CFOs and corporate accountants face a future full of challenges and opportunities, according to Tom Hood, the executive vice president of business growth and engagement at the AICPA.
Transcription:
Dan Hood: (
Welcome to On the Air with Accounting Today. I'm editor-in-chief Dan Hood. Now, if you've listened to any of our podcasts, you know that the world of public accounting is undergoing massive change, but it's always worth bearing in mind that the other half of the profession in corporate accounting is undergoing similarly massive changes, and here to talk about that is Tom Hood, the executive vice president of business growth and engagement at the AICPA, who we caught up with during the annual Engage conference in Las Vegas in early June. Tom, thanks for joining us,
Tom Hood: (
Dan. It's awesome to be here.
Dan Hood: (
Like I said, we know there's big challenges and opportunities in public accounting. What about in finance and industry? What are you seeing with that?
Tom Hood: (
Well, I want to say ditto, equal to at least sometimes maybe even more intense, but we've spent the last year putting together a future of finance leadership advisory group, getting CFOs from some of the top corporations in the world actually. But those companies, a bunch of them are at panels here at Engage for the first time, right. In a finance track. So yeah, we're finally showing there's a whole other side of our profession. That's equally important.
Dan Hood: (
Yeah. So, alright. So when they talk about the future of finance, what are the, what are the issues? What are the things they're, they're thinking about? What are they worried about? What are their opportunities?
Tom Hood: (
So this we're doing this right after our future finance panel, right? So we're like fresh, but effectively the, the top issues that they're dealing with stem from the beginning of digital acceleration. So COVID accelerated just about everything, including finance transformation. And so that was like the top issue. Then there was issues like leading and managing a hybrid workforce, cuz most of these guys had never had to do that. So now they're trying to figure that out then there was the wellbeing of the team stressed out from the great resignation and all that add to that supply chain, inflation, DEI, ESG, like, can we just go down the whole alphabet day?
Dan Hood: (
It's it's terrifying. But,
Tom Hood: (
And so what, based on that, what they told us is they like convening and having peer to peer discussions because they, as they would say, any one of them might have an idea that the other ones wouldn't have. So the fact that there's so many and what they said is it's not like any one issue it's that they're all happening at the same time now. Right. So then that led us to say, well, what's the future look like for finance and accounting. So we came up with this idea of instead of CFO, it's the chief future officer. Ooh, I like that. Right. And an idea that we have to be future oriented, not just bean counters, but bean growers. Right. And then there was a list of things that they came up with in our summit in Nashville that kind of characterized the shift from and two.
Tom Hood: (
So from rear view mirror to windshield, from a cost mindset to value focus from the CF, no to the CF, no. K N O w that's a, that's a keeper. I like that one. Yep. I love that one. Uh, from score keeper to intelligent advisor or value partner. Right? Those are some of the other ones, another one was tangibles to tangibles and intangibles. Now that leads to ESG. I think we're gonna talk about that a little bit later. Yeah. But, but basically what they're saying is, and today Denise den weer, CFO of Randstad, said this, she said, while we say that's the future, the future's now there's an urgency that we have to do this now to stay relevant because what's ahead. No one knows. Right. But we better be ready with these kind of attitudes and thinking to get to that future.
Dan Hood: (
Right. Well, you talk, I mean, uh, COVID has changed so much. You talked about it. How, how it hasn't. I mean, that's, it's accelerated that, right? The future might have been three years ago. You might have said, yeah, you could have a couple of years co would change that because you had to have that forward looking mindset. If you were gonna get your company through, uh, well through it's still going on, but you know, to get at least to get 'em to here. Yeah. Um, and it's fascinating because this is, is similar issue across the profession, wherever you are, right. Is the whole notion of that switch from being counters to bean growers, or however you wanna phrase it. I like that one. Um, you got a lot of great, you gotta write phrases coming outta here. You gotta write all these down. But that, that switch to for looking mindset is a huge thing. And it's, um, uh, it's particularly important. It sounds like for the finance function, because they're so used to be like, yeah, we just, we just record the past and that's it. Um, but businesses need a lot more of that sort of advisory forward looking, uh, uh, um, what do you wanna call it? Leadership.
