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Economics 194 Financial Management

R. C. Lowes. Economics 194 Financial Management. Functional Evolution of Finance. Cash. Language of Finance. Business Analysis. Business Planning. Business Partner. Variables Type and Size of Business Financial Health of Business

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Economics 194 Financial Management

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  1. R. C. Lowes Economics 194Financial Management

  2. Functional Evolution of Finance Cash Language of Finance Business Analysis Business Planning Business Partner

  3. Variables Type and Size of Business Financial Health of Business Personalities and Backgrounds of Senior Management and Directors The Role of Finance

  4. 1st – Administrate Money for Company 2nd – Provide the Language of Finance as a Common Denominator The Minimal Roles of FinanceDemanded & Unavoidable

  5. Applying Financial Skills to the Broader Context of the Total Business… Current & Future as a Business Partner to General Management The Larger Role of Finance

  6. CFO Career Grid Corporate Cross-Functional International New Co.’s Manager Entry Planning, Reporting, Investor Relations Business Analysis, Treasury Cost Acct. Strategic Planning Acct. Audit Tax

  7. Skill Curve Sr. Mgmt. Middle Entry Political & Leadership Skills Managerial Skills Technical Skills

  8. Play to Your Strength Stay Ahead of the Curve Manage Up as well as Down Network … Internally & Externally Understand the Impact of Job Changes Communicate/ Communicate/ Communicate Lessons Learned

  9. Make Decisions Work on People Skills Be Humble Keep Learning Careful of Image & Impact on Others Learn to Play the Cards you have L.L. II

  10. Learn to Live with Change “Change what you can, accept what you can’t and God willing you’ll know the difference.” Learn to Lead, Manage, and be a Team Player Eat Elephants one small bite at a time Don’t Believe or trust your own press L.L. III

  11. Lipset’s: Politics of Scarcity Anarchy Shortages Dictator Abundance Democracy Countries Corporations Teams Balance

  12. First thoughts? “NCAA” (No Clue At All) “Accounting Practice” “Boring” “Reviewing Accounting Records” “Bean Counting” Internal Audit

  13. Understand the Nature and Scope of the Activity/Function being audited Check Administrative Efficiency of Polices and Procedures (P&P’s) Purposes of Internal Audit

  14. Ascertain the Extent to which Company Assets are Accounted Safeguard from Losses of All Kinds Determine the Reliability of Management Data developed within the Organization Purposes of Internal Audit

  15. Determine the Extent of Actual Compliance Appraise P&P’s for Possible Improvement Increase Efficiency by identifying any other means by which the activity/function can be made More Effective shared best practices Purposes of Internal Audit

  16. Function of Ability to Control Cash Complexity & Knowledge of Business Quality/ Integrity of Personnel Centralization vs. Decentralization Report to Audit Committee (vs. CFO) Security Department (should be included) Internal Audit Structure

  17. Operation Audits Financial Audits Cooperation with External Audit can drive positive  within company Evaluation of Internal Controls Internal Audit Responsibilities:

  18. Management Support of Audit Computer Skills Legal Interface Internal Audit Needs:

  19. Risk Assessments Size, Amount of Change, Previous Reports Cycle Approach Based on Risk High Risk First Visit Everyone within 2 to 5 year Cycle Internal Audit Program

  20. MIS Implications (Security Systems) External Hackers Internal Theft Disgruntled Employees Statistics Pinpoint problems by Variance Internal Audit Program

  21. What “I” need to know in order to be successful: Familiarity with some element of the business operations, not just “text book” learning. Internal audit is a great job if you have 2-5 years of work experience in another department (especially IT/Systems). Or, a strong ability to compare experience-to-date to the company’s business processes. Internal Audit

  22. Get to the Root of the Problem Focus on the Cause, Not on the Symptoms. Strong Written and Verbal Communication skills The ability to structure work, be a self starter, stay on-time and budget, etc… Strong Project Management Skills Success at Internal Audit

  23. Skill at being “Non-Threatening” in a threatening role Be a Consultant, a Listener with a Purpose Make Connections with people in a short time frame. Success at Internal Audit

