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CIMA E1 - MM > Leveraging Tech in Finance > Flashcards

Leveraging Tech in Finance Flashcards

1
Q

Define ‘digital mindset’.

A

The ability to see how digital technology can transform an organization

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2
Q

What is one dimension of the digital mindset?

A

Providing vision yet empowering others

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3
Q

What does ‘architecting choices’ refer to in the context of a digital mindset?

A

Guiding employees towards beneficial outcomes while empowering them

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4
Q

What is a key challenge when adopting disruptive technologies?

A

Sustaining ongoing operations and profitability

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5
Q

What is the balance required in the digital mindset regarding data and intuition?

A

Relying on data yet trusting your intuition

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6
Q

True or False: Emerging technologies should always be embraced without skepticism.

A

False

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7
Q

What defines change adept organizations?

A

View change as an opportunity

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8
Q

What is a characteristic of a flexible structure in organizations?

A

Easily adopt new technologies and adapt processes

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9
Q

What does a growth mindset in employees entail?

A

Willingness to continuously learn new skills

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10
Q

What potential transformation can a digital mindset have on the finance function?

A

Changing focus from operational efficiency to strategic goals

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11
Q

What is digital costing?

A

Costing that accommodates the differences in structure and behavior of digital assets

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12
Q

How is the traditional structure of the finance function changing in the digital age?

A

From a triangular to a diamond shape

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13
Q

What is the automation paradox in finance?

A

Loss of skills due to automation increasing reliance on automated processes

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14
Q

What role does the finance function play as a strategic partner?

A

Assisting in financial and commercial evaluation to improve business performance

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15
Q

What visual shape represents the evolving finance function?

A

Diamond shape

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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
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17
Q

What skills are required for effective strategic partnering in finance?

A
  • Generating useful insights
  • Communication skills
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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]

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19
Q

What does the term ‘value’ include beyond monetary aspects?

A
  • Brand reputation
  • Employee satisfaction
  • Customer happiness
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20
Q

What is a strategic partner likened to in the text?

A

A boxing sparring partner

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21
Q

What does the finance function analyze to support decision-making?

A

Financial information

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22
Q

What is the outcome of a finance function acting as a business partner?

A

Influencing decisions made across the organization

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23
Q

What shift has occurred in the finance function’s focus due to automation?

A

From increasing efficiency to strategic partnering

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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.

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25
Q

What is essential for a strategic partner to influence decision-making and business strategy?

A

A broader range of knowledge than held by traditional financial professionals

This includes understanding how different areas of the organization operate.

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26
Q

What analytical skill is increasingly important for strategic partners due to technological advances?

A

The ability to analyze trends and identify anomalies using large data sets

Examples include analyzing buying patterns before hurricanes.

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27
Q

True or False: Successful strategic partners are seen as leaders within an organization.

A

True

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28
Q

What confidence-related skill must financial strategic partners possess?

A

Act with confidence and be persuasive

They must challenge management and influence decision-making.

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29
Q

What is commercial acumen?

A

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

This includes evaluating options and implementing decisions.

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30
Q

How does the finance function create value through strategic partnership?

A

By analyzing how value is created and communicating insights to different areas of the organization

This supports efforts to maximize value creation.

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31
Q

What role does the CFO play in strategic leadership?

A

Transitioning from navigator to co-pilot of the organization

This involves formulating strategies alongside the CEO.

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32
Q

List three skills required for effective strategic leadership by a CFO.

A
  • Communication skills
  • Ability to build relationships
  • Leadership skills
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33
Q

What is a key responsibility of a CFO in relation to technology?

A

Manage the investment in technology and understand its value and cost

This includes leveraging emerging technologies.

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34
Q

Fill in the blank: The integration of technology into business processes increases demand for _______.

A

financial advice and support

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35
Q

What is the impact of technology on traditional finance roles?

A

It poses a threat to some jobs while creating new opportunities

Examples include the automation of data entry tasks.

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36
Q

What are digital centres of excellence (DCoE)?

A

Shared service centres focusing on achieving business objectives through expertise and technology

They include specialists from various areas analyzing data for insights.

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37
Q

What is business partnering?

A

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

This can include both internal partnerships and external collaborations.

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38
Q

What significant deal did Nestlé sign in 2018?

A

A $7.1bn deal to sell Starbucks branded coffee in locations other than Starbucks’ cafes

This deal created a long-term relationship benefiting both companies.

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39
Q

What is one role of the finance function in an organization?