Tom Hood: (
Yeah. Yeah. Well, and it's, it's the idea of being like the kind of co-pilot to the plane with the CEO and what we're finding is many of these CFOs, and this is across the industry have like even going up to CFO, I mean to CEO. So, um, Joe Radakovich who's from Stanley black and Decker, he said his, uh, his global CFO just got promoted the CEO. So that's showing you that the right skillset with finance and understanding the business with that forward looking view is the right skillset for the future. Even at the CEO level
Dan Hood: (
And it's, and that's relatively fresh. That's new. I mean, that's not a thing that had not been traditionally a path to CEO. Right? Correct. You were the CFO, you were the support, you were the, you know, the, the, the Lieutenant yeah.
Tom Hood: (
Back
Dan Hood: (
Office who gave, well, vice, if you were really good, but mostly you just sort of said, yep. That's what happened. Yeah. Um, so that new new role for, for CFOs and for, for finance is gotta be maybe a little scary for some of them. Is that, uh,
Tom Hood: (
Yeah. I think there's, there's a lot of them that are like going, how do I do this? Right. That's a big part of it. The interesting part is there was a stat, uh, I think that Denise referred to that right in the middle of the pandemic, they said the first month of the pandemic, the CFO's office was asked to do more projections and forecasting by a factor of 30 times than at any time in their history. Right. Think about that. Yeah. Now what we've talked about today is we said, yeah, that went on. And of course we adapted and all that. Now that we're coming outta the pandemic, you would think now, wow, we can slow down. Guess what? Inflation, right. Supply chain, chain issues, the right. The war in Ukraine, the war around
Dan Hood: (
The world. Yeah. Yeah.
Tom Hood: (
So those are creating another round of projections, Dan, that, that are forcing that CFO to move into that value partner or chief future officer idea.
Dan Hood: (
I'm gonna try to take a slight, not detour, cuz I think it ties into this, but uh, there's the technology aspect. You're talking about projections and, and the tools that are available now to do those kinds of projections to do them much better. Uh, I mean that's gotta play a big role, having an understanding of that technology and how, how it comes into to play four looking into the future.
Tom Hood: (
Yes. Now it's funny today with our panel, there are questions from the audience going, okay, how do we what's the playbook? So, um, the combination of the three said effectively, it's this, you gotta, you gotta think lean, like eliminate waste things that you don't need to do to make room for the new things. Right. So eliminate waste, standardize your processes.
Dan Hood: (
Exactly. You mean waste time, like waste
Tom Hood: (
Time, right? Well like
Dan Hood: (
Not part of it, but it's mainly about it's don't do work. You don't have to do right.
Tom Hood: (
And exactly that's it Dan? And they said like, like the first thing you do take inventory, all your reports and don't send them out for a month and see who complains, cuz that's telling you, who's actually using them. And, and she said, they eliminate like half of theirs when they did that. So eliminate that, then it's like, okay, standardize your processes then begin to automate. So all that data goes in automatically. That's where we're seeing the big shift from collecting and putting the data into actually analyzing it and projecting with it.
Dan Hood: (
Right. Cause if you're spending all your time just gathering it, formatting it, you're not actually looking at it. You're putting out the reports that no one's reading, uh, cuz you're not even reading 'em yourself.
Tom Hood: (
You're just exactly. And then that leads to the automation piece and all the new types of automation, AI machine learning, robotic process automation, that's what's on their plate, obviously all the new systems and the applications are like proliferating. Like there's no tomorrow.
Dan Hood: (
So I mean, uh, I think we've touched on a lot of these things, but I wanna get a list if we can of sort of there's a lot of skill sets. I think that, um, I guess like you could consider, could always having been sort of part of the, the role of the CFO or the finance department, people in the finance department, but they seem to be having more importance now, things like tech skills and stuff like that. Maybe you can run through a quick list of the, the skills you've gotta have to be a, uh, uh, the, the C the chief future officer
Tom Hood: (
We've, we've been surveying this for a while, as you know, and what's, what's fascinating to me right now, Dan is those skill sets are the same for public account and going into advisory as they are for the CFO. It's the first time I've ever seen that level of conversions. And, and, you know, we talk about the T-shaped professional that came out of our business learning Institute. So those skills, right, there's there's five. And we actually added a sixth one that go on top of our deep technical business skills from the core accounting side, um, including data and tech savvy, which are actually in the deep side, but the boundary crossing skills that we call them leadership and sense making anticipation, right? Serving, evolving needs, strategic and critical thinking, communication and storytelling. Storytelling is the key, right from that future officer and then integration and collaboration.
