they have questions the finance business partners will be on hand. 

Let’s work together to evolve the finance function not extinguish it, through infighting.  

 

Related Articles:

The Future of the Finance Function Survey 2016

  • 2016-07-12 14:17:16
  • Darryl Bannon
  • FP&A, Finance Function, FREXIT