Leveraging Tech in Finance Flashcards
1
Q
Define ‘digital mindset’.
A
The ability to see how digital technology can transform an organization
2
Q
What is one dimension of the digital mindset?
A
Providing vision yet empowering others
3
Q
What does ‘architecting choices’ refer to in the context of a digital mindset?
A
Guiding employees towards beneficial outcomes while empowering them
4
Q
What is a key challenge when adopting disruptive technologies?
A
Sustaining ongoing operations and profitability
5
Q
What is the balance required in the digital mindset regarding data and intuition?
A
Relying on data yet trusting your intuition
6
Q
True or False: Emerging technologies should always be embraced without skepticism.
A
False
7
Q
What defines change adept organizations?
A
View change as an opportunity
8
Q
What is a characteristic of a flexible structure in organizations?
A
Easily adopt new technologies and adapt processes
9
Q
What does a growth mindset in employees entail?
A
Willingness to continuously learn new skills
10
Q
What potential transformation can a digital mindset have on the finance function?
A
Changing focus from operational efficiency to strategic goals
11
Q
What is digital costing?
A
Costing that accommodates the differences in structure and behavior of digital assets
12
Q
How is the traditional structure of the finance function changing in the digital age?
A
From a triangular to a diamond shape
13
Q
What is the automation paradox in finance?
A
Loss of skills due to automation increasing reliance on automated processes
14
Q
What role does the finance function play as a strategic partner?
A
Assisting in financial and commercial evaluation to improve business performance
15
Q
What visual shape represents the evolving finance function?
A
Diamond shape
16
Q
What are two key elements of the role of financial strategic partners?
A
- Communicating insight on how to add value
- Business partnering to support another business function
17
Q
What skills are required for effective strategic partnering in finance?
A
- Generating useful insights
- Communication skills
18
Q
Fill in the blank: Value in a business context encompasses all things that ensure the success of the business in the _______.
A
[long-run]
19
Q
What does the term ‘value’ include beyond monetary aspects?
A
- Brand reputation
- Employee satisfaction
- Customer happiness
20
Q
What is a strategic partner likened to in the text?
A
A boxing sparring partner
21
Q
What does the finance function analyze to support decision-making?
A
Financial information
22
Q
What is the outcome of a finance function acting as a business partner?
A
Influencing decisions made across the organization
23
Q
What shift has occurred in the finance function’s focus due to automation?
A
From increasing efficiency to strategic partnering
24
Q
What is a key communication skill required for financial professionals acting as strategic partners?
A
Communicate effectively with stakeholders outside of the finance function
This includes avoiding financial jargon and ensuring information is understandable.
25
What is essential for a strategic partner to influence decision-making and business strategy?
A broader range of knowledge than held by traditional financial professionals
## Footnote
This includes understanding how different areas of the organization operate.
26
What analytical skill is increasingly important for strategic partners due to technological advances?
The ability to analyze trends and identify anomalies using large data sets
## Footnote
Examples include analyzing buying patterns before hurricanes.
27
True or False: Successful strategic partners are seen as leaders within an organization.
True
28
What confidence-related skill must financial strategic partners possess?
Act with confidence and be persuasive
## Footnote
They must challenge management and influence decision-making.
29
What is commercial acumen?
The ability to make good judgements and quick decisions regarding commercial and financial issues
## Footnote
This includes evaluating options and implementing decisions.
30
How does the finance function create value through strategic partnership?
By analyzing how value is created and communicating insights to different areas of the organization
## Footnote
This supports efforts to maximize value creation.
31
What role does the CFO play in strategic leadership?
Transitioning from navigator to co-pilot of the organization
## Footnote
This involves formulating strategies alongside the CEO.
32
List three skills required for effective strategic leadership by a CFO.
* Communication skills
* Ability to build relationships
* Leadership skills
33
What is a key responsibility of a CFO in relation to technology?
Manage the investment in technology and understand its value and cost
## Footnote
This includes leveraging emerging technologies.
34
Fill in the blank: The integration of technology into business processes increases demand for _______.
financial advice and support
35
What is the impact of technology on traditional finance roles?
It poses a threat to some jobs while creating new opportunities
## Footnote
Examples include the automation of data entry tasks.
36
What are digital centres of excellence (DCoE)?
Shared service centres focusing on achieving business objectives through expertise and technology
## Footnote
They include specialists from various areas analyzing data for insights.
37
What is business partnering?