A

To be a business partner to various departments by providing financial advice and support

This support helps departments make informed decisions.

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40
Q

How has the traditional view of the finance function changed?

A

It is becoming increasingly embedded in different departments rather than being treated as a separate entity

Management accountants are now often found within departments instead of a central accounts department.

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41
Q

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

A

Through individuals working within another department to provide guidance

For example, a management accountant in a marketing department.

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42
Q

What is another method of business partnering besides individuals?

A

Through multi-disciplinary teams that work on projects together

An example includes accountants working alongside architects and builders on a building project.

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43
Q

What is a mixture of both methods in business partnering?

A

Having a combination of traditional-type departments and multi-disciplinary teams

This allows for finance personnel to be embedded in both structures.

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44
Q

What shift is occurring in the focus of the finance function?

A

From reporting on historical performance to planning and decision-making

This shift enhances the role of the CFO in leadership.

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45
Q

What role does technology play in the changing focus of the finance function?

A

It enables automation of repetitive processes, allowing finance professionals to focus on planning

Real-time financial information also aids future-oriented decision-making.

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46
Q

What traditional roles must the CFO still manage?

A

Financial reporting, management accounting, and treasury management

These roles remain essential even as the focus shifts to strategic leadership.

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47
Q

What is the role of the CFO in relation to the CEO?

A

To work closely with the CEO to set strategies for improving future performance

This collaboration is key to implementing organizational changes.

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48
Q

What era is referred to as the digital age in relation to finance?

A

An era where computing technology is integrated into all aspects of modern life

This integration transforms basic finance activities within the finance function.

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49
Q

Fill in the blank: The finance function is being transformed by the widespread use of _______.

A

[computing technology]

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50
Q

What is the primary goal of business partnering within an organization?

A

To enhance collaboration and support decision-making across departments

This can improve overall organizational performance.

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51
Q

What are the five basic activities of the finance function referred to as?

A

The five As

The five As are Assembling information, Analysing for insights, Advising to influence, Applying for impact, and Acumen.

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52
Q

What do the four stages between information and impact begin with?

A

The letter I

The stages are Information, Insight, Influence, and Impact.

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53
Q

What is the difference between data and information?

A

Data is unprocessed raw facts; information is processed and organized data.

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54
Q

What is the first basic activity of the finance function?

A

Assembling information

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55
Q

What does the finance function analyze to find useful insights?

A

Information

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56
Q

What is the purpose of the finance function advising stakeholders?

A

To influence decision-making processes

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57
Q

What does applying for impact involve in the finance function?

A

Implementing decisions to guide the actions of the organization.

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58
Q

What is meant by ‘Acumen’ in the context of the finance function?

A

The ability to help the organization make better future decisions.

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59
Q

How is the traditional finance function visually represented?

A

As a triangle

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60
Q

In the traditional finance function, what does the broad base of the triangle represent?

A

The greatest number of staff in the lowest management level.

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61
Q

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

A
  • Enabling
  • Shaping
  • Narrating
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62
Q

What is a shared service center (SSC) in finance?

A

A central department providing finance services that were previously in multiple parts of the organization.

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63
Q

What has driven the segregation of financial operational processes into SSCs?

A

Desire to reduce costs and increase efficiency.

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64
Q

What shape is the finance function expected to take in the digital age?

A

Diamond shape

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65
Q

At Level 4 of the digital age finance function, what tasks are performed?

A
  • Assembling data
  • Cleaning data
  • Providing limited insight
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66
Q

What role do specialists at Level 3 of the finance function fulfill?

A

Generating further insights in their areas of specialism.

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67
Q

What does partnering for value involve at Level 2 of the finance function?

A

Influencing and shaping how the organization creates value.

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68
Q

What are the responsibilities of finance professionals at Level 1?

A

Leading the finance team and formulating strategies.

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69
Q

What is the fourth industrial revolution (4IR) characterized by?

A

Convergence of technologies that blur the lines between physical, digital, and biological systems.

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70
Q

What technological advancements are associated with the fourth industrial revolution?

A
  • Artificial Intelligence (AI)
  • Cloud computing
71
Q

What distinguishes the fourth industrial revolution from the third?

A

Fast rate of changes and widespread impact across industries.

72
Q

What is the role of artificial intelligence in the finance function?

A

To analyze data, make decisions, and learn from outcomes.

73
Q

What does autonomous technology refer to?

A

Technology that operates without human control.

74
Q

Fill in the blank: The five basic activities of finance professionals are known as the five _____

A

As

75
Q

True or False: The shape of the finance function has remained static over the years.

