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E1 > Activities of Finance Professional > Flashcards

Activities of Finance Professional Flashcards

1
Q

What the are 4 activities of a finance function according to the White paper (Farrar)

A

Assembling Information
Analysing Information
Advising to Influence
Applying for Impact

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2
Q

Define Data and Define Information

A

Data: Raw unprocessed facts and figures

Information: Data that has been processed in a way to make in meaningful for planning or decision making

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3
Q

What types of data are identified in the report ‘From insight to impact- unlocking opportunities..’

A

Financial Data
Enterprise Data
Big Data

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4
Q

What is financial Data

A

Standard Metrics which are well tracked and understood by organisation

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5
Q

What is enterprise data

A

Financial data + Broad operational and transactional data for analysis and forecasting

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6
Q

What is big data

A

Enterprise data + new types of internal and external data which can be unstructured, large in volume
Could yield insights into business performance, risks and opportunities

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7
Q

What is the general rule of costs associated with assembling data

A

Costs should not exceed the value of the information created
Value can either be intrinsic and sold or more subjective to the company in terms of the information provided

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8
Q

What qualities does information require to be useful

A

A: accurate- reliable information with no mistakes

C: complete - include everything if relevant and be consistent

C: cost effective

U: understandable

R: relevant

A: accessible- choice of medium should be appropriate

T: timely

E: easy to use

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9
Q

What are ways of collecting data

A

Informal gathering: general everyday information

Formal gathering: when organisation needs specific data for specific purpose

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10
Q

Define environmental Scanning and provide examples

A
  • External data source
  • Process of gathering external information from wide range of sources
    -eg. tax specialists, legal expert, research and development, marketing managers, government, bureaus, consultancies, data sharing portals, newspaper etc
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11
Q

What are requirements of internal data sources

A
  • System for collecting/measuring data that sets out how, when, by who, methods
  • Informal communication of information between staff and managers
  • Formal communication
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12
Q

What are some sources for internal data

A
  • Accounting Records (ledgers, books and bank transactions)
  • Human resources (payroll records)
  • Machine Logs
  • Time sheets
  • Staff conversations
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13
Q

Define Data Cleansing

A

Process of identifying incorrect data and modifying or removing it

eg. duplicated, errors, corrupt, out of data, data with no purpose, data held in contraction of gdpr

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14
Q

What are the methods of cleansing data

A

Cross-checking raw data with validated
Manual checks
Automated batch processing
Data wrangling (converting raw data from one form to another to use in different system

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15
Q

How is a data-centric business created

A
  • understand what data is important
  • assess existing data initiatives
  • identify quick wins and proof of concept projects
  • conduct a formal full-scale data project
  • create data culture
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16
Q

What is a data connection tool

A

Software to connect vast data sources
- cloud-based and lots of processing powers
- eg. tableau or Microsoft power bI

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17
Q

What are the four key functions of data connection tools

A
  1. Data integration: can compile data from many sources
  2. Pre-built starter kits: accelerate development time
  3. User friendly
  4. Mobile reporting
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18
Q

Define data analysis

A

Process of evaluating data by comparison benchmarks to form a conclusion
- reporting the facts

19
Q

Define data insights

A

Finding the indicators of the drivers of value for the organisation
- reporting what might happen in the future

20
Q

What are the four levels of data analysis

A
  1. Reporting- what happened
  2. Analysis - why did it happen
  3. Monitoring - whats happening now
  4. Prediction - what might happen

Complexity and value to the business increase at each level

21
Q

Define stakeholders

A

People/groups who have an interest in the organisation

22
Q

What is the difference between primary and secondary stakeholders and list examples

A

Primary: contractual relationships with the organisation (shareholders, managers workers, trade unions, customers, suppliers and business partners, lenders)

Secondary: other relationships which impact organisation (government, local authority and public, natural environment)

23
Q

Explain shareholders as stakeholder in an organisation

A
  • Money invested is at stake
  • Expect a return on investment and growing profits through dividends
  • growth in capital value of their share of the business
24
Q

Explain directors/managers/employees and trade unions as stakeholders

A
  • Livlihoods, career at stake
  • Expect fair and growing remuneration
  • Expect career progression and safe working environments
25
Q

Explain customers as stakeholders

A
  • Thier custom is at stake
  • Expect products and services of good quality and value
  • Expect fair terms fo trade and continuity of supply
26
Q

Explain suppliers/business partners as stakeholders

A
  • Items they supply at stake
  • Expect fair terms of trade and prompt payment and continuity
27
Q

Explain lenders as stakeholders in an organisation

A
  • Money lent is at stake
  • They expect a return on their investment through interest paid and repayment of capital
28
Q

Explain the government and its agencies as a secondary stakeholder

A
  • Stake: National infrastructure, welfare of employees and tax revenue
  • Expect reasonable employment and good business practises and increasing income fo tax revenue
29
Q

Explain the local authority and general public as stakeholders

A
  • Secondary staekholders
  • Stake: national infrstructiure used by business and welfare of employees
  • expect reasonable employment and good business practises
30
Q

Explain the natural environment as a secondary stakeholder

A

Stake: environment

expectations of reasonable environmental business practices

31
Q

How are stakeholders further split up into three groups

A

I: Internal: management and employees

C: Connected: shareholders, lenders, customers, suppliers

E: External: Local community, society, government, competitors

32
Q

How does Mendelow classify staekholders

A
  • Matrix of Power vs Level of Interest
  1. Low power + low level of interest = minimal effort
  2. Low power + high level of interest = keep informed (core employees, small suppliers)
  3. High power + low level of interest = keep satisfied (government, customers)
  4. High power + high level of interest = key players (key employees, main suppliers)
33
Q

What are the three features of effective stakeholder communication

A

Audience
Frequency
Format

34
Q

How is the ‘applying to influence’ function carried out

A

Through Business Partnering : finance function embedding and working alongside other functions of organisation to support and guide performance

35
Q

Which three stakeholders require close partnering

A
  • IT Function: captures data
  • Data Scientists: advanced analysis
  • Business Leaders: turn ideas and insight into concrete action -most important
36
Q

According to CGMA what skillsets do you need for business partnering

A
  1. Effective Business partnering relationshios
  2. Contributing insights into drivers of cost, risk and value
  3. Ability to integrate, apply and communicate
37
Q

What is meant by effective business partnering relationships

A

Empathy with business
Compelling communication
Preparedness to challenge

38
Q

What is meant by contributing insights to drivers of cost, risks and value

A

Passion for business
Commercial Curiosity
Professional objectivity

39
Q

What is meant by the ability to integrate apply and communicate

A

Business understanding
Analytical skills
Accounting skills

40
Q

What are the requirements finance professional needs to support business decisions

A

Understanding data sources and analytical techniques

Understanding business operations

Communication Skills

Good working relationships

Leadership skills

41
Q

What is understanding data sources and analytical techniques

A

the ability to question data analysis to see whether decisions are good

42
Q

What is meant by understanding business operations

A

Ability to challenge colleagues to improve performance
Using business acumen for sensible suggestions

43
Q

What are the ways finance functions connect business

A
  • Business partnering
  • Budgeting
  • Provision of insights
  • Implementing decisions
  • Information systems

E1 (12 decks)

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