Secondment to the finance department

For the next couple months I’ll be in Kansas City getting some experience in one of the regional offices of a division of my company, helping with some year end tasks. It’s going to be pretty interesting to be on the other side of the table for once, liaising with the external auditors and working with finance staff located across the Midwest to put together the financials.

Anyway, what’s new with you? It’s been a while…

Finance managers are human

CFO.com has brought to my attention a survey conducted by the CEB of finance managers. They asked finance managers whether they believe their direct reports are “effective in the behaviors and skills that drive excellent performance by the finance function.” The title of CFO.com’s article gave away the answer: Finance Leaders Bemoan Talent Shortage. Not only that, but they’re good at the stuff that sucks and suck at the stuff that’s good:

And on average, finance workers are more skilled in the areas that have the least positive impact on value creation.

You know how everyone likes to think they’re above average? Above average driver, above average intelligence, etc.? This is that. Finance managers believe they’re above average at their jobs, therefore those around them are likely below them, and possibly even below average. It’s OK. They’re human.

I also think there’s an element of confirmation bias at play. They’re finance managers, so they must be above average and have the skills and behaviours that the survey indicates is important.

But back to those hapless direct reports: First, who hired them? If it was those selfsame finance managers, shouldn’t that reflect poorly on their ability to assess competence and develop talent? Whose responsibility is it to put in place succession and training plans? (HR’s, they’d probably say, if surveyed about it.)

Overall, finance managers appear quite dissatisfied with the talent levels on their teams. [The CEB] acknowledges as much. “We weren’t particularly surprised that the ratings were so low,” she says. In fact, she adds, one reason CEB did a report on talent is that when it conducted its annual interviews with CFOs last year, 85 percent said talent was a major concern.

I’m not surprised either. This is never going to stop, until robots run companies completely. Even then we’ll probably sneak a “dissatisfied with direct report talent levels” easter egg into the code, just so robot CEB surveyors can have something to write about. What a chilling dystopian vision; I think the living will envy the dead.

Mercilessly, it continues:

Effective delegating is a capability many finance departments sorely need. “After the financial crisis, finance is overwhelmed with ad-hoc requests,” the report states.

If you’re delegating to staff that you don’t have (because they were all downsized during the recession), it isn’t going to be very effective. Perhaps that’s the reason they’re feeling overwhelmed?

There’s a reason why great people are hard to find: they’re scarce. And once found, smart managers do everything they can to keep them. As well, it’s highly likely those yearned-for “persuaders, strategists and builders” recognize a good situation when they have it. Perhaps that’s the most important takeaway here for finance managers. Build it, and they will come.

Pay off debt, then start saving and investing

I took the plunge this weekend and expunged my debts to the depths of the hell from whence they came. It was a tough move for some reason, even for a cold, calculating accountant. Subconsciously, I held on to the debt in order to keep my asset balances high. Artificially high.

This is a bad move, and you don’t need to be a bean-counter to follow the logic. I had credit card debt at 18%, a personal line of credit at prime + 3%, savings earning me 3.5%, and a chequing account costing me the monthly plan fee less a paltry amount of interest. In summary, a net cost to me.

I had enough cash in the savings and chequing to pay off the debts, but for some reason I had held off on doing so for months, all the time allowing the interest costs to pile on. I felt more secure maintaining the artificially high cash/savings balances. Why is that?

It wasn’t until I started tracking my expenses using the so very Web 2.0 tool expensr.com about two weeks ago that I realized the time had come to man up and pay the debt off. Only then could I save with a clean conscience, knowing I had no interest expense completely wiping out the interest I would earn on savings.

Note: I plan to write a post soon about expensr.com. It has really helped me get a hold of my expenditures and features a mobile version I can access on my cell phone to capture cash outlays as I make them.

So now you all know my dirty little secret. I’m an accountant and auditor, I find other people’s mistakes and control weaknesses, and until this weekend I wasn’t even managing my own finances like a pro!

Hollinger audit committee had “no finance experts”

The Conrad Black trial has been good theatre, and the latest coming out of Chicago doesn’t disappoint.

Testifying at the trial of former Hollinger chairman Conrad Black, a former member of the company’s audit committee has testified that it kept watch over company finances for four years without any financial experts.

Economist Marie-Josee Kravis, sat on the committee during the time that Black allegedly helped steal $60m (£30m) from the company.

She said that no one on the audit committee between May 1999 and May 2003 had the financial experience required by its governing charter.

Kravis is referring in part (I’m assuming) to the best practices of an audit committee as outlined by the AICPA, which stipulate at least one member of the audit committee be designated a financial expert. The decision tree to determine whether a member qualifies as a financial expert can be found here (PDF).

Basically a financial expert is someone who is an accountant or auditor, has taken an accounting or auditing program or course, has experience in auditing or as a controller or financial officer of a company, has experience assessing a company’s financial statements, or has experience supervising the accounting function in a company.

On top of that, they must be familiar with GAAP, the function of an audit committee, internal controls, and how those apply to the company in question.

My question is: Why would you want anyone who doesn’t meet those standards on the audit committee?

Always have exact change

CoinsThis struck me as sort of interesting, possibly useful, and probably a little compulsive. One blogger’s way of slowly using change is to carry the optimal number of each denomination of coin in his pocket.

Everyone has coins they want to get rid of. I randomly thought of an easy way to carry change and always have enough change for a purchase. For the sake of this article, I consider change to be less than $1 of coins. To be able to make any change combination, you need to carry $0.99 of change through 10 coins…

I almost never pay with exact change, but that’s probably because I find a sick satisfaction in rolling my coins every few months and taking them to the bank. I crave that big mountain of coins because when I was a kid it was easy to imagine a big pile of coins were treasure.

(Via Lifehacker.)