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he finance functions in large U.S. and European firms have focused on cost control,
operating budgets, and internal auditing. But as corporations go global, a world of finance
opens up within them, presenting new opportunities and challenges for CFOs. Rather than
simply make aggregate capital-structure and dividend decisions, for example, they also have
to wrestle with the capital structure and profit repatriation policies of their companies
subsidiaries. Capital budgeting decisions and valuation must reflect not only divisional
differences but also the complications introduced by currency, tax, and country risks.
Incentive systems need to measure and reward managers operating in various economic and
financial settings.
financing, risk management, and capital budgeting.

Financing in the Internal Capital Market

Institutional differences across a companys operations allow plenty of scope for creating
value through wise financing decisions. Because interest is typically deductible, a CFO can
significantly reduce a groups overall tax bill by borrowing disproportionately in countries
with high tax rates and lending the excess cash to operations in countries with lower rates.
CFOs can also exploit tax differences by carefully timing and sizing the flows of profits from
subsidiaries to the parent. However, tax is not the only relevant variable: Disparities in
creditors rights around the world result in differences in borrowing costs. As a consequence,
many global firms borrow in certain foreign jurisdictions or at home and then lend to their
subsidiaries.
Multinational firms can also exploit their internal capital markets in order to gain a
competitive advantage in countries when financing for local firms becomes very expensive.
When the Far East experienced a currency crisis in the 1990s, for example, and companies in
the region were struggling to raise capital, a number of U.S. and European multinationals
decided to increase financing to their local subsidiaries. This move allowed them to win both
market share and political capital with local governments, who interpreted the increased
financing as a gesture of solidarity.

But the global CFO needs to be aware of the downside of getting strategic about financing
in these ways. Saddling the managers of subsidiaries with debt can cloud their profit
performance, affecting how they are perceived within the larger organization and thereby
limiting their professional opportunities. Similar considerations should temper companies
policies about the repatriation of profits. For U.S. companies, tax incentives dictate lumpy
and irregular profit transfers to the parent. But many firms choose to maintain smooth flows
of profits from subsidiaries to the parent because the requirement to disgorge cash makes it
harder for managers to inflate their performance through fancy accounting. Finally, letting
managers rely too much on easy financing from home saps their autonomy and spirit of
enterprise, which is why many firms require subsidiaries to borrow locally, often at
disadvantageous rates.

Managing Risk Globally

The existence of an internal capital market also broadens a firms risk-management options.
For example, instead of managing all currency exposures through the financial market, global
firms can offset natural currency exposures through their worldwide operations. Lets say a
European subsidiary purchases local components and sells a finished product to the
Japanese market. Such operations create a long position in the yen or a short position in the
euro. That is, those operations will become stronger if the yen appreciates and weaker if the
euro appreciates. This exposure could be managed, in part, by offsetting exposures
elsewhere in the group or by having the parent borrow in yen so that movements in the yen
asset would be cancelled by movements in the yen liability.
Given this potential for minimizing risk, it might seem perverse that many multinationals let
local subsidiaries and regions manage their risks separately. General Motors is a case in point.
Even though its treasury function is widely regarded as one of the strongest pools of talent
within the companyand one of the best corporate treasury functions worldwideGMs
hedging policy requires each geographic region to hedge its exposures independently,
thereby vitiating the benefits of a strong, centralized treasury. Why duplicate so many
hedging decisions? Because forcing a businesss hedging decisions to correspond to its
geographic footprint gives GM more-accurate measurements of the performance of the
individual business unit and of the managers running it.
In a related vein, companies often limitin arbitrary and puzzling waystheir considerable
expertise in managing currency exposures. Many firms require finance managers to follow
passive policies, which they apply in a rote manner. For example, GM actively measures
various exposures but then requires 50% of them to be hedged with a prescribed ratio of
futures and options. Firms adhere to these passive strategies because they limit the degree to
which financial managers can undertake positions for accounting or speculative reasons. So
although functioning in the global environment calls for considerable financial expertise,
organizational strategy requires that expertise to be constrained so that financial incentives
dont overwhelm operating ones.