A

False

76
Q

What example illustrates the impact of technology on finance functions?

A

Automation of financial operational processes.

77
Q

What is autonomous technology?

A

Technology that operates without human control, such as self-driving cars and automated manufacturing processes.

78
Q

What are cyber-physical systems?

A

Physical systems integrated with computers or networks that monitor and control them.

79
Q

Provide an example of a cyber-physical system.

A

A thermostat that adjusts heating or air conditioning based on temperature readings.

80
Q

How do cyber-physical systems benefit business operations?

A

They improve efficiency and can lead to cost savings and more attractive products.

81
Q

What impact does autonomous technology have on job types?

A

It replaces repetitive tasks and shifts focus towards jobs requiring compassion, creativity, and social skills.

82
Q

What is the role of finance professionals in relation to autonomous technology?

A

To analyze data and support business decisions rather than performing manual tasks.

83
Q

What is one major benefit of 4IR technology in managing natural resources?

A

Improving energy efficiency and reducing environmental impact.

84
Q

Name a key emerging technology of the Fourth Industrial Revolution (4IR).

A

Big data and data analytics.

85
Q

What is big data?

A

Sets of data so large that they cannot be analyzed using standard reporting facilities.

86
Q

Define structured data.

A

Data with a fixed format that can be organized into categories.

87
Q

What is unstructured data?

A

Data that does not have a clear format, making it difficult to categorize.

88
Q

What is semi-structured data?

A

Data that has some properties for organization but is not entirely structured.

89
Q

What is data analytics?

A

The process of analyzing big data to make conclusions and answer questions.

90
Q

List the benefits of big data for the finance function.

A
  • Provide fresh insights
  • Improve decision making
  • Optimize processes
  • Increase transparency
91
Q

What is a challenge of big data for the finance function?

A

Lack of expertise in handling and analyzing large data sets.

92
Q

What is 3D printing?

A

The process of using equipment to print 3D shapes from computer designs.

93
Q

What is Additive Layering Manufacturing (ALM)?

A

A method of 3D printing that builds objects by layering material.

94
Q

Name a benefit of 3D printing.

A

Reduction of transport costs.

95
Q

What is one disadvantage of 3D printing?

A

High initial investment and maintenance costs.

96
Q

What is artificial intelligence (AI)?

A

When computers perform tasks typically associated with intelligent beings.

97
Q

What are some uses of AI?

A
  • Voice recognition
  • Planning
  • Learning
  • Problem solving
98
Q

Fill in the blank: AI systems may have the ability to _______.

A

[reason, find meaning, or learn from past experience]

99
Q

What is a low level of AI innovation?

A

User-tailored online advertisements based on browsing history.

100
Q

What is a high level of AI innovation?

A

Self-driving cars that navigate without human intervention.

101
Q

What are some uses of AI?

A

Voice recognition, planning, learning and problem solving

102
Q

What is a low-level example of AI innovation?

A

User-tailored online advertisements

103
Q

What is a high-level example of AI innovation?

A

Self-driving cars like those from Tesla

104
Q

What is machine learning?

A

A subset of AI where a computer learns from data to identify patterns and make decisions

105
Q

What are algorithms in the context of machine learning?

A

A set of instructions programmed into a computer

106
Q

How does Amazon utilize machine learning?

A

Using data on customer purchasing habits to make product suggestions

107
Q

In what areas is AI being used in business?

A

Data analysis and predicting financial activities

108
Q

What future role will AI play in accountancy?

A

Replacing many accountancy-related tasks through automation

109
Q

What is one disadvantage of implementing AI in finance?

A

Lack of expertise among staff

110
Q

Why is the availability of data a barrier to implementing AI?

A

AI requires large amounts of high-quality and accurate data

111
Q

What does data visualisation aim to achieve?

A

Make data more accessible and understandable

112
Q

What percentage of information that comes into the brain is visual?

A

Around 90%

113
Q

What are some tools used in data visualisation?

A
  • Charts
  • Infographics
  • Graphs
  • Tables
  • Maps
114
Q

What is one benefit of data visualisation tools for the finance function?

A

Makes data easier to understand

115
Q

How do data visualisation tools provide insights?

A

By visualising data in a new way to understand business performance

116
Q

What is blockchain?

A

A growing list of records called blocks linked using cryptography

117
Q

What does each block in a blockchain contain?

A
  • A cryptographic hash of the previous block
  • A timestamp
  • Transaction data
118
Q

What is one benefit of blockchain for the finance function?