The development of a successful and long-lasting strategic relationship between groups in business
## Footnote
This can include both internal partnerships and external collaborations.
38
What significant deal did Nestlé sign in 2018?
A $7.1bn deal to sell Starbucks branded coffee in locations other than Starbucks’ cafes
## Footnote
This deal created a long-term relationship benefiting both companies.
39
What is one role of the finance function in an organization?
To be a business partner to various departments by providing financial advice and support
## Footnote
This support helps departments make informed decisions.
40
How has the traditional view of the finance function changed?
It is becoming increasingly embedded in different departments rather than being treated as a separate entity
## Footnote
Management accountants are now often found within departments instead of a central accounts department.
41
What is one way business partnering of the finance function can be achieved?
Through individuals working within another department to provide guidance
## Footnote
For example, a management accountant in a marketing department.
42
What is another method of business partnering besides individuals?
Through multi-disciplinary teams that work on projects together
## Footnote
An example includes accountants working alongside architects and builders on a building project.
43
What is a mixture of both methods in business partnering?
Having a combination of traditional-type departments and multi-disciplinary teams
## Footnote
This allows for finance personnel to be embedded in both structures.
44
What shift is occurring in the focus of the finance function?
From reporting on historical performance to planning and decision-making
## Footnote
This shift enhances the role of the CFO in leadership.
45
What role does technology play in the changing focus of the finance function?
It enables automation of repetitive processes, allowing finance professionals to focus on planning
## Footnote
Real-time financial information also aids future-oriented decision-making.
46
What traditional roles must the CFO still manage?
Financial reporting, management accounting, and treasury management
## Footnote
These roles remain essential even as the focus shifts to strategic leadership.
47
What is the role of the CFO in relation to the CEO?
To work closely with the CEO to set strategies for improving future performance
## Footnote
This collaboration is key to implementing organizational changes.
48
What era is referred to as the digital age in relation to finance?
An era where computing technology is integrated into all aspects of modern life
## Footnote
This integration transforms basic finance activities within the finance function.
49
Fill in the blank: The finance function is being transformed by the widespread use of _______.
[computing technology]
50
What is the primary goal of business partnering within an organization?
To enhance collaboration and support decision-making across departments
## Footnote
This can improve overall organizational performance.
51
What are the five basic activities of the finance function referred to as?
The five As
## Footnote
The five As are Assembling information, Analysing for insights, Advising to influence, Applying for impact, and Acumen.
52
What do the four stages between information and impact begin with?
The letter I
## Footnote
The stages are Information, Insight, Influence, and Impact.
53
What is the difference between data and information?
Data is unprocessed raw facts; information is processed and organized data.
54
What is the first basic activity of the finance function?
Assembling information
55
What does the finance function analyze to find useful insights?
Information
56
What is the purpose of the finance function advising stakeholders?
To influence decision-making processes
57
What does applying for impact involve in the finance function?
Implementing decisions to guide the actions of the organization.
58
What is meant by 'Acumen' in the context of the finance function?
The ability to help the organization make better future decisions.
59
How is the traditional finance function visually represented?
As a triangle
60
In the traditional finance function, what does the broad base of the triangle represent?
The greatest number of staff in the lowest management level.
61
What are the three broad categories of management levels in the finance function?
* Enabling
* Shaping
* Narrating
62
What is a shared service center (SSC) in finance?
A central department providing finance services that were previously in multiple parts of the organization.
63
What has driven the segregation of financial operational processes into SSCs?
Desire to reduce costs and increase efficiency.
64
What shape is the finance function expected to take in the digital age?
Diamond shape
65
At Level 4 of the digital age finance function, what tasks are performed?
* Assembling data
* Cleaning data
* Providing limited insight
66
What role do specialists at Level 3 of the finance function fulfill?
Generating further insights in their areas of specialism.
67
What does partnering for value involve at Level 2 of the finance function?
Influencing and shaping how the organization creates value.
68
What are the responsibilities of finance professionals at Level 1?
Leading the finance team and formulating strategies.
69
What is the fourth industrial revolution (4IR) characterized by?
Convergence of technologies that blur the lines between physical, digital, and biological systems.
70
What technological advancements are associated with the fourth industrial revolution?
* Artificial Intelligence (AI)
* Cloud computing
71
What distinguishes the fourth industrial revolution from the third?
Fast rate of changes and widespread impact across industries.
72
What is the role of artificial intelligence in the finance function?