Global Capital Budgeting

In addition to exploiting the de facto internal financial market to mediate between their
operations and the external financial markets, CFOs can add a lot of value by getting smarter
about valuing investment opportunities. When energy giant AES began to develop global
operations, in the early 1990s, managers applied the same hurdle rate to dividends from
around the world that they used for domestic power projects, despite the different business
and country risks they faced. That approach made risky international investments look a lot
more attractive than they really were.
The companys subsequent attempts to improve its capital-investment decision process
illustrate the organizational challenges CFOs face as they move from domestic to foreign
markets. In order to improve the quality of valuations, AES required managers to
incorporate sovereign spreads into their discount rates. Sovereign spreads measure the
difference between the rates at which two countries can borrow in the same currency, and
they are widely tacked on to discount rates in order to adjust for country risk. Although this
method created the semblance of tremendous precision, it came with some curious
incentives, particularly for managers charged with securing deals in emerging markets.
Knowing that their projects would face very high discount rates, managers forecasted
inflated cash flows to compensate. For managers keen to complete transactions, as some at
AES were, excessive penalties and precision can result in a less robust process.
In extreme cases, the gaming that takes place in a formalized process can undermine the
companys strategy. Consider Asahi Glass, one of the first Japanese corporations to
rigorously implement Economic Value Added systems worldwide in order to increase capital
efficiency. Asahi set country-specific discount rates based on typical risk measures, including
sovereign spreads. The result, however, was that managers overinvested in Japan (because of
very low discount rates) and underinvested in emerging markets (because of very high ones).
Once again, adopting a narrowly financial approach led to an outcome directly at odds with
the companys strategic objectives. In response, Asahi made a series of adjustments to
reconcile its initial, purely financial approach to discount rates with its broader organizational
goals.
The moral of these stories is that formal methods of valuation and capital budgetingwhich
work quite well in a domestic context, where the variables are well understoodmust be
refined as companies globalize. Firms need to make sure that their finance professionals
actively discuss potential risks with the country managers who best understand them.

Creating a Global Finance Function

How can CFOs ensure that their global finance operations make the most of the
opportunities at their disposal? At a minimum, they must inventory their financial
capabilities and ensure their adaptation to institutional variation and their alignment with
organizational goals. To achieve this, a global finance function must do three things well:
Establish the appropriate geographic locus of decision making.
The example of GMs approach to hedging makes clear that a finance function must locate
decision making at a geographic level where other strategic decisions are made. Even if

centralizing decisions can generate substantial savings, these might need to be sacrificed to
ensure that the finance function reflects the degree of centralization appropriate for the firm
overall. Highly centralized firms can have a large finance function at headquarters that
effectively dictates decision making for all subsidiaries; such an arrangement can capitalize
on many financial arbitrage opportunities without sacrificing organizational goals
substantially. Decentralized organizations, in which country managers are paramount, must
replicate some financial decision making at the country level.
The finance function must locate decision making at a geographic level where other
strategic decisions are made.
Create a professional finance staff that rotates globally.
Leading companies recruit and rotate financial managers in the same way that they do
marketing and operational talent. If companies groom a network of finance professionals
who are comfortable in various environmentsand have rotated through positions at the
country, region, and corporate levelsthe dynamic between the financial headquarters,
where most expertise resides, and the subsidiary can be a powerful resource in difficult times.
Drug giant Novartis is an example. In 2001, the company had to decide whether to continue
financing its Turkish subsidiary, which had repeatedly delayed payment to Novartis during
periods of crisis. On the numbers alone, the decision would have been straightforward:
Force the managers to fund locally or deny shipments of life-saving drugs to the subsidiary.
Complicated negotiations ensured that the subsidiary would continue to operate, capitalize
on the weakness of its competitors, and ultimately pay back the parent. A successful
outcome was achieved only because of the trust built up over many years between finance
managers at headquarters and those in Turkey, many of whom had spent time at Novartis
subsidiaries around the world.
Codify priorities and practices that can be adapted to local conditions.
It is tempting to stipulate that cash repatriation policies or investment criteria be applied
universally. Such a requirement, however, can sacrifice opportunities that arise locally.
Similarly, strategic objectives, as in the Asahi example, may demand flexibility in investment
analyses. Smart companies, therefore, formulate policies centrally with an understanding that
local idiosyncrasies and strategic imperatives may require exceptions. Specifying the process
for making exceptions, such as instituting a standing committee of finance professionals to
review possibilities, is critical to ensuring that deviations from the norm are properly
managed.
Forty years ago, most firms didnt have CFOs, and the finance function was usually staffed
by controllers. As external markets have become more demanding in terms of performance
and their requirements for disclosure, the finance function has become more prominent.
Now that multinational companies have their own internal capital markets, the finance
function must graduate to a more strategically engaged level. A globally competent finance
department is one that understands how to reconcile the firms financial, managerial, and
institutional priorities across its business units. Does your