  24. If you don’t have some other work experience, you can get Stuck in Audit Best Sequence: Functional Role 2-5 yrs. Internal Audit 3+ yrs. (longer if promoted in audit) Back to a Functional Role Internal Audit – ‘the Dark Side’

  25. Testing Compliance can be Boring Many people think its Not a good work experience You Travel a Lot (60% 0n the Road) “What Personal Life ?” Internal Audit – ‘the Dark Side’

  26. Most people are threatened by auditors and can be defensive (at the least) or aggressive, or even on the attack… You can have days where very senior people are screaming at you… Works OK with my motto: “Any Exposure is Good Exposure.” Internal Audit – ‘the Dark Side’

  27. Audit Improves MPNW (My Personal Net Worth) Broad Exposure to a Business’s Operations Translates to Functional Experience Work on End-to-End processes, not just in Functional Silos a.k.a. Internal Audit – the Good Side: ‘the Force’

  28. Opportunities to Learn How the Business Really Works Functionally in Different Markets Excellent Opportunity for Networking in the Organization No other Internal Role give the same Exposure to the same Number of People Great way to Learn about other Areas of the business from a career perspective Internal Audit – the Good Side

  29. Can Scope out Future/Potential Roles Unusual for Entry-Level jobs to have such exposure to Senior Management Develops Communication Skills and the ability to think on your feet! Internal Audit – the Good Side Interaction & Exposure to Senior Management

  30. Can get a better understanding of what jobs are like than via an interview process. Great Travel. Experience what it’s like to live all over the world without having to move. Gives you more career paths as you’re learning processes and operational capabilities; not just finance. Internal Audit – the Good Side

  31. Use and Develop Internal Audit People Development Opportunity Promote and Move Auditors In/Out Eliminate Stagnation If they Object send in More Firepower & more Senior People Prosecute … Hang Publicly High Compensation Doesn’t mean High Integrity Lessons Learned – Internal Audit

  32. Share Findings and Best Practices Build on Audit Experience Utilize in House Consultants to question P&P’s Eyes and Ears in the Field Cross-Train with Systems Personnel Get Audit Involved Up Front on New Systems L.L. – Internal Audit II

  33. Don’t Forget to Recognize the Audit Team Be Creative in Road Time Compensation Remember it is Internal Audit They Are Your People, So Keep it in Your House. L.L. – Internal Audit III

  34. Answers to: Government and Accounting Bodies Has become more: Consulting than Auditing of Company Economics is Driving Audit Firm Consolidations & Spin Offs External Audit

  35. Fiduciary Responsibility The Audit Committee of the Board Hiring External Auditor Reviewing Audit Plan Reviewing Performance Review Audit Issues/Recommendations Insuring Internal Control External Audit

  36. Audit Firm Reporting Relationships Partners Audit Managers Other Services < 30-40% of Bill => Dilemma: Conflicts of Interest Technical Accounting Systems Organizational Development External Audit

  37. Relationships Matter Audit to Client Firm to Finance Function Partner to CFO Replace the Partner before the Audit Firm Be Inclusive of External Audit within the Company as a whole Lessons Learned – External Audit

  38. Accounting • GAAP • Income • Balance Sheet • Cash Flow

  39. AccountingReporting • S.E.C. • F.T.C. • I.R.S. • Dept. of Labor

  40. AccountingOrganizations • Consolidations • Government Reporting • Technical Issues • Services

  41. Accounting Business Complexity • International • Compensation • Manipulation

  42. Lessons Learned - Accounting • Understand the Grey Areas • Management Judgment • Set Reasonable Policies and Avoid Change • Standardized Charts of Account & General Ledger Systems • Are Worth their Weight in Gold!

  43. Shared Services • Payroll • Payables • Receivables • Financial Systems • Property Management

  44. Shared ServicesWhat Makes It Work: • Internally • Service Orientation • Profit Incentives • Mgmt. Communications • Std. Systems & Procedures • State of the Art Technology

  45. Shared ServicesWhat Makes It Work: • Externally • Service Orientation • Keeping Clients Happy • Overkill of Problems • Cost Savings • Communication, Communication, Communication

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