To analyze data, make decisions, and learn from outcomes.
73
What does autonomous technology refer to?
Technology that operates without human control.
74
Fill in the blank: The five basic activities of finance professionals are known as the five _____
As
75
True or False: The shape of the finance function has remained static over the years.
False
76
What example illustrates the impact of technology on finance functions?
Automation of financial operational processes.
77
What is autonomous technology?
Technology that operates without human control, such as self-driving cars and automated manufacturing processes.
78
What are cyber-physical systems?
Physical systems integrated with computers or networks that monitor and control them.
79
Provide an example of a cyber-physical system.
A thermostat that adjusts heating or air conditioning based on temperature readings.
80
How do cyber-physical systems benefit business operations?
They improve efficiency and can lead to cost savings and more attractive products.
81
What impact does autonomous technology have on job types?
It replaces repetitive tasks and shifts focus towards jobs requiring compassion, creativity, and social skills.
82
What is the role of finance professionals in relation to autonomous technology?
To analyze data and support business decisions rather than performing manual tasks.
83
What is one major benefit of 4IR technology in managing natural resources?
Improving energy efficiency and reducing environmental impact.
84
Name a key emerging technology of the Fourth Industrial Revolution (4IR).
Big data and data analytics.
85
What is big data?
Sets of data so large that they cannot be analyzed using standard reporting facilities.
86
Define structured data.
Data with a fixed format that can be organized into categories.
87
What is unstructured data?
Data that does not have a clear format, making it difficult to categorize.
88
What is semi-structured data?
Data that has some properties for organization but is not entirely structured.
89
What is data analytics?
The process of analyzing big data to make conclusions and answer questions.
90
List the benefits of big data for the finance function.
* Provide fresh insights
* Improve decision making
* Optimize processes
* Increase transparency
91
What is a challenge of big data for the finance function?
Lack of expertise in handling and analyzing large data sets.
92
What is 3D printing?
The process of using equipment to print 3D shapes from computer designs.
93
What is Additive Layering Manufacturing (ALM)?
A method of 3D printing that builds objects by layering material.
94
Name a benefit of 3D printing.
Reduction of transport costs.
95
What is one disadvantage of 3D printing?
High initial investment and maintenance costs.
96
What is artificial intelligence (AI)?
When computers perform tasks typically associated with intelligent beings.
97
What are some uses of AI?
* Voice recognition
* Planning
* Learning
* Problem solving
98
Fill in the blank: AI systems may have the ability to _______.
[reason, find meaning, or learn from past experience]
99
What is a low level of AI innovation?
User-tailored online advertisements based on browsing history.
100
What is a high level of AI innovation?
Self-driving cars that navigate without human intervention.
101
What are some uses of AI?
Voice recognition, planning, learning and problem solving
102
What is a low-level example of AI innovation?
User-tailored online advertisements
103
What is a high-level example of AI innovation?
Self-driving cars like those from Tesla
104
What is machine learning?
A subset of AI where a computer learns from data to identify patterns and make decisions
105
What are algorithms in the context of machine learning?
A set of instructions programmed into a computer
106
How does Amazon utilize machine learning?
Using data on customer purchasing habits to make product suggestions
107
In what areas is AI being used in business?
Data analysis and predicting financial activities
108
What future role will AI play in accountancy?
Replacing many accountancy-related tasks through automation
109
What is one disadvantage of implementing AI in finance?
Lack of expertise among staff
110
Why is the availability of data a barrier to implementing AI?
AI requires large amounts of high-quality and accurate data
111
What does data visualisation aim to achieve?
Make data more accessible and understandable
112
What percentage of information that comes into the brain is visual?
Around 90%
113
What are some tools used in data visualisation?
* Charts
* Infographics
* Graphs
* Tables
* Maps
114
What is one benefit of data visualisation tools for the finance function?
Makes data easier to understand
115
How do data visualisation tools provide insights?
By visualising data in a new way to understand business performance
116
What is blockchain?
A growing list of records called blocks linked using cryptography
117
What does each block in a blockchain contain?
* A cryptographic hash of the previous block
* A timestamp
* Transaction data
118
What is one benefit of blockchain for the finance function?
Enhanced security through linked transactions
119
What is a smart contract?
A contract written in computer code that transfers assets once verified
120
What challenge does cryptocurrency pose for financial reporting?
Unclear treatment for accounting standards
121
What is business process automation?