https://www.ieee.org/documents/financial_ops_manual.pdf
fin

A financial plan outlining the revenues and expenses over a period of time.
A financial operating plan (FOP) uses past performances, incomes and
expenses to forecast what to expect in the following years. It then
incorporates past and recent trends into the planning so as to most
accurately forecast what is to come. It will define goals for areas such as
budgeting, sales, payroll, etc, as well as create a cash flow projection.
A good financial operating plan will need to be ammended and updated
due to any extraordinary events relating to finances, as well as to see if it is
still relevant to the current situation. If prepared and ammended
accordingly, an FOP can be a useful tool in creating and managing the
budget, improving control of management operations and ultimately
creating profitability.

The Operations division functionally is split into four main areas: Capital Markets
Operations, Financial Analytics & Reporting, Operations Design, and Data Science &
Engineering.

Capital Market Operations acts as the front-line of the division to enable all of the firms
businesses and supports the life cycle of a trade by partnering with clients and other divisions to
mitigate risk and provide excellent client service

Professionals in Financial Analytics & Reporting create financial models and manage the
divisions metrics to enable informed business decisions and improve the economics of the our
business
Operations Design professionals plan and execute change programs and create new financial
operations capabilities to drive efficiency, improve client service levels, and reduce our
operational risk
Data Science & Engineering professionals develop cutting edge analytical tools and engineer
solutions to address operational challenges

I look at data that we have as a firm. We use math to synthesize the information that
is present in that data to come up with new conclusions about how we should
transact our business, how we can approve our business, or how we can help our
clients in a new way. Right now Im working on a project where we are looking at
funding channels that we are using to service our day-to-day liquidity needs and the
goal of this project is to really understand what the situations are where we resort to
something that is not optimal from a risk point of view or from a cost point of view
and help to eliminate them.

Accounting
Audit
Corporate Development
Corporate Treasury
Estimating
Financial Planning & Analysis
Financial Services
Financial Systems & Applications

Government Finance
Independent Cost Evaluation
Investor Relations
Overhead Planning & Controls
Planning & Scheduling
Program Finance
Property Management
Tax

ole of Finance
Bookkeeping is one of the main roles of a finance department in any organization. Additionally, a finance
department needs to keep track of sales and spending and produce yearly and quarterly statements.
Financial departments need to also regularly update managers of other departments within an organization
about the financial state of the business. Financial reports must remain accurate, verifiable and objective.
Management relies on the income statement, which shows the companys financial results, to calculate
budgets. Moreover, the finance department needs to help the organization secure necessary funding and
distribute profits in the form of dividends.

Duties of a Finance Manager

A finance manager oversees all money-related functions with a business, including the billing and
accounting departments. Additionally, finance managers will typically monitor the mark-up of products and

services to ensure the profitability of the company. The finance manager also reviews the budget and helps
to make decisions about cuts and increases in spending. Further, finance managers prepare and interpret
financial reports and help to forecast the companys financial future.

Supply Chain Management Accounting

This Guideline focuses on key techniques that can be used in practice to implement
management accounting practices that facilitate effective supply chain management.
It recognizes that relationships between organizations will differ because of their
different stages of maturity and strategic choices. It addresses risk management
issues and considers the sustainability agenda as a factor gaining importance in the
area of supply chain management. A central feature of the Guideline is a description
of the way that professional accountants can add value to the management of supply
chains.

Implementing Self-Directed Work Teams

Faced with intense global competition in a rapidly changing marketplace, companies today need
continuous improvement of product and process and effective management of a diverse
workforce in order to create value and competitive advantage. One innovative management
approach gaining widespread acceptance is the use of self-directed work teams (SDWT's),
capable of evolving and adapting to changing circumstances. By involving employees in problemsolving and in managing their own work, SDWT's can increase motivation and productivity as well
as the quality of products and services.

Accounts Receivable Management

Accounts receivable often constitute a significant portion of assets. Controlling the accounts receivable
process demands the development of policies that are compatible with an enterprises profit, liquidity and
market share. Since the accounts receivable policy has a broad impact, it must be managed carefully and
assessed frequently.
A Strategic Role for Treasury
With downsizing and reengineering initiatives underway, modern corporations are focusing on long-term
strategies. For every organization, the goal of these strategies is to increase shareholder wealth. Many
organizations do not recognize the importance of treasury management in accomplishing this objective.