Tom Hood: (
Those are the five, the new one, the new kid on the block is agile. Yeah. So finance, there was a recent survey of, of, uh, functions inside a company, marketing sales, right? All those different functions. Finance was dead last in being agile. Wow. Right. So that, so they've gotta increase their cycle time, which means quicker, closes quicker, getting the da, which all gets back to that idea of automation and standardization. Right. But that's forcing them to have these new skills. And what we're finding is because the pandemic forced the CFO's office into that projection scenario. Mm-hmm that the rest of their team many did not have the skills to move forward and keep up with that pace of change. So that's what they're all doing right now. Um, we've got a bunch of those skills, but our C GMA finance leadership program has all those types of skills that move them up into that strategic level.
Dan Hood: (
Gotcha. Well, that's why they're all here at engage, right?
Tom Hood: (
Yeah.
Dan Hood: (
To learn that sort stuff. I wanna just briefly talk about, cause I love, you know, I love the whole anticipation thing for a while. I think that's a great program. Uh, maybe just briefly explain it cause I'm not, I'm not sure people necessarily are familiar with it. Um, just what that anticipation idea
Tom Hood: (
Is. Yeah. So that was, uh, a partnership we created with Dan Burris, global futurist. And he had been doing this with like big, giant fortune five hundreds. And we said, what if we could teach accounting to anticipate, now we did this probably 10 years ago almost by now, seems like that. And uh, and the point is that anticipation and serving evolving needs means you want to start looking at trends because they're coming faster. Right? So you wanna have a good understanding of what's coming. He has a great concept called hard trends and soften. You remember that? And the hard trends are technology regulation and demographics, all the things that are at play right now. We're gonna talk a little bit about ESG late. Right? Think, yep. So in that notion, he teaches you how to understand what he calls those hard trends and think about where the opportunities are, which this would speak right. To all the things you're going in, in corporate finance. And we actually are doing this with a couple big corporate finance groups to teach them that skill of anticipation for the, especially their, um, top leaders and emerging leaders.
Dan Hood: (
And it's a, the reason I bring it up one, cuz I love it. Uh, but , it really speaks to me, uh, cuz you, I mean, one of the things I remember him Dan was saying was that you can predict the future. There are things, you know, are gonna happen. There will be presidential elections at certain periods of time. You know, there will be a holiday season though, you know, holiday shopping season, there will be summer vacation, you know, things that you know are gonna happen in the future. Right. And you can plan for them and that can help you plan for the things you can't plan for, uh, as well. But it's such a, such a neat idea. And it's, uh, particularly as all across the profession, both in public and in, in, in, in corporate finance that need to switch from the, the, the backwards looking focus to the forward one. And this is just such a great set of tools for doing that. I can't predict the future. Well actually you can a little bit. Yes. And here's how it's a, it's a, I
Tom Hood: (
Always, and he's got a lot of principles in there that would come under the agile bucket actually with teach teams, how to solve problems, better, how to anticipate things and work better at a teams. He's got one big principle called, skip it, take your biggest problem and skip it, which is huge. Right. Cause if you could do that, that increases the cycle time. Right. So yeah. That's cool.
Dan Hood: (
It's uh, yeah, that way, focusing on things that say, well, stop focusing on it and focus on something better or something that's more useful, uh, or something you can actually control. Yeah. It's a neat program anyways, but all those, that list of skills that so people need to be, uh, need to be focusing on, as you say that is there is that convergence between public and, and corporate bits. Uh, yeah. A lot of the same issues. Um, I, I, we could, we could go on sort of broadly and I think this is a great overview of sort of all the changes that you're coming to to that, to that half of the profession. Um, but I do wanna dive a little bit more deeply. You mentioned ESG, uh, cuz it's a big issue for public accounting or big opportunity for public accounting. We're hearing a lot about it and I want to talk a little bit more about it, uh, how it affects, uh, corporate accountants. Uh, but we're gonna take a quick break.
