What is occupying the Minds of CFOs?

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ACCA’s market position as leader in support and research provides assistance to members and industry, drawing on current and future trends. ACCA as an association calls on members to provide feedback from the industry in order to assist with the correct support and research data.

The financial landscape brings a fair share of stress. CFO’s are required to juggle multiple tasks in order to remain loyal to a prescribed objective. This juggling “effect” is found in majority of local and international companies as they go about their day-to-day duties. In a recent networking, CFOs and Finance Directors shared what is occupying their minds and also the challenges they face in trying to find success in their roles.

CFO SA director Melle Eijckelhoff kicked the discussion off, asking guests what’s keeping them occupied at the moment. Amanda Albäck, Financial Director at Tongaat Hulett, replied – “the margin squeeze” as the biggest consumer of mind focus. The paradox of balancing ever-increasing operating costs against keeping customer price increases reasonable, and showing satisfactory profit growth is a reality that businesses find themselves having to deal with every day.”

Peter Walsh, Group CFO at Servest, mentioned “expanding into Africa” as one of the most stressful parts of his work. “There is a lot of pressure to get it right, but people we deal with quite unashamedly ask for facility payments, as they call it. There are massive opportunities in the continent, but there are also plenty of headaches.” Domestically, Walsh sometimes senses distrust for his company, because it can provide an integrated package of many different services, ranging from security to lawn mowing. “When we manage a property, there is one point of contact. If any part, regardless if it is security or landscaping, does not do well, it brings risks for the whole development. That is certainly a risk that we face.”

The challenges of Jobo Moshesh, CFO of SITA, are different. His parastatal company consolidates and coordinates the State’s information technology resources, leading to some unique issues. “A significant majority of our clients get money from National Treasury.  My role at SITA requires consistently maintaining a creative balance between ensuring the financial sustainability of the organisation, while effectively lowering the cost of delivering ICT services and solutions to our clients. This environment is governed with laws such as the Public Finance Management Act (PFMA), a piece of legislation that requires a combination of sound fiscal management and a commitment in practice to implementing effective governance” (http://cfo.co.za/profiles/blogs/cfos-discuss-their-challenges-during-successful-executive-dinner )

The mark that truly sets successful CFOs and Financial Directors from those that fail is the ability to; handle the challenges that exist currently and ensure that sound solutions are crafted to turn them to success; and further to look at the future and see the trends that may have direct or indirect impact on the business and the operations.

The upcoming ACCA event titled the Future of Finance Leadership Summit on the 20th August 2015 will look at future challenges on the horizon that will affect the way finance professionals in South Africa do business. Borrowing from the findings of the ACCA research reports titled, Future Pathways to Finance Leadership, one of the subjects discussed will be the twin peaks model of regulation. This regulation that will be monitored by the SARB and the FSB will modify the methods of operation that finance practitioners are used to.

The summit will also delve into the issue of Generation-Y (Report: Generation Y: Realising the Potential) and the motivations that drive this market. The need to understand this market needs no emphasis; this cohort will in the years to come be the backbone that the country leans on. The transfer of skills from the old generations to Generation-Y cannot be ignored by HR Specialists. This market is important to employers and also to the industry.

The rapid speed that the financial sector is evolving requires constant learning and re-learning. The ability to learn from the past, manage the present and anticipate the movements of the future will be the difference between efficient finance practitioners and those that struggle to confirm.

Entrepreneurial Activity in Africa

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Africa is open for business it seems, many investors from all over the world are attracted to the African landscape. Africa is competing with major economies for investor dollars.

But how has the concept of entrepreneurship been received by the African youth? In 2012 the Global Entrepreneurship Index sited a decline in entrepreneur activity in South Africa, this was after the anticipated increase after the 2010 World Cup. This loss of entrepreneurial spirit was attributed to a complicated cocktail of problems, including the poor education system, difficult and onerous labour laws, crime, government corruption and nepotism and generally unfavourable conditions for entrepreneurs in South Africa.

These results have however changed, it seems that the problems that countries faced presented an opportunity. History has proven that when the state of the economy declines, entrepreneurship plays a major role in getting it stable again. In the 2014 GEI, South Africa places 53 out of 130 countries participating and by virtue of its score is operating at 40% of its entrepreneurship capacity. By comparison the index suggest that, as a whole, the world is at 52 % of its entrepreneurial capacity. This score places South Africa at the top of the Sub Saharan Africa region, well above the next highest ranked country, Botswana which placed 66.

An ACCA study titled, 100 Drivers of Change for the Global Accountancy Profession, panel members outlined different factors that have changed the face of the business discipline in our age. These factors, it seems, know no boundaries, they affect Africans that wish to enter the entrepreneurial space too. They are: technology, education and the economic state. Technology has made its effects felt in Africa, the most notable factor is its ability to lower entry barriers to industries/markets that Africans could not get into in the past. Access to information through the internet, although not at its peak, has become easier for African entrepreneurs.