Transferring tasks previously done by humans to computers
122
What is the difference between traditional and modern process automation?
* Traditional: Simple repetitive tasks
* Modern: Complex business processes incorporating 4IR technology
123
What is one example of traditional process automation?
Automated emails for purchase confirmations
124
What is one example of modern process automation?
Software used in recruitment processes
125
What are the two types of process automation?
Traditional process automation and modern process automation
## Footnote
Traditional process automation involves simple repetitive tasks, while modern process automation incorporates advanced technologies like AI and big data.
126
What characterizes traditional process automation?
Automation of simple repetitive tasks originally done by hand
## Footnote
Examples include automated emails for product purchases and shipping notifications.
127
What is modern process automation?
Automation of complex business processes using advanced technologies like AI and big data
## Footnote
An example is AI software used in recruitment to optimize resume screening.
128
How is business process automation becoming important to the finance function?
It enables the automation of increasingly complex processes
## Footnote
This is particularly relevant as technology advances in the Fourth Industrial Revolution (4IR).
129
Define cloud computing.
Storing and accessing files remotely over the Internet
## Footnote
Users can access financial records and programs from any Internet-connected device.
130
What are the two main types of cloud computing?
Public cloud and private cloud
## Footnote
Public cloud examples include Microsoft Azure and Google Cloud; private clouds are owned by specific organizations like Facebook.
131
What are the benefits of cloud computing for the finance function?
Accessibility, back-up, integration, real-time co-working, greater memory
## Footnote
Allows finance personnel to work remotely and collaborate efficiently.
132
True or False: Cloud computing restricts employees to a specific physical location.
False
## Footnote
Employees can access work from anywhere with an Internet connection.
133
What does mobile technology enable in the finance function?
Better communication and flexibility
## Footnote
Employees can communicate and access information anytime, anywhere.
134
What is the Internet of Things (IoT)?
Interaction of Internet devices that gather and exchange data
## Footnote
Examples include smart home devices and manufacturing equipment.
135
How does IoT benefit the finance function?
Provides up-to-date data and real-time auditing
## Footnote
Enables organizations to respond quickly to changes and manage internal audits efficiently.
136
What ethical considerations must organizations adhere to regarding data protection?
Integrity, objectivity, professional competence and due care, confidentiality, and professional behavior
## Footnote
These are part of CIMA's five ethical principles.
137
What is GDPR?
General Data Protection Regulation
## Footnote
A regulation in EU law for protecting personal data and privacy of individuals.
138
What is required for organizations to comply with GDPR?
Appropriate technical and organizational measures to protect personal data
## Footnote
Organizations must seek consent and inform customers about data collection.
139
Fill in the blank: The Facebook-Cambridge Analytica scandal highlighted the need for _______ in data protection.
transparency and accountability
## Footnote
It raised awareness about the importance of ethical data handling.
140
What is a key challenge posed by IoT in organizations?
Evaluating the necessity of IoT before using data
## Footnote
Organizations must assess the relevance and implications of IoT data.
141
What are the advantages of real-time data in finance?
Speedier decision-making and effective resource use
## Footnote
Real-time information increases organizational transparency to stakeholders.
142
What is the GDPR's requirement regarding consent for data processing?
Individuals must give consent for their data to be processed beyond lawful specifications.
## Footnote
Individuals can withdraw their consent at any time.
143
What happened in the Facebook-Cambridge Analytica scandal regarding user consent?
The app collected data from Facebook friends of users who had not given consent.
## Footnote
The app misled users about the extent of data collection.
144
What must businesses do to inform customers about data collection?
Businesses must declare the lawful basis for data collection, the duration of data retention, and whether data will be shared with third parties.
## Footnote
This is part of GDPR compliance.
145
What right do customers have regarding their collected data?
Customers can request a copy of their collected data in a common format.
## Footnote
Example: Facebook users can download their data after making a request.
146
Under what circumstances can a customer request data erasure?
Customers can request data erasure under specific circumstances, but businesses may have to comply with other regulations.
## Footnote
Example: Deleting a Facebook account requires data deletion, but banks must retain data for 10 years.
147
What is the recommended default for privacy settings in businesses?
Businesses must use the highest possible privacy settings as the default.
## Footnote
Prior to the scandal, Facebook did not enforce strict privacy defaults.
148
How can businesses protect customer identities?
By storing personal information in separate databases linked by customer numbers.
## Footnote
This limits exposure if one database is compromised.
