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CGMA: How will it play in Purley?
AccountingWEB.co.uk editor John Stokdyk came away from this week’s high-tech, high-concept CGMA launch with a feeling of ambivalence.
There is no question about it, the simultaneous online launch of the new CGMA designation in London and New York on Tuesday was a spectacular event.
We got executive vision from high-powered finance executives on both sides of the Atlantic and, as CIMA’s immediate past president George Glass put it, a “great discussion on challenges faced by C-suite executives in the corporate environment”.
But what did the all the audio-visual hoopla tell us about the new professional designation and its objectives?
With Kirsty Wark anchoring the London panel discussion anchored and Bloomberg’s Kathleen Hays corralling the people in New York, the production values and messages were targeting the Newsnight audience: opinion formers and people for whom executive remuneration crises are more than just idle gossip.
CIMA insiders made it clear to me that the tie-up with the AICPA was pitched at managers in multinational organisations, which was confirmed by the people interviewed for the study published to accompany the launch conference - 17 CFOs, VPs and executive directors from Fortune 500 companies.
‘Rebooting Business: Valuing the Human Dimension’ raises some interesting points about the failure of corporate reporting to accommodate the drivers that really underpin business performance, but will be somewhat overshadowed by its role as the main agenda for the launch event. The premise of the report is that people-oriented factors will be critical to sustaining the long term success of a business. But as Wark summarised, “The importance of measuring their contribution to the organisation’s long-term value is still dwarfed by financials.”
The study is available for download and merits attention in its own right. The comments that follow, however, are drawn from conversations at the CGMA launch that we can only assume were meant to embody what the new qualification is about.
Like Tilly, AICPA president Barry Melancon claimed the designation would bring a new level of global recognition for management accounting expertise. “CGMA serves as a complement to skills management accountants already have.” These skills, Melancon continued, would help CGMAs demonstrate the full value of organisations to shareholders, “based on elements that go beyond numbers”.
The fundamental problem was the continuing focus on short-term financials, short-term reporting and short-term gains, added Tilly. Investors who show no interest in the long term are “holding companies to ransom”, he said. “This must stop.”
The premise was supported by the six executives on the international launch panel, including Otis Elevator CFO Angelo Messina in New York. “We maintain £1.7bn worth of elevators. That has tremendous value and if I do an M&A analysis, it’s worth tens of billions of dollars. But GAAP doesn’t record that. The challenge for us is to ensure that portfolio of assets delivers value.”
Messina added that when it comes to investor relations, the role of the management accountant should be to join those dots and highlight where the true value within an organisation lies.
“CGMAs are the ones who have the skills to explain to investors that investing in the long term makes sense… Management accountants can do a better job at selling the future.”
Blogger Dennis Howlett commented on Twitter that investment banking analysts frequently probed for underlying drivers of long-term value, but that these tended to be “wrapped up in a mish mash of gut feel factors”.
The unkind thought popped into my head that the same could be said of the brand values CIMA and the AICPA were trying to build around their new designation. The CGMA-as-visonary corporate communicator looked and sounded good on the satellite webcast, but how will it play with the finance managers in Peoria or Purley, who will underwrite the new qualification?
Tilly rose to my question afterwards: “For us the purpose of the launch was to set out some challenges businesses face and highlight how important the role of the management accountant is. In particular CIMA and AICPA are highly organised global organisations. We can’t do everything ourselves, but working as partners we can become more global and raise the profile of management accountants.”
That’s a fine starting point, Charles. But I’d like to see a three-year business plan with some tangible milestones and objectives. Isn’t that also what management accountants are supposed to do?