The 411 from Tom Hood on the future of finance

The role shift of the finance function was accelerated by the pandemic, and CFOs and controllers continue to adapt to provide value for their organizations. Few people have more insight on that topic than Tom Hood, CPA/CITP, CGMA, executive vice president–Business Engagement & Growth for the Association of International Certified Professional Accountants, representing AICPA & CIMA.

Hood is a featured speaker on a skills-focused webinar on Thursday about the Finance Leadership Program. He also leads a group of finance executives from large organizations, and he shared insights from that group — and what it will emphasize in the future — in this podcast conversation.

More information can be found on the following topics mentioned:

• A registration link for the webinar on Thursday.
• The Registered Apprenticeship for Finance Business Partners program.

What you’ll learn from this episode:

• An explanation of the Finance Leadership Program (FLP) and its levels.
• The skills component of the FLP’s strategic case study.
• Highlights of a recent conversation between Hood and Merck finance executive Rita Karachun, CPA, CGMA.
• The top-of-mind issues for members of the Future of Finance Leadership Advisory Group.
• Some of the advisory group’s recent speaking engagements and outreach.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript:                                                            

Neil Amato: What does CFO stand for? As a listener of this podcast, you probably know the answer. But this next episode expands upon the traditional meaning and role of the chief financial officer. This is Neil Amato with the Journal of Accountancy. Coming up after this brief sponsor message, you’ll hear a conversation about a finance leadership opportunity, a group of name-brand company leaders working together, and more.

Amato: Welcome back to the Journal of Accountancy podcast. I’m joined again by Tom Hood, a name this audience most definitely knows. But for those who don’t, Tom is a CPA who holds the CGMA designation. He’s a colleague of mine, and he’s executive vice president for Business Growth and Engagement for the AICPA & CIMA. Tom, as I said you’re a repeat podcast guest, and today we’re getting a midsummer update from you on a few of your focus areas.

The first thing I want to hit on is the Finance Leadership Program and a webinar you have coming up. First of all, that webinar is on Thursday, July 28. We’ll include a link to that webinar in the show notes for this episode. But tell me something about that webinar, and for those who don’t know what the Finance Leadership Program or FLP is, what should they know?

Hood: We’re calling it the 411 on the Finance Leadership Program. It’s with my colleague Barry Payne, and together we’re going to walk through what I think is an exciting opportunity for CPAs to think about how they can get that CGMA credential. But more importantly, the critical skills that come with it.

First, let me start for the CPAs in the audience. The FLP is our Finance Leadership Program. It’s an online case-based learning, meaning it’s scenarios and real-life things. Instead of like a multiple-choice test, it’s literally a case study test. You actually apply the learning to real-life scenarios. Here’s what it means. It’s in three levels, and we’re going to go to the webinar to get everything.

But for a CPA who has the CPA license, they only have to do the top level called the strategic level, and that covers some critical competencies in strategic finance, which are what every major company is telling us they’re in need of. Including things like project management, strategic thinking, scenario analysis, all the things that are really useful in today’s crazy environment. This will give them all the background on how to do that, and they can sign up and go right into that strategic case study and take some of the learning, then take the exam and qualify.

Amato: Continuing on the theme of skills and being strategic, I’d say one of the other points of emphasis for you is the Ffuture of Finance group, specifically the Future of Finance Leadership Advisory Group. Now one member, I guess, of that group is Rita Karachun, who’s a CPA and CGMA, and senior VP and global controller for Merck.

You recently had a video conversation with her. She shared, I think, some of the key parts of the group, which are accountants as value partners. One, explain what maybe you mean by value partners and some of the highlights of your conversation recently with Rita.

Hood: Yeah. Rita has been instrumental in this whole effort with our Future of Finance. We have about 40 large corporate CFOs, global controllers from well-known companies, including Merck where Rita is. We have Nike, we have Verizon, IBM, just some extremely well-known brands, and that group has re-imagined like, what’s finance look like coming out of this pandemic? We actually have a name. We call it instead of CFO, think of it as the chief future officer.

Neil, this is that shift from what we would call rearview mirror to a windshield view, obviously accelerated through the pandemic. That’s when we saw the CFO and controllers really come into this huge value partnering role. Because instantly, the company was saying what’s going to happen next week? How’s the impact of this pandemic? Those kind of things. They had to move into a forecasting and projection mode like never before. In fact, one of the stats is 30 times more than at anytime prior to the pandemic were they actually engaging in it.

With Rita, we started to talk about what does that mean, and then what’s the significance of a CPA/CGMA in a large corporate like Merck? I love what she said because she really emphasized the importance of the CPA’s grounding in understanding the accounting numbers at a very deep level. One of her statements in there is, a CPA can learn finance much better than a finance person can learn accounting. Now what she means by that is you have to understand where the numbers come from, from a good solid integrity and understanding the reliability of those numbers.

