ACCA, Performance Management: The World Class Finance Function

Over the last 10 years Chief Financial Officers have been looking at how to develop the finance function in order to better support the business. As the corporate environment has become ever more complex, so has the role of the finance department with the need to deliver ever greater analysis and insight. This, in combination with the on going need to pick up the core activities of cost efficiency for instance, using performance management techniques, has meant that finance departments have been multitasking for some time.

The ACCA, (Association of Chartered Certified Accountants) in its Accountants For Business Report looks to understand how finance functions spend their time and determine what divides the good from the world class. In respect of the latter, its research found that people in finance expended 6% of working time on management reporting, 19% on strategy and planning, 20% on budgeting and forecasting, 25% on performance improvement projects and some 30% on business analysis.

In its paper, “Collaborative Working: Relationships Matter In Finance” the ACCA contends that world class finance functions are able to better support the business because their “internal reputation is very strong”. However, it is the quality of the people that it concludes is the key factor. The report states that “If the skills, knowledge and capabilities of finance people are leveraged in the right way, the finance function becomes a valued partner to the business”.”

It is the provision of these essential skills, knowledge and capabilities that are paramount to the ACCA mission. One of the study areas of the main qualification  is paper F5, performance management. This provides coverage of the theory and application of most of those concepts highlighted in the Report on which accounting professionals spend their time. The syllabus is separated into five key elements and these mirror almost perfectly the principal functional areas of a finance department. They are, specialist cost and management accounting techniques, such as backflush accounting, decision-making, budgeting, standard costing and variance analysis and,Performance measurement and control.

The finance function is undoubtedly of critical importance to a business. In fact, the Report suggests that it, along with the CFO, are “…the guardians of the corporate brand, and the major interface between key stakeholders and the business”. However, as we already know, it is in fact the “finance people” who make a great finance function. Those professionals qualified via the ACCA are just that type of “finance people”.