|
|
|
|
 |
|
Home |  |
Contacts | |
Editorial | |
Advertising | |
Subscribe | |
Archives | |
Search | |
CMA Canada | |
|
|
|
|
Departments
Table of Contents
Printer Friendly
New and noteworthy information you can use Finance execs struggle to support growth The recently released IBM Chief Finance Officers Study of 900 senior finance executives worldwide reveals that only a third of respondents rate themselves highly effective in supporting their CEO’s efforts to grow the company. The study, developed in co-operation with The Economist Intelligence Unit, finds that at a huge cost to the future competitiveness of companies, almost 50% of executives report finance staff are tied up in transactional activities such as processing accounts and tax transactions; only a quarter are focused on decision support — performance and growth-focused activities. Furthermore, respondents say that nearly 60% of finance organizations don’t have robust processes and activities in place to support growth. “Profitable growth is at the top of the CEO’s agenda and is what counts in the eyes of shareholders and financial analysts; however CFOs are struggling to deliver predictive insight out of the colossal amount of data they collect,” says Nancy Thomas, leader of IBM Business Consulting Services Financial Management practice. “At their fingertips, financial executives have the power to unleash future growth by breaking down complex processes and systems and applying innovative methods to unlock information, provide new fact-based insight and create significant competitive advantages for their companies.” The study also correlates a financial benefit that may be linked to the effective analysis of financial information to drive growth activities. Analysis of publicly available financial data from nearly 300 of the study respondents reveals companies with highly effective delivery of performance, risk and growth information have increased revenue growth and are driving more value creation compared to their industry peers with less effective insight delivery. The report can be downloaded at www.ibm.com/bcs/cfosurvey.
IQ eluding firms, hampering growth Despite numerous technological advancements and the tens of billions of dollars companies have poured into information technology over the past five decades, a new global research report finds that a majority of business decision makers don’t have ready access to high quality, reliable, useful information on operating and financial performance. CFO Research Services and Deloitte Consulting LLP, a subsidiary of Deloitte & Touche USA LLP, surveyed 385 senior finance and IT professionals from the U.S. and Canada, Europe and China on the quality of management information and its proficiency in meeting information needs at large companies. The result: fewer than half believe they have achieved their information quality (IQ) objectives. Equally important, 82% believe they could improve the utility of financial information for forward looking planning and strategy. The research report, IQ Matters: Senior Finance and IT Executives Seek to Boost Information Quality, further shows that, in the absence of IQ, a majority of business decision makers are forced to spend time building special reports and analyses and reconciling “multiple versions of the truth.” “Poor information quality is one of the most critical problems facing businesses today — and the amount of data companies have to deal with is only increasing,” explains Ann Senn, national managing director of strategy and innovation at Deloitte Consulting. “Clearly, progress in information quality must be made in order for companies to operate in today’s marketplace and regulatory climate.” Among the primary drivers of poor IQ, more than 80% cited disparate, non-integrated IT systems and the variability of business processes as a problem. Time-consuming special reports and analysis to supplement systems-generated reports, misguided incentive programs, and unrealistic plans and budgets are also contributors to poor IQ. For more information visit www.deloitte.com.
Canadian banks gain momentum with economic capital The use of economic capital is seeing significant momentum within the financial services sector around the globe. Canadian banks are well ahead and are actively employing economic capital as a business tool, a new study by PricewaterhouseCoopers (PwC), in association with the Economist Intelligence Unit, has found. The survey revealed that 44% of financial institutions worldwide already use economic capital, with a further 13% planning to do so within the next 12 months. However, a quarter of companies (25%) said that they have no intention of adopting economic capital at all, and a third are sceptical about its value. The study, Effective Capital Management: Economic Capital as an Industry Standard? sought views from more than 200 senior financial services executives globally. Economic capital and other advanced risk-based capital methodologies enable organizations to quantify the risks they face, the capital needed to cover them, and the real risk-adjusted returns that are being made. From the impact of Hurricane Katrina on re-insurers to the risks facing mortgage lenders of a potential housing crash, economic capital can help protect against loss. Other industries are following the example set by financial institutions in the use of economic capital and are leveraging best practices already in place by trend-setters like Canadian banks. “Encouraged by new regulations like Basel II, the big six Canadian banks have already done a great deal of work on economic capital models. They continue to develop and refine these on an ongoing basis,” said Diana Chant, partner and leader of the PwC financial services practice in Canada. “The challenge is how to expand its use into core business units and determine the right balance of disclosure to the capital markets.” In the global survey, PwC found that the survey respondents believe that economic capital is more valuable to their business in helping to define their appetite for risk and set risk limits rather than as a means of meeting regulatory capital requirements. Over 95% of respondents who have implemented or plan to implement economic capital have either already achieved, or expect to achieve, a better allocation of capital than under a regulatory capital model. Many institutions are not exploiting the full business value of economic capital. The study found that levels of understanding among senior management about the business applications of economic capital vary greatly among institutions. For more information visit www.pwcglobal.com.