Dan Hood: (
All right. We're back talking to Tom ho of the a I CPA, uh, about the many, many changes that happened to, to corporate corporate accountants and finance departments all across the country, all across the profession. Um, and we had talked about, uh, we mentioned a couple of times you mentioned a couple of times ESG, uh, environmental, social and governance. I always, uh, wanna say sustainability instead of social. I always get it wrong. Yeah. Um, but anyway, so easy SG issues from the public accounting side, people looking as in a test opportunity, uh, but also as a, an advisory opportunity to businesses that need to, to start developing it. Um, how do you see, uh, uh, people talking about it in terms of finest in terms of is an opportunity, is it threat? Is it a responsibility? How do they, how are they looking at it?
Tom Hood: (
So what's, what's fascinating is I thought, for sure, in light of all the other issues that they're dealing with, right. Having to deal with this, now these are mostly big public companies. Right. But I think there's an, an angle even for the private companies. I'll talk about that in a second. But what I fully expected was them to say God, another compliance burden. Yeah. And we're gonna have to do that in addition to all these other things that you're telling us we have to do. Right. So what they said is, uh, what this blew me away, they said ESG is our chance to really get into the value creation role. Oh, okay. So they took it completely opposite. Yeah, yeah. Of what I expected. Nice. And, and across the board and they said, it's urgent that we put a stake in this ground for value creation.
Tom Hood: (
So they see it as a, an opportunity and they're gonna use their Sarbanes Oxy skills to develop the rigor around data collection, integrity, getting it ready for at tests. Right. So they're the ones that are collecting at the front lines. Right. So they're gonna use all that. They're gonna use, obviously all the RPA to kind of pull, pull the data together. So they're good at that. That's the core. Uh, and then it will end up in their 10 Ks and 10 QS because the S SEC's gotta rule out that they're proposing to do it. But then they took it a step further and said, we literally can be using this to get into the front of the company and be socially responsible companies. And the CFOs can help lead that inside the companies. And in fact, most of them are, or they're on a, you know, it, it comes from it.
Tom Hood: (
Usually it comes from like investor relations. Some of them are gonna be probably the lead, but the CFO's office is becoming very prominent more so than just statutory, like the controllership function or the integrity of the data. So that, that blew me away. Yeah. That's now let's talk about the private companies because what's happening is any of these major companies that are doing, I think it's called level three reporting. If they're doing that, they're gonna push that through their supply chain. Right. So if you're a small private companies selling to Walmart or Stanley black and Decker or auto manufacturer, you're gonna have to figure this out also. Right. So it's also an opportunity, even for many of this audience who could be private company CFOs to be thinking about, well, how could I do that? And since it's such a major trend, maybe we gotta be doing some of that, even if it's voluntary. Right.
Dan Hood: (
Right. Well, there's a bunch of other, I mean, obviously right. If you're in a supply chain where Walmart is telling you, you're gonna do it, cuz Walmart tells you to do it. And, and they're used to those kind of mandates from, uh, Walmart or large, right. Uh, large public companies anyways, or a lot of, you know, small suppliers are used to that. Uh, but there's all kinds of other aspects, right? Where it becomes, it's valuable in hiring, uh, it's valuable in just sort of relations with, with the suppliers you work with or other people. And this is, uh, we talk about the chief future officer. This is the trend of the future. There's more and more people are going to expect this and want this. Uh, so if you're out there ahead of it a little bit, you're in a good
Tom Hood: (
Position. Exactly. And we've got tons of resources on that that are for management accountants in our C gma.org area, tons of reports and the a I CPA also. So we're trying to, to balance those out and make sure we have plenty of resource to keep our members ahead of these big trends. Gotcha.
Dan Hood: (
Maybe could just talk a little bit more about it, cuz what's interesting about it is that a lot of people are talking about ESG and how important it is and now they wanna be, uh, get ahead of it as an opportunity. And I think it's awesome that the, that the in the corporate world, they're thinking of it that way, the accounts there thinking of it, it's an opportunity opposed to just, I mean, it is a compliance burden, but right. It's, it's more than that, right? It has this, this great upside to it. Um, but there's also a, I keep getting a sense of right. It's still super early days and it's kind of difficult to figure out like how far can you go right now? Because you don't want to go down a certain path and then have the S sec go, oh no, sorry we're using this sting set of standards. Now tear that all up. And I mean, it, it won't be tear that bad, but it's still,
Tom Hood: (
Yeah. So, so the, so we just held an ESG symposium up in New York with cpa.com and, uh, it was fascinating. We had a whole bunch, we had investors, we had, uh, a lot of public accounting and we had our future finance group there. And the interesting part is cuz they were all thinking about it from that future value notion. But to your point, the standards are converging right now. So there's movement right now under the ISSB and the value reporting foundation. So if people Google that, you'll see the latest there we think, and Barry talked a lot about this yesterday that that we're gonna have, it will quickly harmonize and yet there will still be competing standards from other groups and things outside of the profession, so to speak. So you're still gonna have to pay attention, but it's settling down rather quickly. It's all moving.