The ACCA study highlights the costs of university fees and the greater demand from students as another factor that has led the youth into entrepreneurship. There are a lot of efforts that governments have done in helping the youth get the proper education sought-after, but with the increase in population, those efforts have not been able to help everyone. In embracing the entrepreneurial spirit, the African youth seems to have adopted the belief that universities are not the only way to be prepared for entrepreneurship. Abai Schulze, owner of ZAAF Collections based in Ethopia, “I don’t think business school was going to teach me how to run a business in Ethiopia. You don’t go by the book when you are running a business here. You just have to jump into it and learn as you go.”

It is only fair that Africans exploit the fertile ground of their land first before external investors can enjoy the fruits that Africa offers in business. Entrepreneurship plays a huge role in dealing with issues such as unemployment. It is pleasing to see that there is a rise in entrepreneurial activity and that the African youth is charting its own thinking regarding entrepreneurship. Business in Africa needs careful study and as many big corporations have discovered, strategies that worked in other parts of the world cannot just be copied and pasted if one desires to enjoy success in the African context.

The change in thinking by the African youth also poses a new challenge for professionals that service the industries in Africa. Salin Talavdekar, senior accountant at Citadel Risk, advises that accountants evolve into businesses partners rather than just service providers. It is professionals that understand the mindset that African entrepreneurs employ that will be service this market.

Budget Brief: What is the value of Corporate Culture in SME’s?

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In South Africa the rate of success for Small to Medium Enterprises (SMEs) remains relatively low. For SMEs remaining in business past the 5 year mark is in itself a challenge. As the company grows the inclusion of corporate culture becomes essential and companies playing within this space are often called to task in creating their own unique corporate culture. Once this has been established, the questions is then asked, how valuable is one’s corporate culture and as a CFO, can one establish a tangible value for ones company’s corporate culture?

ACCA SA recently hosted a round table discussion on the 2015/2016 National Budget. The key element discussed was the difficulty in doing business in South Africa. From red tape analogies to mission impossible scenarios, all in all business is tough! Remaining compliant in business is as challenging. One of the panellists, Manenzhe Manenzhe, ACCA Member and CFO in Parliament, encourages SMEs to focus on compliancy and move away from corporate wrong doing in order to benefit in the long term.

A point to highlight, and raised by ACCA’s Policy Manager Nomsa Nkomo at the Budget Brief, is that governments inducement of the SME sector has an umbrella effect and one cannot count on these measures alone. One would need to create a competitive edge, a sense of difference, uniqueness and fresh approach to business. Tax relief and government incentives alone will not drive success

A report by ACCA; Culture and Channelling Corporate Behaviour, found that many companies have reduced corporate wrong doing by focussing on building suitable and sustainable corporate culture. The value of reducing corporate wrong doing and increasing productively can then be directly related to a company’s focus on sustainable corporate values and culture.

The report suggests that in designing corporate culture seven points need to be considered. These serve as a starting point for assessment and possible change:

  • Align and embed core values at the very top
  • Watch out for dynamics in groups
  • Track how decisions are being made
  • Be honest about the value of regulation and codes
  • Beware of unintended consequences attached to any incentives structure
  • Find out what motivates people
  • Anticipate trends

SMEs should not only align success with sales figures, corporate culture can add rand value. One is encouraged to see actual value in maintaining a strong sense of corporate culture. As encouraged by Manenzhe, one need focus on compliancy and ethical practise to truly benefit from government assistance. To remain competitive, one would have to create a culture that is dynamic and in line with successful practise.

ACCA introduces Integrated Reporting into its qualification

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www.sustainabilitysa.org  reports that the aim of an integrated report (IR) is to clearly and concisely tell the organization’s stakeholders about the company and its strategy and risks, linking its financial and sustainability performance in a way that gives stakeholders a holistic view of the organisation and its future prospects. #ACCA is the first global accountancy body to introduce integrated reporting into its qualification.

In essence an integrated report is a brief, detailed communication about how organisation’s performance, governance and strategy lead to the holistic creation of sustainable value.

This introduction came soon after the International Integrated Reporting Council (IIRC) www.theiitc.org launched its new integrated reporting framework in December 2013. #IIRC is a comprehensive union of firms, investors, regulators, standard setters, the accountancy profession and NGO’s. The IIRC is the global authority on integrated reporting and is of the notion that vested interest in communication about value creation is crucial to the advancement of corporate reporting. ACCA’s strategic introduction of integrated reporting aims to improve the quality of information available by developing a diversified set of skills and supporting decision-making that focuses on the creation of value.

South African organisations need a carefully planned reporting environment. By introducing #IR into the course outline creates an area where professional ACCA affiliates can create long-term value for their firms and demonstrate leadership for the future. Evidently, ACCA’s unique core values such as accountability, innovation and opportunity continue to steer the professional body, equipping professionals with understanding and expertise to work in all sectors.

Updates on ACCA’s course offering can be viewed at http://bit.ly/1mATxnM 

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