Managing Banking Relations

Management accountants are sometimes asked to select which banks and services will be used in cash
management, but often have inadequate information to make the best decisions. This guideline, designed
for small to medium-sized organizations, explains the appropriate information and steps required in choosing
a bank and preparing a request for banking services.
uman Resources Accountability

This guideline describes the role of HR, and discusses general concepts and specific techniques
for measuring the performance of the HR function. Concrete examples of different types of
analysis and a case study are also provided. In organizations without an HR function, the
approaches and material presented can be of assistance in personnel administration.

Strategic Partnering
In order to improve their chances of survival in the marketplace, companies are turning with increasing
frequency to strategic alliances with their suppliers, customers and competitors. This innovative approach
allows organizations to share skills and resources, develop new products and technologies and gain access
to new markets.

Outsourcing the Finance and Accounting Functions

How well an outsourcing arrangement is managed matters more than where the outsourcing services are
provided. That point has at times been obfuscated by politically charged discussions and articles that
examine the pros and (more frequently) the cons of off-shoring. Off-shoring can be performed by an
external outsourcing vendor or within a company that establishes captive shared-services operations in
other countries. The geographic location of an FAO provider does matter, and its potential implications
should be addressed during the selection of a provider; however, the location of the outsourcing services
matters less than how well the FAO buyer manages and monitors the relationship. This guideline focuses
squarely on the latter challenge.

Implementing Business Process Redesign

Efficient and effective business processes are critical to any enterprise that hopes to maintain, or improve,
its competitive position. Improvement in quality, time, and costs can result in increased profit. The way an
enterprise structures and manages its business processes has a great impact on these outcomes.
Business processes are becoming more important as customers' expectations are increasing and there is a
need to become focused on providing customer value. Simultaneously, time-based competitionshorter
planning cycles, shorter lead time, shorter product development cycles, shorter product life cyclesis
becoming prevalent. Many enterprises are not ready to meet the concurrent demands of customer-focused,
time-based, and low-cost competition because key business processes are poorly structured.

Implementing Activity-Based Costing

Accurate and relevant cost information is critical to any organization that hopes to maintain, or improve, its
competitive position. For years, companies operated under the assumption that their cost information
actually reflected the costs of their products and services when, in reality, it did nothing of the kind. Overgeneralized cost systems were actually misleading decision makers, causing them to make decisions
inconsistent with their organizations' needs and goals, principally because of misallocated costs. Activitybased costing (ABC) is a valuable concept that can be used to correct the shortcomings in the cost systems
of the past. It is a means of creating a system that ultimately directs an organization's costs to the products
and services that require those costs to be incurred. ABC can be used this way because it provides a crossfunctional, integrated view of the company, its activities and its business processes.
As a result, in many organizations, ABC has evolved beyond the point of simply developing more accurate
and relevant product, process, service and activity costs. These organizations use ABC as a means of
improving operations by managing the drivers of the activities that cause costs to be incurred. They are
using ABC to support major decisions on product lines, market segments and customer relationships, as
well as to simulate the impact of process improvements. Organizations involved in Total Quality
Management processes are using both the financial and non-financial information of ABC as a
measurement system.

Implementing Target Costing

The long term financial success of any business depends on whether its prices exceed its costs by enough
to finance growth, provide for reinvestment, and yield a satisfactory return to its stakeholders. As competition
increases, and supply exceeds demand, market forces influence prices significantly more. To achieve a
sufficient margin over its costs, a company must manage those costs relative to the prices the market allows
or the price the firm sets to achieve certain market penetration objectives. In the context of these
characteristics, the practice of target costing has evolved.

Building a Data Warehouse

The data warehouse provides an opportunity to isolate and analyze customer, product, and financial data in
order to customize marketing programs, streamline financial processes, optimize supply chains, and make
key decisions based on sound operating performance information. Monitoring and managing the financial
aspects of a business, keeping existing customers happy, and attracting new ones are some of the biggest
challenges in today's dynamic and competitive business environment.
Strategic Planning for Information Resource Management
Corporate environments increasingly emphasize the customer. While information on the customer is
generally abundant, companies often have difficulty transforming information into knowledge. Capitalizing on
information requires a good technical infrastructure and strategic information resource management (IRM).
Customer Profitability Analysis

Companies recognize that though "exceeding customer expectations" is a worthy goal, exceeding those
expectations profitably is necessary for long-term corporate viability. Thus, an understanding of corporate
profitability necessarily relies on an understanding of what drives shareholder value in organizations
Distribution Channels Management Accountability
Today, distribution channels are still looked upon as a major source of potential cost reduction. However, as
organizations are realizing that their ability to compete is highly dependent upon providing quality customer
service, distribution channels have reached a new level of significance.