Tom Hood: (
And the S E C rule making has accelerated that process. So we think you're gonna get to like one or two global standards and they'll be in the road to harmonizing. So you can read those tea leaves to your point, that's regulatory hard trend. So you need to be looking at some of those proposals and looking for where they're the same or where they're different. And then all you have to do is pay attention to the evolution of those two categories. Right. And, and you'll be ahead of it. So, but you can clearly get really clear size Dan, just by looking at where that's going. Gotcha.
Dan Hood: (
Let me ask you another question, cuz I'm curious about this. Uh, do we expect, um, obviously there'll be sort of overall our overarching standards and some things, but do we expect this to get super specific by industry or are different industries going, Ooh, we're gonna get, we're gonna have to report on this, that nobody else reports on. Uh, I always think of, um, uh, uh, bottlers Coca-Cola bottlers who have water issues, right, right. How much water they're using and their impact on, on water systems around the world. Cause that's a big deal wherever they operate. Uh, but any industry must have different individual ESG.
Tom Hood: (
There will no doubt be industry standards from that standpoint just because you're right. Water in the people that are using the water, the people using minerals, like all those are gonna have special notions. Um, but I think Barry likened it a bit to like ifs that you're gonna end up with one global standard, right? You're gonna have dialects like little nuances that are potentially by country from their regulatory side and from industries. So that's where you might have some basic standards that are same for everyone and then deeper, depending on where you sit from an industry or country standpoint.
Dan Hood: (
And is there anybody, anybody having a sense? I mean, I know the theb is, is interested in a lot of these and talk to a lot of people about this, but is there a sense of, Hey, is it's so early, maybe we can get in and influence it. Like
Tom Hood: (
so we, so we're true. We're clearly I think the SCP, we must have like 10 working groups. Yeah. Involved in all those areas to try to influence it. And more importantly standardize it cuz the quicker we standardize it, the more it will be usable. Otherwise everyone's gonna be running around for who can make the most competing. Now you're still gonna have like rating agencies and some of them that are gonna try to win that war, but the assurance side will help us push that to a global standard. If you want assurance on it, you're gonna need the discipline that comes with our accounting side. Right. Of both the standard setting and the assurance and compliance, right? Like we've done with Sarbanes Oxy internal control to core standards. Right. So that's where firms and corporate finance are important in this game.
Dan Hood: (
Cool. Excellent. All right. I mean, we could talk about all these for, for uh, uh, a lot longer cuz there are big topics and there's a lot of change going on. Um, but maybe I'm gonna gonna focus you down. Is there maybe some final thought you would have people take away about the future of finance or how they should be planning for their futures is uh, in, in the corporate world or in wherever an
Tom Hood: (
Account. Yeah, I think, uh, so two things, if you, if you follow the hashtag future of finance on LinkedIn or Twitter, we're putting out a lot of stuff automatically there. So that's a great place to find us. But I think the point Dan, we, we, we use this all the time is that in this period of rapid change, the winners are gonna be those who keep their rate of learning greater the rate of change and greater than their competition. So L greater than C squared. So I think it's really important. And then to take effectively coach K, who opened up the conference, right? Said you, you have to keep adapting. He talked about a lot of things. He what, 75 years old or something, how he's had to adapt. And he said, if you wanna win, you have to adapt. And I think that's the, like the future's here. Yeah. Now, and we gotta move. So let's get moving. Lots of resources, look for the stuff that's all over our, our websites, et cetera. And let's get to the future together.
Dan Hood: (
Excellent. Cuz it is it's right here. Whether you like it or not. And there's a lot of it. So as you say that, that makes a lot of sense. All right, Tom, ho of the a I CPA, thanks so much for joining
Tom Hood: (
Us. Awesome. Being here.
Dan Hood: (
Awesome. And thank you all for listening. This episode of On the Air was produced by Accounting Today. Rate or review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest. Thank you for listening.