For years, pioneering CFOs steadily extended their duties beyond the boundaries of the traditional finance and accounting function. Over the past year, an expanding set of beyond-finance activities – including those related to environmental, social and governance (ESG) matters; human capital reporting; cybersecurity; and supply chain management – have grown in importance for most finance groups. Traditional finance and accounting responsibilities remain core requirements for CFOs, even as they augment planning, analysis, forecasting and reporting processes to thrive in the cloud-based digital era. Protiviti’s latest global survey of CFOs and finance leaders shows that CFOs are refining their new and growing roles by addressing five key areas:
Accessing new data to drive success – The ability of CFOs and finance groups to address their expanding priorities depends on the quality and completeness of the data they access, secure, govern and use. Even the most powerful, cutting-edge tools will deliver subpar insights without optimal data inputs. In addition, more of the data finance uses to generate forward-looking business insights is sourced from producers outside of finance group and the organization. Many of these data producers lack expertise in disclosure controls and therefore need guidance from the finance organization.
Developing long-term strategies for protecting and leveraging data – From a data-protection perspective, CFOs are refining their calculations of cyber risk while benchmarking their organization’s data security and privacy spending and allocations. From a data-leveraging perspective, finance chiefs are creating and updating roadmaps for investments in robotic process automation, business intelligence tools, AI applications, other types of advanced automation, and the cloud technology that serves as a foundational enabler for these advanced finance tools. These investments are designed to satisfy the need for real-time finance insights and analysis among a mushrooming set of internal customers.
Applying financial expertise to ESG reporting – CFOs are mobilizing their team’s financial reporting expertise to address unfolding Human Capital and ESG reporting and disclosure requirements. Leading CFOs are consummating their role in this next-generation data collection activity while ensuring that the organization lays the groundwork to maximize the business value it derives from monitoring, managing and reporting all forms of ESG-related performance metrics.
Elevating and expanding forecasting – Finance groups are overhauling forecasting and planning processes to integrate new data inputs, from new sources, so that the insights the finance organization produces are more real-time in nature and relevant to more finance customers inside and outside the organization. Traditional key performance indicators (KPIs) are being supplemented by key business indicators (KBIs) to provide sharper forecasts and viewpoints. As major new sources of political, social, technological and business volatility arise in an unsteady post-COVID era, forecasting’s value to the organization continues to soar.
Investing in long-term talent strategies – Finance groups are refining their labor model to become more flexible and gain long-term access to cutting-edge skills and innovative thinking in the face of an ongoing and persistent finance and accounting talent crunch. CFOs also are recalibrating their flexible labor models and helping other parts of the organization develop a similar approach to ensure the entire future organization can skill and scale to operate at the right size and in the right manner.
An opinion that’s supported by irrelevant or unreliable data might not be accurately capturing company performance.
How well is the opinion of your company’s performance supported by the evidence the auditor’s using?
Public Company Accounting Oversight Board (PCAOB) staff have released guidance on what constitutes relevant and reliable evidence for supporting audit opinions.
If evidence auditors are using isn’t relevant or from a reliable source, or if the reliability of the evidence itself is questionable, that can call into question the soundness of the opinion.
“In some cases, information that was determined by the auditor to be more relevant may not be the most reliable, and vice versa,” the guidance, released October 7, says.
PCAOB was created in 2002 as part of the Sarbanes-Oxley Act to help ensure auditors don’t allow accounting problems in public companies to get past them and put investors at risk.
The new guidance tries to put guardrails around auditors’ growing use of external evidence to support their opinions.
The use of external evidence, like so many things today, is fueled by the widespread availability of data that companies, regulators and other entities collect and release. The question the guidance tries to answer is which data is relevant and reliable and which isn’t.
“Advancements in technology in recent years have improved accessibility and expanded the volume of information available to companies and their auditors from traditional and newer external sources,” the document says.
In general, data generated by regulators or entities that are themselves regulated — stock exchanges are mentioned — can be counted on to be more reliable than data generated by other types of organizations.
Similarly for data that’s generated by organizations vs. data that is derived through analyses of other organizations’ data. The more raw the data is, in other words, the better chance it’s reliable.
Relevance is the other big issue, and the guidance provides several use cases for thinking about that. For example, weather data can be relevant evidence for assessing the accuracy of a company’s sales data, presumably because bad weather can reduce brick-and-mortar sales, but only if the data is used correctly.
“Before using the weather data in developing certain expectations – e.g., for substantive analytical procedures related to product revenue – the auditor would need to understand the relationship between weather data and company activities,” the guidance says.
A company’s year-end stock price, obtained from an exchange, is another example. That data can be used to compare against the price the company is using to support its valuation of an instrument.
“The exchange price would represent the fair value of the instrument,” the document says.
The guidance is directed at auditors, but it’s relevant to CFOs for checking whether their auditor is using external evidence appropriately in its assessment of company performance.
Nurses and other healthcare workers have voted to authorize a strike at Kaiser Permanente in Southern California, according to a union news release.
The vote covers 21,000 registered nurses, pharmacists, midwives, physical therapists and other healthcare professionals represented by the United Nurses Associations of California/Union of Health Care Professionals, as well as 7,000 members of United Steelworkers. It does not mean a strike is scheduled. However, it gives bargaining teams the option of calling a strike. Unions representing the workers would have to provide a 10-day notice before striking.
The vote comes as Oakland, Calif.-based Kaiser is negotiating for a national contract with UNAC/UHCP, along with about 20 other unions in the Alliance of Health Care Unions. The alliance, which has been in negotiations with Kaiser since April, covers more than 50,000 Kaiser workers nationwide.
UNAC/UHCP said union members are facing “protracted understaffing” amid record levels of burnout during the COVID-19 pandemic.
“While healthcare workers are facing record levels of burnout after 18 months of the COVID pandemic, they continue to deal with protracted understaffing. Talks at the table center on how to recruit to fill open positions that impact patient care and service,” the union said in a news release. “Kaiser Permanente … wants to slash wages for new nurses and healthcare workers and depress wages for current workers trying to keep up with rising costs for food, housing and other essentials.”
Kaiser has defended its pay amid a challenging pandemic, saying its proposal includes wage increases for current employees “on top of the already market-leading pay and benefits,” as well as a market-based compensation structure for those hired in 2023 and beyond.
In a statement shared with Becker’s Oct. 11, the system also emphasized its continued focus on high-quality, safe care.
“In the event of any kind of work stoppage, our facilities will be staffed by our physicians along with trained and experienced managers and contingency staff,” the system said.
This strike would affect Kaiser hospitals and medical centers in Anaheim, Bakersfield, Baldwin Park, Downey, Fontana, Irvine, Los Angeles, Ontario Vineyard, Panorama City, Riverside, San Diego, West Los Angeles and Woodland Hills, as well as various clinics and medical office buildings in Southern California.