Western cities’ economies growing fast Western Canadian cities will top the list of the fastest growing metropolitan economies in Canada next year, just as they did in 2005, according to the Conference Board’s Metropolitan Outlook — Winter 2006. “In 2005, western Canada boasted eight of the nine fastest-growing metropolitan economies, led by Edmonton. In 2006, four of the top five are expected to be in the west,” said Mario Lefebvre, director of the Metropolitan Outlook Service. Thanks to Olympic-related activity, another year of exceptional growth is expected in the construction sector in 2006, paving the way for Vancouver to have the fastest growing economy in Canada next year. Almost 31,000 new jobs are expected to be created in Vancouver in 2006, and real gross domestic product (GDP) is forecast to grow by 4%. Calgary’s real GDP is expected to grow by 3.8% in 2006, a slightly slower pace of activity than in 2005. Strong non-residential construction and services sector activity will support employment growth and, in turn, domestic demand. After a relatively modest performance in 2005, real GDP in the Toronto Census Metropolitan Area is forecast to expand by a robust 3.7% in 2006, its fastest growth rate in four years. Manufacturing activity is expected to pick up, as the sector completes its adjustment to the stronger dollar. Between 2007 and 2010, economic growth in Toronto is expected to surpass, on average, that of all other Canadian cities. With real GDP growth of 5.2%, Edmonton led all metropolitan economies in 2005. Growth will moderate to a still healthy 3% in 2006, as energy-related investment remains strong and employment rebounds from a one-year pause in 2005. For the full story visit www.conferenceboard.ca.
Password overload — a risky business A survey of enterprise technology users released late last year reveals that employees are managing a dangerously high number of passwords at work. According to the Password Management Survey findings, frustration with password management is leading to behaviours that could jeopardize IT security. The survey of approximately 1,700 chief information officers, chief security officers, and IT directors, managers, and administrators in U.S. organizations was conducted by RSA Security, a Bedford, Mass.-based company that specializes in protecting online identities and digital assets. Results of the survey reveal that 28% of respondents manage more than 13 passwords, while 30% use at least six to 12 passwords. Nearly 90% of survey participants reported frustration with the password management process. Strict corporate password policies that mandate the use of multiple passwords, long and complex passwords, and frequently-changed passwords are making it difficult for employees to manage passwords effectively. Worse, employees are resorting to risky behaviours that undermine corporate security to keep better track of their passwords. The most risky of these behaviours include:
Unfortunately, it has been suggested that the situation could worsen due to the number of compliance initiatives — such as the U.S. Sarbanes-Oxley Act of 2002 — that mandate the use of better security practices to protect confidential information and enhance internal security controls. In addition, as companies grow and more Web portals are needed to conduct business operations, password use could be expanded to provide added layers of security. To download a copy of the survey, visit The International Institute of Auditor’s website at www.theiia.org/download.cfm?file=51.
High tech New version of Simply Accounting software package aims to simplify the bookkeeping process for small and medium-sized businesses By Karine Benzacar, CMA In anticipation of growing competition serving the needs of small and medium-sized businesses, Sage Software, Inc. recently released a new and improved edition of its Simply Accounting software package. There are many enhancements that improve how the system operates for both accountants and non-accountants alike. Sage still has some work to do, but the new version is a step in the right direction. What’s better now ... for accountants One of the best improvements for accountants is the new Accountants’ Edition of the software. This version removes many of the software controls designed to prevent non-accountants from accidentally misfiling their records, thus giving accountants more flexibility. For example, accountants can easily post journal entries to any account, whereas the non-accountant version won’t allow posting to certain accounts. Accountants can also export their clients’ general ledgers and make journal entries to their clients’ files while their clients continue working on their daily transactions in a separate file. The two files can be merged later. This is a substantial advantage because clients will no longer have to delay their daily work, such as invoicing, while their accountant reviews their books. The Accountants’ Edition also lets accountants do several other handy functions such as renumbering accounts and automatically preparing notes to financial statements. ... for non-accountants Accountants aren’t the only ones to benefit from Simply Accounting’s improvements. Buyers of the three other versions of Simply Accounting — Basic, Pro and Premium — benefit from an improved user interface. Simply Accounting can now store photos of inventory in JPEG and GIF formats. And it’s now much more straightforward to import and export files between Simply Accounting and other programs, such as Excel, Word, and tax preparation packages. The Pro and Premium versions include some improvements unavailable in the Basic version:
... for everyone Access to strong technical support is just as important as the quality of any software. Sage Software has dramatically cut telephone waiting times — from over an hour on average early last year to mere minutes now — and has enhanced the quality and knowledge of its telephone support staff. What still needs to be fixed? There are still a few inconvenient features of Simply Accounting that Sage Software hasn’t addressed. Most have work-arounds but the work-arounds can be cumbersome. Users can’t automatically reverse a journal entry. Instead, they must either reverse an entry manually or open the original entry and delete all the information on it. Sage Software says it will eventually fix this situation. Invoices and purchase transactions can’t be saved temporarily in a “draft” mode. Users must either complete the transaction, redo their transaction entirely, or process an incomplete transaction then adjust it later. This last approach makes the accounting records very complex and harder to trace because the system reverses the original journal entry and creates a new one. Although users can e-mail invoices directly from Simply Accounting, they can’t e-mail invoices to more than one recipient. There is also a limit of about 30 lines of text to accompany the invoice. One can get around these limitations by saving the invoice as a file and attaching it to a regular e-mail. When viewing or printing an invoice, it isn’t easy to see whether or not the invoice has been paid. Instead, users must go to a different area of Simply Accounting, view the customer payments, and determine manually the invoice payment status. This is particularly cumbersome when a customer asks for a copy of a paid invoice. It would be more helpful to display the payment status directly on the screen and on the invoice. Simply Accounting doesn’t include descriptions of GIFI codes (tax terminology for General Index of Financial Information). Users must now look up these descriptions in tax documentation. Overall, the value provided by the software far exceeds its limitations. The software is now much more flexible and easier to work with for accountants and non-accountants alike. Sage Software has done a good job of solidifying its product prior to Microsoft’s launch of a small and medium enterprise (SME) accounting package to the Canadian market, expected within the next year. Karine Benzacar, CMA, MBA (karine@knowledgeplus.ca), is managing director of Knowledge Plus Corporation.
New Software |
