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CIMA E1 - MM > Digital Age Finance Function > Flashcards

Digital Age Finance Function Flashcards

1
Q

What does the ‘shape’ of the finance function refer to?

A

The arrangement of roles, responsibilities, and reporting relationships within the finance function

This concept is analogous to the organizational structure of a business.

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2
Q

How has the traditional finance function been visualized?

A

As a triangle with a hierarchical structure

This triangle shows layers of management, with the broad base representing the largest number of staff at the lowest management level.

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3
Q

What are the three broad categories of management levels in the finance function?

A
  • Enabling
  • Shaping
  • Narrating
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4
Q

What is the role of the finance function at the enabling level?

A

To carry out operational processes that enable the creation and preservation of value

This includes tasks like data collection, processing, and analysis.

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5
Q

What does the shaping level of the finance function involve?

A

Influencing how value is created and preserved by using insights gained at the enabling level

This includes controlling operational processes and communicating information.

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6
Q

What is the primary responsibility of the narrating level in the finance function?

A

Determining how value is created and preserved in the organization through strategic planning and financial reporting

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7
Q

What is a shared service center (SSC) in the context of the finance function?

A

A centralized department providing finance services that were previously decentralized

This model helps reduce costs and increase efficiency.

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8
Q

What shape is the finance function taking in the digital age?

A

A diamond shape

This reflects the impact of automation on the number of staff at various management levels.

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9
Q

What are the four levels of the finance function in the digital age according to CIMA?

A
  • Level 4: Assembling and extracting data
  • Level 3: Specialists generating insights
  • Level 2: Partnering for value
  • Level 1: Leading the finance team
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10
Q

What occurs at Level 4 of the digital age finance function?

A

Data is collected, cleaned, and assembled, often by computing technology

This level ensures accounting rules are applied correctly.

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11
Q

What is the focus of Level 2 in the finance function?

A

Partnering for value to influence and shape how the organization creates value

This involves advising on cost-saving measures and strategic decisions.

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12
Q

What is the role of financial strategic partners?

A

Communicate insights to internal and external stakeholders and influence how the organization preserves value

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13
Q

What are the five basic activities of the finance function known as?

A

The five As

These activities include Assembling, Analysing, Advising, Applying, and Acumen.

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14
Q

Fill in the blank: The finance function collects data from various sources and organizes it into prescribed formats during the _______.

A

Assembling information

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15
Q

What does the finance function do during the Analysing stage?

A

Find patterns and trends to provide useful insights for stakeholders

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16
Q

True or False: The finance function’s primary goal is to increase efficiency and reduce operating costs.

A

False

The focus has shifted to strategic partnering and creating value.

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17
Q

What does value encompass in a business context?

A
  • Profit generation
  • Customer satisfaction
  • Employee treatment
  • Brand reputation
  • Community consideration
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18
Q

What are the two key elements of the strategic partnership role in finance?

A
  • Communicating insight on how to add value
  • Business partnering to support another business function
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19
Q

What is the primary role of the finance function in decision making?

A

To analyze data and communicate insights to support decision making

Effective communication of insights is essential for action to be taken.

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20
Q

How do strategic partners in finance contribute to business partnering?

A

They provide financial advice and support to various departments, influencing decisions and aiding in business strategy execution

21
Q

Where do many management accountants operate now compared to traditionally?

A

Within different departments of organizations rather than from a central accounts department

22
Q

What is one advantage of accountants being embedded in departments like marketing?

A

They can provide better support due to close proximity and understanding of departmental needs

23
Q

What skills are now required for effective strategic partnering?

A
  • Generating useful insights
  • Communication skills
  • Developing own knowledge
  • Analytical skills
  • Leadership
  • Acting with confidence and being persuasive
  • Ability to build relationships
  • Commercial acumen
24
Q

What does generating useful insights involve for strategic partners?

A

Analyzing reports to provide actionable advice to stakeholders

25
Q

Why is communication important for strategic partners?

A

They need to convey financial information in a way that is understandable to non-financial stakeholders

26
Q

What must strategic partners develop knowledge about?

A

How the rest of the organization operates, especially the area they are advising

27
Q

What do analytical skills enable strategic partners to do?

A

Analyze trends and identify anomalies using large data sets

28
Q

What is the significance of leadership for strategic partners?

A

They influence decision-making and aid in executing business strategy

29
Q

What is commercial acumen?

A

The ability to make good judgments and quick decisions regarding commercial and financial issues

30
Q

How has the role of the CFO evolved according to Ash Noah?

A

From a navigator to a co-pilot, actively supporting the CEO in leading the organization

31
Q

What skills are essential for effective strategic leadership in finance?

A
  • Communication skills
  • Ability to build relationships
  • Leadership skills
  • Analytical skills
  • Knowledge outside of finance
  • Adaptable to changing technology
  • Problem-solving abilities
32
Q

What does the CFO need to understand to manage technological disruption?

A

The use, value, and cost of emerging technologies and how they can be leveraged

33
Q

What is the impact of technology on the finance function?

A

It allows for automation, changing the nature of jobs and creating new opportunities

34
Q

What are the five As in the finance function?

A
  • Assembling
  • Analyzing
  • Advising
  • Applying
  • Acumen
35
Q

What is required for finance professionals to successfully transition to new roles due to automation?

A

The ability to use new technology and skills to advise for influence and apply for impact

36
Q

What are digital centres of excellence (DCoE)?

A

Shared service centres where services are centralized within an organization

37
Q

What is a Digital Centre of Excellence (DCoE)?

A

A DCoE brings together expertise from different areas and utilises technology to focus on achieving an objective contributing to the overall business strategy

DCoEs are created in conjunction with shared service centres (SSCs) to optimize service delivery and expertise.

38
Q

What role do financial technical specialists play in a DCoE?

A

They generate insights from data relevant to their specialty and collaborate with other specialists

For example, a budget analyst will analyze budget-related data.

39
Q

What is the goal of RAC Limited’s DCoE?

A

To create and deliver a digital offering that meets the aspiration of becoming the ‘motorist’s champion’ in the digital world

This includes a focus on digital transformation, digital marketing, and e-commerce.

40
Q

Define business partnering.

A

The development of a successful and long-lasting strategic relationship between groups in business

Business partnerships can be internal or external.

41
Q

Give an example of an external business partnership.

A

Nestlé signed a $7.1bn deal to sell Starbucks branded coffee in locations other than Starbucks’ cafes

This partnership benefits both companies by expanding brand reach and revenue.

42
Q

How is the finance function traditionally structured?

A

As its own separate department or group of departments, e.g. financial accounting or treasury management

This structure is changing with finance roles becoming embedded in other departments.

43
Q

What is one way business partnering of the finance function can be achieved?

A

Through individuals working within another department to provide guidance

Example: A management accountant in a marketing department providing financial analysis.

44
Q

What is another method of achieving business partnering?

A

Through multi-disciplinary teams that work on projects together

Example: An accountant working alongside architects and builders on a construction project.

45
Q

What is the changing role of the CFO?

A

The CFO is taking on a greater leadership role, focusing on planning and decision-making rather than just historical performance reporting

This shift is enabled by technology and automation.

46
Q

What traditional roles does the CFO still maintain?

A

Ensuring the finance department is effective in financial reporting, management accounting, and treasury management

This remains essential even as the role evolves.

47
Q

How does the CFO implement changes in the organization?

A

By working closely with the CEO to set strategies and through business partnering with other departments

This approach helps in spreading initiatives to improve future performance.

48
Q

What are the 5As and what are they influencing?

A

CIMA E1 - MM (11 decks)

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