Supply Chain Management Accounting

Clearly organizations today are competing on how effectively they can move raw materials, components and
finished products globally through their supply chain to customers rather than just those who have the most
efficient manufacturing plants. These new supply chains and their continuing improvement have become a
major driver of profits.
There is not however a one size fits all supply chain solution strategies and tactics differ widely based on
many variables. The role of the professional accountant and the management accounting techniques
deployed in the effective management of supply chain solutions is dependent on those context-dependent
strategies and tactics.
This Guideline focuses on key techniques that can be used in practice to implement management
accounting practices that facilitate effective supply chain management.
World-Class Research and Development Management
Companies with world-class Research &Development (R&D) have visionary management, and use a variety
of tools and procedures effectively to improve operations and develop new strategies. This publication
describes world-class management of 12 such activities, explains the effective use of four R&D tools and
techniques, and discusses the issues and challenges involved in improving the management of R&D.

Strategic Cost Management

Learn the concepts and techniques related to the provision and analysis of financial information. Discover
how this information is applied to the strategic direction of your organization's products and services.

Developing Comprehensive Competitive Intelligence

Redesigning the Finance Function

Lean Accounting Resources

Implementing Business Process Redesign

Implementing Target Costing

Implementing Activity-Based Costing

Outsourcing the Finance and Accounting Functions

Time Estimates as Cost Drivers (CIMA)

Make Your Accounting Department More Efficient (Journal of Acco

(Members Only)

(Members Only)

Information Technology
Increase your knowledge of strategic and operational management of computer hardware and software
products, as well as their applications and how they affect your organization. Understand the business
benefits of IT, and how to successfully manage it.

Building a Data Warehouse

Evaluating Performance in Technology

Strategic Planning for Information Resource Management

Final Rules on Identity Theft Red Flags and Notices of Address Discrepancy

McKinsey Research Looks at Web 2.0 Payback

Increase Productivity with Multiple Monitors

(Members Only)

(Members Only)

Strategic Partnering
apid change. In order to improve their chances of survival in the marketplace, companies are turning with
increasing frequency to strategic alliances with their suppliers, customers and competitors. This innovative
approach allows organizations to share skills and resources, develop new products and technologies and
gain access to new markets. When there is a good strategic and operational fit between partners, these
cooperative relationships can produce mutual competitive advantage.

In providing an overview of the emerging concept of strategic partnering, this publication discusses the
potential benefits and associated risks, the importance of careful partner selection, the use of control
mechanisms and the measurement of performance.

Managing Future Value: How to Manage your

Intellectual Capital
Growth, above-average earnings, and sustainable competitive advantages are no longer driven by investing
in physical assets such as factories, offices, or machinery, but instead by investing in and managing
intellectual capital. The success of leading companies such as Amazon, Google, Microsoft, and Wal-Mart is
based on their intellectual capital. Physical assets such as distribution warehouse, office buildings, and
stores are important, but not as much as (for example) knowledge about customers, technology, and
markets. For example, organizations such as Wal-Mart, with its huge store infrastructure, couldnt perform
as well as it does without the intelligence to build its stores at the right locations, the knowledge about
consumers to stock the right goods, and its expertise in inventory replenishment. Intellectual capital allows
organizations to leverage their tangible resources. Identifying and managing the right intellectual capital is
and will increasingly be the key differentiator between successful, mediocre, and failing enterprises.

