I have long supported the traditional European management structure of splitting the chairman and chief executive officer duties. When different people run the board and the company, greater management oversight can occur. The changing duties of finance may require a similar line of thinking about our own diverse responsibilities.
A recent business trip to England opened my eyes to a different way of thinking when it comes to finance organizations. In the U.S., many of our finance activities report to the same individual. However, the scope of financial work is becoming more complex and challenging for a single person to oversee.
As I wrote in a past CFOWorld.com post, specialization is becoming a more viable career path. I know many people who have made great careers as an expert in a particular area. Specialization is also a consideration from an organizational context, because financial and managerial accounting can serve very different, and often competing, ends.
My full-time position is with a major defense provider headquartered in the UK. I visited the corporate office last week and learned how the finance organization has a clear split between financial accounting and operations accounting. Each group reports to a separate manager-level person, and these people report to the finance director. Each line of business has a dedicated financial analyst working closely with the engineering and operations staffs. While the LOB analysts feed information to the financial accounting group, the analysts are less restrained by financial accounting practices. The financial accounting group coaches the analysts on technical issues, but the analysts are better able to partner with the business.
The Europeans consider "controlling" to be a very different discipline from "financial accounting." In fact, SAP (a German company) has two completely different modules for financial and controlling. Despite the somewhat restrictive language, the controlling concept is the business partner role many of us are seeking to become in our companies.
Finance organizations serve many customers and needs to provide the necessary information to run a business. Expecting a single organization to provide technical accounting and management support is asking a great deal from our professionals. A greater focus on splitting the roles of financial and management accounting will provide greater clarity and counsel to our organizations.
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