A

Enhanced security through linked transactions

119
Q

What is a smart contract?

A

A contract written in computer code that transfers assets once verified

120
Q

What challenge does cryptocurrency pose for financial reporting?

A

Unclear treatment for accounting standards

121
Q

What is business process automation?

A

Transferring tasks previously done by humans to computers

122
Q

What is the difference between traditional and modern process automation?

A
  • Traditional: Simple repetitive tasks
  • Modern: Complex business processes incorporating 4IR technology
123
Q

What is one example of traditional process automation?

A

Automated emails for purchase confirmations

124
Q

What is one example of modern process automation?

A

Software used in recruitment processes

125
Q

What are the two types of process automation?

A

Traditional process automation and modern process automation

Traditional process automation involves simple repetitive tasks, while modern process automation incorporates advanced technologies like AI and big data.

126
Q

What characterizes traditional process automation?

A

Automation of simple repetitive tasks originally done by hand

Examples include automated emails for product purchases and shipping notifications.

127
Q

What is modern process automation?

A

Automation of complex business processes using advanced technologies like AI and big data

An example is AI software used in recruitment to optimize resume screening.

128
Q

How is business process automation becoming important to the finance function?

A

It enables the automation of increasingly complex processes

This is particularly relevant as technology advances in the Fourth Industrial Revolution (4IR).

129
Q

Define cloud computing.

A

Storing and accessing files remotely over the Internet

Users can access financial records and programs from any Internet-connected device.

130
Q

What are the two main types of cloud computing?

A

Public cloud and private cloud

Public cloud examples include Microsoft Azure and Google Cloud; private clouds are owned by specific organizations like Facebook.

131
Q

What are the benefits of cloud computing for the finance function?

A

Accessibility, back-up, integration, real-time co-working, greater memory

Allows finance personnel to work remotely and collaborate efficiently.

132
Q

True or False: Cloud computing restricts employees to a specific physical location.

A

False

Employees can access work from anywhere with an Internet connection.

133
Q

What does mobile technology enable in the finance function?

A

Better communication and flexibility

Employees can communicate and access information anytime, anywhere.

134
Q

What is the Internet of Things (IoT)?

A

Interaction of Internet devices that gather and exchange data

Examples include smart home devices and manufacturing equipment.

135
Q

How does IoT benefit the finance function?

A

Provides up-to-date data and real-time auditing

Enables organizations to respond quickly to changes and manage internal audits efficiently.

136
Q

What ethical considerations must organizations adhere to regarding data protection?

A

Integrity, objectivity, professional competence and due care, confidentiality, and professional behavior

These are part of CIMA’s five ethical principles.

137
Q

What is GDPR?

A

General Data Protection Regulation

A regulation in EU law for protecting personal data and privacy of individuals.

138
Q

What is required for organizations to comply with GDPR?

A

Appropriate technical and organizational measures to protect personal data

Organizations must seek consent and inform customers about data collection.

139
Q

Fill in the blank: The Facebook-Cambridge Analytica scandal highlighted the need for _______ in data protection.

A

transparency and accountability

It raised awareness about the importance of ethical data handling.

140
Q

What is a key challenge posed by IoT in organizations?

A

Evaluating the necessity of IoT before using data

Organizations must assess the relevance and implications of IoT data.

141
Q

What are the advantages of real-time data in finance?

A

Speedier decision-making and effective resource use

Real-time information increases organizational transparency to stakeholders.

142
Q

What is the GDPR’s requirement regarding consent for data processing?

A

Individuals must give consent for their data to be processed beyond lawful specifications.

Individuals can withdraw their consent at any time.

143
Q

What happened in the Facebook-Cambridge Analytica scandal regarding user consent?

A

The app collected data from Facebook friends of users who had not given consent.

The app misled users about the extent of data collection.

144
Q

What must businesses do to inform customers about data collection?

A

Businesses must declare the lawful basis for data collection, the duration of data retention, and whether data will be shared with third parties.

This is part of GDPR compliance.

145
Q

What right do customers have regarding their collected data?

A

Customers can request a copy of their collected data in a common format.

Example: Facebook users can download their data after making a request.

146
Q

Under what circumstances can a customer request data erasure?

A

Customers can request data erasure under specific circumstances, but businesses may have to comply with other regulations.

Example: Deleting a Facebook account requires data deletion, but banks must retain data for 10 years.

147
Q

What is the recommended default for privacy settings in businesses?

A

Businesses must use the highest possible privacy settings as the default.