Business Continuity Management

The frequency of man-made and natural disasters has increased in recent years. The nature of disasters
has also changed: who could have imagined five years ago that civilian passenger airplanes would be used
as a weapon of war? More important, the impacts of disasters on companies have greatly increased and
intensified thanks to technological advances, progressing globalization and the extension of the supply
chain. Companies of all sizes are "connected" to their suppliers and customers to a much greater degree
today than ever before. When a disaster occurs, its effects quickly ripple up and down the supply chain.
As a result, management teams and corporate boards face much more pressure to make their organizations
more resilient when disasters, ranging from simple power outages to Category 4 hurricanes to synchronized
suicide bombings, strike. To date, however, the corporate BCM capabilities necessary to establish that
resiliency generally have ranged from absent to insufficient. This deficiency has a high cost: a University of
Minnesota study finds that 93 percent of companies that lose critical systems for more than 10 days quickly
file for bankruptcy; another study finds that 90 percent of organizations that experience a catastrophic loss of
data and equipment" without a business continuity plan in place go out of business within 24 months of the
loss (Kah The 9/11 Commission's exhaustive investigative research concludes that the Sept. 11, 2001,
terrorist attacks revealed failures in imagination, policy, capabilities and management.
The purpose of this guideline is to help organizations address and prevent those failures while providing
finance and accounting managers with a foundation on which to further develop their BCM thinking, strategy
and processes. The purpose of this Management Accounting Guideline is not to fear monger (a tactic
practiced by some BCM service providers that should be recognized and disregarded), but to help finance
and accounting professionals enable their organizations to make the most effective and cost-efficient
investment in the BCM capabilities that best meet the needs of the business.
an, 2005).

Management Control
Learn how the broad area of control is implemented by your board of directors, management, and other
personnel to provide reasonable assurances of effective and efficient operations, internal financial control,
and compliance with laws and r

Codes of Ethics Practice and Conduct

Corporate Governance: The Role of Internal Control

Post Appraisal of Capital Expenditure

Applying the Balanced Scorecard

Evaluating the Effectiveness of Internet Marketing Initiatives

Implementing Benchmarking

Dashboard Your Scorecard

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(Member Only)

(Member Only)

Customer and Supplier Value Chain

Determine how customer value and supplier relationships accumulate along a chain of activities leading to a
more successful product or service and an improved bottom line.

Selecting the Optimum Product Line for an Enterprise

World-Class Research and Development Management

Customer Profitability Analysis

Monitoring Customer Value

Managing Customer Value

Supply Chain Management Accounting

Distribution Channels Management Accountability

Strategic Partnering

(Members Only)
(Members Only)

(Members Only)

Using Strategy Maps to Drive Performance

Effective execution of strategy is paramount to success and essential for survival, yet few companies are
truly successful at implementing the strategies they have selected, and many fall far short of their own
expectations and the expectations of others.
Possibly the single most significant reason for poor strategy implementation is that leaders who chart the
course for the organization are not able to communicate their vision in a way that others can share in, one
that gets everyone necessary for the achievement of that vision on the same page.
While the vast majority of organizations have well defined procedures for developing strategic plans, there is
a major disconnect between theformulation and execution phases of strategy. The ability to cascade an
organizations vision, mission and core strategies into the actionable behaviors that achieve critical
objectives is a more challenging task than strategy theorists and gurus would suggest.

Strategy maps provide a way for organizations to describe andcommunicate their strategies. Evolving as a
breakthrough in second-generation balanced scorecards, the underlying concept of strategy maps is based
on a well-known premise a picture is worth a thousand words. Strategy maps provide a way for companies
to tell the story of their strategy in a way that reduces the noise level in the message. The visual nature of
the strategy map enables individual employees and other stakeholders to locate themselves in the bigger
picture and take up their role in the ongoing story of the organization.
Strategy maps describe how organizations create value by building on strategic themes such as growth or
productivity. These themes determine what specific strategies organizations will adopt at their customer,
process, and learning and growth levels. Well constructed maps describe how the organization plans to
meet its specific customer promises through a combination of employee, technology and business
processes that satisfy customer expectations and meet shareholder demands. In short, they provide the
conceptual framework that organization leaders and their followers can use to better understand and
execute strategy. In so doing they reduce the impediments to successful strategy implementation.
Planning the Trip
A systematic approach is key to realizing the benefits of strategy mapping. The following six steps have
proven very useful and. can be used by managers to effectively create and implement strategy mapping
initiatives in their own organization:
1. Determine the overriding objective While customer satisfaction and quality are worthwhile pursuits,
the overriding objective(s) for profit-making enterprises must be economic. These financial targets should be
a SMART goals specific, measurable, attainable, realistic and have a time parameter. For example,
increase component sales by 20% within the next two years.
2. Determine the dominant value proposition No organization can be all things to all people. The key
here is to select one dominant value proposition and provide breakthrough customer value in that
proposition. Operational excellence, product leadership and customer intimacy are all worthy value
propositions, pick one to excel at.
3. Choose the key financial strategies Deciding on your dominant value proposition will guide your
selection of financial strategies. Focusing on your dominant value proposition will bring clarity to asset
utilization decisions, productivity pursuits, and the cost and revenue balancing act.
4. Choose the key customer related strategies Similarly, your dominant value proposition will determine
how much emphasis you place on adding and retaining customers, increasing revenues per customer, or
reducing costs per customer.
5. Choose the key internal business process strategies Once the appropriate financial and customer
strategies are identified, the what we want to accomplish becomes the how. Identifying appropriate
metrics serves to provide focus and prioritize the effort expended on critical internal operations, innovation,
or customer management processes.
6. Choose the key learning and growth strategies - Finally, the inevitable gaps in knowledge skills and
abilities necessary for effective execution are addressed with learning and growth strategies in three key
areas: human capital, information capital and organization capital.
This six-step process will produce an effective strategy map, a reliable navigation tool that your entire
organization can use to maintain focus on the ultimate destination of success.
Embarking on the Journey
Once a corporate level map is developed, it can be used to communicate the path of the journey you are
embarking on together in a way that will draw others into their own planning for how they can contribute to
the successful achievement of the organizations objectives, ensuring that everyone is on the same bus.
While some organizations will be well served by one corporate-level strategy map, others may find the need
to cascade the process further down into their organization and develop more detailed maps for different
terrains, based on geographical, product, service or group distinctions. Additional perspective can also be
developed by drilling deeper into specific strategies within the corporate level map.
While some have the perception that strategy mapping is a good tool for the corporate behemoths of the
world, large companies do not have a corner on the market when it comes to poor strategy execution. Nor
do they have a corner on the market when it comes to the benefits of strategy mapping.