149
What safeguards should be in place to prevent privacy lapses?
Safeguards like using pseudonyms and anonymizing data should be implemented.
## Footnote
Anonymization is especially important for sensitive data analysis.
150
What is the time frame for reporting data breaches?
Businesses must report data breaches within 72 hours.
## Footnote
The Cambridge Analytica scandal was revealed by a whistle-blower, not the companies.
151
When must a business appoint a Data Protection Officer (DPO)?
If collecting personal data is a core business process.
## Footnote
Facebook appointed its first DPO after the scandal.
152
What was the financial consequence for Facebook due to the breach of privacy laws?
Facebook faced a $5 billion fine for breaching privacy laws in the US.
## Footnote
Under GDPR, they must also comply with EU legislation for all EU customers.
153
What ethical considerations should businesses keep in mind regarding data?
Businesses should consider the ethical implications of their data practices, beyond legal requirements.
## Footnote
Customer trust can be impacted by perceived misuse of personal data.
154
What was the public response to the Facebook-Cambridge Analytica scandal?
26% of US adults deleted the Facebook app following the scandal.
## Footnote
Facebook's shares dropped significantly due to concerns over data privacy.
155
What is a code of ethics?
Guidelines advising employees on handling data and ethical behavior
## Footnote
It may be voluntary and not required by law.
156
What is corporate digital responsibility (CDR)?
Voluntary commitment to ethical and social principles in handling technology and data
## Footnote
Aims to protect customers and ensure a positive societal impact.
157
What are social considerations in implementing information systems?
Considerations on how data can be collected, analyzed, and shared positively for society
## Footnote
Goes beyond compliance with data protection laws.
158
What does ethical behavior go beyond?
Meeting laws and regulations
## Footnote
It represents the highest level of conduct.
159
What are the five fundamental ethical principles of CIMA?
1. Integrity
2. Objectivity
3. Professional competence and due care
4. Confidentiality
5. Professional behavior
160
What is the relationship between ethics and reputation in business?
An organization trades on its reputation, affecting its license to do business
## Footnote
Bad practices can lead to loss of customers.
161
True or False: Ethical behavior is the minimum standard required by law.
False
## Footnote
Ethical behavior exceeds legal requirements.
162
What are common areas of concern for business ethics?
1. Treatment of workers
2. Avoiding bribery
3. Good professional conduct and honesty
4. Respecting personal data
5. Appropriate advertising
6. Safety at work
163
What is the purpose of ethical training in organizations?
To instill ethical values and ensure compliance with ethical standards
## Footnote
Helps align employee behavior with organizational ethics.
164
What is the role of personal ethics in strategic decision-making?
Individual moral principles influence ethical considerations in decisions
## Footnote
Employing individuals with strong moral values supports ethical practices.
165
Fill in the blank: CIMA ethical principles are based on suggestions from _______.
[IFAC]
## Footnote
IFAC stands for the International Federation of Accountants.
166
What does the principle of objectivity require from professionals?
Avoiding bias, conflicts of interest, or undue influence on professional judgment
## Footnote
Essential for maintaining integrity in financial reporting.
167
What is the significance of confidentiality in accounting?
Respecting the confidential nature of financial information acquired
## Footnote
Essential to maintain trust and legal compliance.
168
What example illustrates a breach of CIMA's ethical principles?
Paschal's actions in completing a Corporation Tax return without knowledge
## Footnote
Violated integrity, objectivity, and professional competence.
169
What are regulations in the context of professional conduct?
Standards set by professional bodies that members are expected to follow
## Footnote
Example: CIMA's code of conduct.
170
How can organizational culture influence ethics?
Beliefs, values, and standards of behavior inherent within the organization shape ethical conduct
## Footnote
Employees learn what is considered acceptable behavior.
171
What is the impact of ethics on employee morale?
Ethical practices lead to satisfied, productive employees
## Footnote
Unethical practices can cause stress and dissatisfaction.
172
What is an ethical code?
A set of ethical rules communicated to all staff outlining expected conduct
## Footnote
Includes disciplinary procedures for violations.
173
Why is it important for organizations to consider ethics in their decision-making?
To ensure decisions are morally sound and maintain reputation
## Footnote
Ethical decisions can lead to competitive advantages.
174
Fill in the blank: Ethical behavior is essential for avoiding _______.
[Legal action]
## Footnote
Ethical organizations tend to exceed legal standards.
