Controllership is being transformed, but not fast enough

The financial controllership function is evolving, but it only seems to be giving corporate controllers more work to do.

A survey from the Institute of Management Accountants and Deloitte found that over three-quarters (76%) of more than 1,300 surveyed finance and accounting professionals, including analysts, managers,  controllers and CFOs, say their organizations' controllership functions have begun a transformation, but nearly all of them (95%) reported they have more work to do or aren't progressing quickly enough. Another 65% said their organizations' controllership function is not prepared or is only somewhat prepared to meet future demands.

"There's broad recognition that transformation needs to happen," said Loreal Jiles, vice president of research and thought leadership at the IMA, who was the lead researcher on the study. "In our findings we saw that 78% had started their transformation journey already. That aligns with this broad recognition that people are aware that our profession at large is under a transformation. We need to transform."

Much of this change is needed in the form of digital transformation, but that doesn't cover everything. "Even though those transformation journeys have started, the biggest gap we saw was in the area of data and analytics, which also aligns a lot with what we've seen in the market and in the broader conversation about this need to embrace digital technology," said Jiles. "We also saw big gaps in the technology enablement and delivery model spaces. That speaks to the need for broader transformation even beyond the digital side. Nearly two-thirds said they're not ready, but the biggest gap is on the tech side."

Governance and compliance ranked as the furthest along on maturity, by 65% of the finance professionals who responded to the survey, while nearly half (46%) reporting data and analytics are still in their early maturity stages. 

"Organizations historically have struggled with the need to invest in standardizing and improving their data and data governance," said Kyle Cheney, a risk and financial advisory partner at Deloitte & Touche. "That's from the chart of accounts to the master data that supports financial management and all the financial reporting.  When we went through the pandemic, there was this realization that we have to work remotely and that came fast. If we didn't have good data, we struggled to be able to work remotely. You're not onsite or on premise where you're able to fix and correct it as swiftly as you could before. You had to do a lot more work remotely to get around bad data issues and the problems they present."

Over half (56%) of the survey respondents pointed to financial planning and analysis as the area most in need of progress to meet the future demands of the controllership function. 

"You need good data," said Cheney. "If you implement a bot and that bot is dealing with data that's unstructured and inaccurate, it's going to trip on the bad data. You can't drive data analytics to make better predictive decisions around the corner with scenario planning if you don't have the data that supports it."

While many financial controllers have been undertaking digital transformation projects at their companies, CFOs have also become more involved in transforming their companies' technology, becoming more like operational finance executives. As with controllers, the transformation skills they need go beyond technology.  

"They need to bring the traditional technical and analytical skills, which are truly the table stakes for being CFO," said Steve McNally, CFO of Plastic Technologies Inc. and chair-emeritus of the IMA's global board of directors. "That includes the ability to solve problems and provide data analysis and insight, all of which helps facilitate good decision making. But the key attributes of an operational CFO go far beyond technical and analytical skills, including attributes like business partner mentality, strategic agility, general business acumen, and really understanding the operations, vendors, customers, competitors and industries in which they operate."

He sees a number of attributes in being an operational CFO. "I think an operational CFO has to bring that curiosity, the ability to question and challenge the status quo, and really be a catalyst for new thinking and breakthrough ideas that can change the course of their own organization," said McNally. "An operational CFO needs to bring that overall leadership ability, possessing vision, executive presence, courage, political savviness, emotional intelligence, team-building ability as well as a positive can-do attitude and agility. Any CFO needs to be results oriented, but clearly an operational CFO must ensure the overall team remains focused on executing the organization's plans of excellence and ultimately creating sustainable economic value."

Acting ethically

An important part of both CFO and controllership jobs is setting a good example for the finance team by acting ethically. Last week, in conjunction with Global Ethics Day, the IMA released a report on how management accountants can use data analytics to ensure corporate compliance as well as design incentive programs to increase internal reporting of fraud and misconduct, and do compliance training through storytelling and gamification. 

On Wednesday, the IMA said it is now accepting entries for its annual Carl Menconi Ethics Case Writing Competition now through Jan. 19, 2023. The competition, sponsored by the IMA's Committee on Ethics, works to develop and distribute teaching cases focused on business ethics. It's open to accounting and finance academics, as well as practitioners.  Winners of the competition will be featured in IMA's Strategic Finance publication, and the case author or team will be recognized at the IMA's 2023 Accounting & Finance Conference scheduled to take place in Minneapolis in June 2023. Winners will also receive one free annual conference registration and a $500 cash prize. Winners will be able to adapt their article into a slideshow and present it during an IMA Faculty Friday webcast, and will also be eligible for acceptance into the IMA Educational Case Journal if the case is adapted to meet the publication's criteria.

Submissions have to focus on business ethics, with specific application to management accounting and finance issues, and reference the IMA's Statement of Ethical Professional Practice. For more information, contact IMA at research@imanet.org.