ATS, Automated Tooling Systems, Inc. a Toronto Stock Exchange company is an excellent case in point. A
leading designer and producer of automated manufacturing and test systems, ATS used strategy mapping
to overcome several significant impediments to growth that were rooted in the entrepreneurial culture that
had contributed to their success.
Following the death of their founder Klaus Woerner in 2004, Ron Jutras, the former CFO took over as CEO
and made strategic planning and execution a priority for ATS, implementing a strategy mapping initiative.
After first selecting a customer intimacy value proposition revolving around the objective of becoming a total
solutions provider, ATS developed drill-down strategy maps for their three main business groups.
According to Jutras, taking a more disciplined and structured approach to running the business has brought
our organization together more globallyThe strategy map has played a significant role in helping us
understand communicate and execute our strategy. We are committed to it.

Corporate Boards: Measuring and Improving

Performance
Recently we have all read about the spectacular failures of corporate governance. New rules and
regulations are being introduced that are intended to rebuild public trust, yet a question remains as to
whether all this activity will result in boards that are more effective in delivering results.
In many firms it was the boards lack of a strategic performance measurement process that resulted in
inadequate board oversight and control that allowed improper activities to occur. Thus, addressing
governance problems by proposing changes only in corporate board structures is too narrow a perspective.
This Management Accounting Guideline has been developed to advance the fields of both corporate
governance and strategic performance measurement. It provides guidance for corporations on how to
respond to regulatory and stakeholder concerns for improving the quality of performance of both senior
managers and corporate boards of directors. It also provides significant new approaches for financial
executives to contribute to improving the performance of boards of directors, CEOs, and corporations.

Human Resources and Related Issues

CPA Financial Executives Respond to 2013 Incentives and Compensation Survey

Performance Targets in CFO Compensation- An International Comparison

Training Grants and You: Expansion Through Career Development

Health Care Reform- What it Means for CPAs - Summary

Managing Cross-Functional Work Teams

Implementing Workplace Flexibility

Human Resources Accountability

Managing the Human Aspects of Organizational Change

Implementing Self-Directed Work Teams

(Members Only)

(Members Only)
(Members Only)
(Members Only)

(Members Only)

Treasury Management
Learn about the concepts and techniques related to the strategic management of financial capital. Discover
how to manage the investment of funds and plan and execute programs to satisfy capital needs in
accordance with your organization's strategic plan.

A Strategic Role for Treasury

Accounts Receivable Management

Managing Banking Relations

How to Effectively Negotiate Loan Covenants

Reduce Pricing Risks with Effective Hedge Strategies

(Members Only)
(Members Only)

(Members Only)

Lean Accounting Resources

Lean manufacturing is an approach that has helped many companies reduce waste and streamline
operations. However, as companies implement a lean approach to manufacturing, many cost accounting
practices no longer make sense. Lean accounting is a new way of looking at the numbers that categorizes
costs by value stream, which includes everything done to create value for a customer that can be
reasonably associated with a product or product line.