Prior to the scandal, Facebook did not enforce strict privacy defaults.

148
Q

How can businesses protect customer identities?

A

By storing personal information in separate databases linked by customer numbers.

This limits exposure if one database is compromised.

149
Q

What safeguards should be in place to prevent privacy lapses?

A

Safeguards like using pseudonyms and anonymizing data should be implemented.

Anonymization is especially important for sensitive data analysis.

150
Q

What is the time frame for reporting data breaches?

A

Businesses must report data breaches within 72 hours.

The Cambridge Analytica scandal was revealed by a whistle-blower, not the companies.

151
Q

When must a business appoint a Data Protection Officer (DPO)?

A

If collecting personal data is a core business process.

Facebook appointed its first DPO after the scandal.

152
Q

What was the financial consequence for Facebook due to the breach of privacy laws?

A

Facebook faced a $5 billion fine for breaching privacy laws in the US.

Under GDPR, they must also comply with EU legislation for all EU customers.

153
Q

What ethical considerations should businesses keep in mind regarding data?

A

Businesses should consider the ethical implications of their data practices, beyond legal requirements.

Customer trust can be impacted by perceived misuse of personal data.

154
Q

What was the public response to the Facebook-Cambridge Analytica scandal?

A

26% of US adults deleted the Facebook app following the scandal.

Facebook’s shares dropped significantly due to concerns over data privacy.

155
Q

What is a code of ethics?

A

Guidelines advising employees on handling data and ethical behavior

It may be voluntary and not required by law.

156
Q

What is corporate digital responsibility (CDR)?

A

Voluntary commitment to ethical and social principles in handling technology and data

Aims to protect customers and ensure a positive societal impact.

157
Q

What are social considerations in implementing information systems?

A

Considerations on how data can be collected, analyzed, and shared positively for society

Goes beyond compliance with data protection laws.

158
Q

What does ethical behavior go beyond?

A

Meeting laws and regulations

It represents the highest level of conduct.

159
Q

What are the five fundamental ethical principles of CIMA?

A
  1. Integrity
  2. Objectivity
  3. Professional competence and due care
  4. Confidentiality
  5. Professional behavior
160
Q

What is the relationship between ethics and reputation in business?

A

An organization trades on its reputation, affecting its license to do business

Bad practices can lead to loss of customers.

161
Q

True or False: Ethical behavior is the minimum standard required by law.

A

False

Ethical behavior exceeds legal requirements.

162
Q

What are common areas of concern for business ethics?

A
  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
Q

What is the purpose of ethical training in organizations?

A

To instill ethical values and ensure compliance with ethical standards

Helps align employee behavior with organizational ethics.

164
Q

What is the role of personal ethics in strategic decision-making?

A

Individual moral principles influence ethical considerations in decisions

Employing individuals with strong moral values supports ethical practices.

165
Q

Fill in the blank: CIMA ethical principles are based on suggestions from _______.

A

[IFAC]

IFAC stands for the International Federation of Accountants.

166
Q

What does the principle of objectivity require from professionals?

A

Avoiding bias, conflicts of interest, or undue influence on professional judgment

Essential for maintaining integrity in financial reporting.

167
Q

What is the significance of confidentiality in accounting?

A

Respecting the confidential nature of financial information acquired

Essential to maintain trust and legal compliance.

168
Q

What example illustrates a breach of CIMA’s ethical principles?

A

Paschal’s actions in completing a Corporation Tax return without knowledge

Violated integrity, objectivity, and professional competence.

169
Q

What are regulations in the context of professional conduct?

A

Standards set by professional bodies that members are expected to follow

Example: CIMA’s code of conduct.

170
Q

How can organizational culture influence ethics?

A

Beliefs, values, and standards of behavior inherent within the organization shape ethical conduct

Employees learn what is considered acceptable behavior.

171
Q

What is the impact of ethics on employee morale?

A

Ethical practices lead to satisfied, productive employees

Unethical practices can cause stress and dissatisfaction.

172
Q

What is an ethical code?

A

A set of ethical rules communicated to all staff outlining expected conduct

Includes disciplinary procedures for violations.

173
Q

Why is it important for organizations to consider ethics in their decision-making?

A

To ensure decisions are morally sound and maintain reputation

Ethical decisions can lead to competitive advantages.

174
Q

Fill in the blank: Ethical behavior is essential for avoiding _______.

A

[Legal action]

Ethical organizations tend to exceed legal standards.

CIMA E1 - MM (11 decks)

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