A finance person understands concepts around accounting, but the CPA accountant understands literally where they come from in the general ledger and all the transaction layer. While you don’t have to get into that transaction layer — it’s getting more automated — understanding of the core of that, and how do you know whether the numbers are right, and what to do if you think there’s something wrong. That’s a core competency that she highlights in that interview.

Amato: There are a couple points of emphasis for the group in particular. What are some of those that you’d like to highlight from the work that the Future of Finance Leadership Advisory Group is doing?

Hood: A couple of things. First of all, we’ve always been tracking these top issues. The new top issues, Neil, right now from the last couple of months is no surprise, inflation, the risk of recession, and the war in Ukraine, and impact on supply chains, and all those things. Those are top of mind.

What that means, by the way, is that all the projections that were coming down as we were coming out of the pandemic are coming back now because now the CEO’s saying, well what’s happening with inflation on our balance sheet and our income statement and cash flow? What’s next? We’re seeing now the CFOs and controllers are being asked to do more cash flow projections. They’re asked to look at the balance sheet a lot more than the income statement, looking at receivables and inventory. That’s a big thing that’s coming out right now, everybody needs to pay attention to.

But in addition, we’re working on what we call finance maturity model to help them evaluate where their organization is relative to best practices in finance transformation. It’s covering about six dimensions of the finance operation and puts it in about five levels to see where would you go to be absolutely best practice and score where you are. That group has been working on that for a couple of months. We hope to have it probably in the next month, and we’ll be releasing that for everyone to see. That’s another big one.

But probably the other big thing is the group has been extremely generous with their time going out and talking to all of our members about it. We’ve done a bunch of presentations. [At] ENGAGE we had a couple of our future finance folks out there. We had Denise Dettingmeijer from Randstad, we had Joe Radziewicz from Stanley Black & Decker, and Azhar Syed, formerly CFO of Tetra Pak.

Those three were helping us talk to this amazing group, which actually included a lot of practitioners from the client accounting services. It’s the first time, Neil, we saw crossover with public accounting and our CFO audience to talk about these core issues. In fact, they’re very similar, so the whole Future of Finance work resonated with that audience in a big way.

We also had several of our members in Boston at a big CFO conference. We had Don Tomoff from Invenio Advisors and John Regan from Swiss Re on a panel there, again, talking to the middle market about what our work is, and all these messages are resonating. Amazing. James Miln from Yelp joined a couple of our other AICPA folks at the ESG Symposium in New York City.

The cool thing is think about these key things, value partner works where we started. ESG — our group thinks of that not as compliance. Yes, that’s critical. But as a step wait for the CFO to add value to the organization. We’re looking at really the value-creation levers. They’re thinking of it in a much broader context than just complying with the latest rules. That’s another key theme that you’re seeing from our group.

Amato: Obviously, that group will continue to meet as they continue to put together the finance maturity model. But I guess there’s an in-person meeting plan for a tie-in with the digital CPA event in Austin in early December?

Hood: Correct. That will be our second Future of Finance Summit, where we’ll bring this group together and continue to evolve, all of the work needed to really position us as that chief value officer or chief future officer. Those are the big ideas that are coming out of it. The other part, say, so think about our themes. It’s going to be finance transformation clearly equipping us with the skills we need for the future.

Then the third big theme is this value-creation idea, value partnering. ESG is a gateway to what we would see as the intangibles that we have to deal with, and a lot of this came out of the work that we did at the AICPA with the Value Reporting Foundation. That’s another example of where finance is moving into the future.

Then one final point I would like the audience to know is if you think about ESG, our group has looked at the S as social, which it is, and saying what we’re trying to do in the DEI initiatives with finance wraps around our Registered Apprenticeship program. We’ll put a link to that in the show notes as well. But we’re really excited about that, and you’ll hear more about that in the future as we go.

Amato: Yeah, exactly. We did have Joanne Fiore in an episode earlier in the year to talk about that Registered Apprenticeship program. I planned to follow up with her for a future one, and thank you for the update on it and how it all ties into some of the initiatives going on. Tom, anything you’d like to say in closing in this midsummer update?

Hood: I just have to really continuously thank our Future of Finance Leadership Advisory Group. Because not only we standing on their shoulders to create all this, but they’re actively helping us get out in the market and talk about it and be on presentations. I just heard they want us to come to the AICPA Council and present there in October, so very exciting stuff.

Amato: Yep. Again, FLP webinar Thursday, July 28. This episode will give you about two days’ notice to get signed up for that and hear Tom give you the 411 on the Finance Leadership Program. Tom, thanks very much.