The Lowdown on Lean Accounting

This article from the Journal of Accountancy provides a look at some of the benefits and pitfalls of
implementing lean accounting.
Lean Accounting Being Driven by a Lean Business Philosophy
This CPA Letter article discusses the growth in interest in lean accounting to support lean manufacturing
initiatives.
Lean Accounting News
News and features about Lean Accounting. Sponsored by the Lean Accounting Summit.
Lean Accounting: What's It All About?
Overview article on Lean Accounting on the Lean Accounting Summit Web site.
Auditors Can Provide Solutions
Planning a conversion to lean accounting? This article from Lean Accounting News explains why and how to
involve your audit firm as soon as possible to avoid surprises and get the answers you need.

Strategic Performance Management

Discover how performance measurement affects your organization's comprehensive planning system,
processes and strategic objectives. Learn how nonfinancial indicators have the potential to make financial
measures more relevant and reporting more balanced.

Identifying, Measuring & Managing Organizational Risk for Improved Performance

Managing Quality Improvements

Evidence-Based Decision Making: Using Business Intelligence to Drive Value

Next Generation Enterprise

Managing Future Value: How to Manage your Intellectual Capital

Strategic Partnering

Business Continuity Management

Using Strategy Maps to Drive Performance

Measuring and Improving the Performance of Corporate Boards

Scenario Planning: Navigating Through Today's Uncertain World

(Members Only)

(Members Only)

Content Overview
Redesigning the Finance Function
The finance function is central to the successful operation of any organization. The finance professional, by
working with the rest of the management team to ensure that resources are efficiently and effectively
acquired, maintained, and deployed in the best interests of all of the organization's stakeholders, sustains
the finance function's essential role in the business equation.
Post Appraisal of Capital Expenditure
Capital budgeting is a vital part of planning, but must be based on uncertain predictions. Modern companies
recognize that monitoring the outcome of past budgeting decisions can improve future decision making. This
guideline details the Post Appraisal process in comparing, when sufficient evidence becomes available, the
actual quantitative results with the estimates made at the time of budgeting.
Corporate Governance: The Role of Internal Control
Recent extensive study of internal control in business has led to the development of a definition capturing
both positive and negative aspects of the issue. While the structure of modern organizations often
undermines this control, it has become recognized as an essential component of successful enterprise.
Organizational Restructuring
Restructuring continues to be a hot topic for organizations involved in mergers and acquisitions, downsizing,
cost reduction programs, shared services, and more. This guideline discusses the objectives for
restructuring, roles and responsibilities, structural options, and implementation issues.

Selecting the Optimum Product Line for an Enterprise

Central to the economic success of any organization is the composition of its line of products or services. In
a changing business environment, a periodic review of products/services should be conducted in order to
determine their profitability, strategic value, long-term prospects and impacts on company resources.

Monitoring Customer Value

Organizations must understand when, why and how customers react to products, services and price
changes, and use that information to better manage their customers through value managing internal
functions and processes. Unfortunately, many organizations' information systems have historically
emphasized internal financial results.

Managing Customer Value

This Management Accounting Guideline examines new tools and techniques for measuring and managing
customer profitability, retention, and lifetime value. It will include recent examples in both for profit and not
for profit organizations and will also demonstrate how these analyses must be customized to the business
model of the organization.

Implementing Benchmarking
The long-term viability of an organizationwhether in a competitive or not-for-profit sectordepends largely
upon how well it understands and meets its customer requirements on a daily basis. These requirements
and the ways to achieve them are constantly changing, thereby creating opportunities and challenges. By
studying and emulating world-class performance in meeting these challenges, an organization can improve
its odds of survival.

Applying the Balanced Scorecard

As business becomes more complex and competitive, traditional financial measures of performance fail to
give managers all the information they need to make intelligent strategic and day-to-day decisions. A
powerful new means of delivering this information is called the balanced scorecard, a mix of financial and
nonfinancial indicators about customers, internal processes, organizational learning, shareholder value,
quality, community relations, and so on. The balanced scorecard enables managers to accelerate
continuous performance improvement, facilitate strategic formulation and execution, and strengthen internal
and external accountability for creating value. This publication describes the concept of the balanced
scorecard; explains the critical steps in implementing one; and shows how companies have applied
scorecards to corporate advantage.

Stakeholder Reporting
Gain insight into preparing financial and non-financial information to meet public policy and regulatory
requirements, as well as governance relationships.