1. 1 Saturday 4 October 2014 CIMA Conference: Essential management accounting tools

2. 2 Our Master of Ceremonies Rob Brown

3. 3 AGENDA 09.50amMC for the day - Rob Brown. 10.05am Opening - Kevin Bragg, Chairman. 10.20amGovernance and business strategy - Louis Cooper. 11.15 – 11.30am Break 11.30amOutcome Costing & Budgeting Project - Dr Alasdair Macnab. 12.15pm KPI’s - Robin Tidd 1.00 – 1.50pm Lunch 1.50pm Building your reputation - Rob Brown. 2.50pmRisk & complexities in the 21 st century – Richard Anderson 3.30 – 3.45pmBreak 3.45pmSpeaker panel questions time. 4.20pmClose - R Brown and K Bragg.

4. 4 Your CIMA KEVIN BRAGG Saturday 4 October 2014 CIMA Conference: Essential management accounting tools

5. 5 Why are we holding this conference? How has this all happened?

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9. 9 Speakers

10. 10 CPD & Employability This has to be and is a key theme and focus both for Students & Members : Training Insights and CPD Thought Leadership Owning the Management Accounting space

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12. 12 CIMA Research Reports http://www.cimaglobal.com/Thought-leadership/ Stay up to speed with new developments by viewing recent CIMA reports online.

13. 13 CGMA magazine Online networking Research papers Practical tools Webinars Exclusively yours at www.cgma.org

14. 14 http://www.cgma.org/Resources/Tools/essential-tools/Pages/list.aspx

15. 15 THANK YOU KEVIN BRAGG CIMA Council Member for EM & EA Kevin.bragg@virtualbusinesspartner.co.uk ©CIMA

16. 16 Governance and Business Strategy Louis Cooper Saturday 4 October 2014 CIMA Conference: Essential management accounting tools

17. 17 Has anything changed?… “… the principal deficiencies in boards related much more to patterns of behaviour than to organisations. The sequence in board discussion on major issues should be: presentation by the executive, a disciplined process of challenge, decision on the policy or strategy to be adopted and then full empowerment… The essential “challenge” step in the sequence appears to have been missed in many board situations and needs to be unequivocally clearly recognised and embedded for the future...” David Walker, UK Banking Review Chairman, November 2009

18. 18 Introductions Louis Cooper Non-Executive Directors Association p: 07899 062125 e: louis.cooper@nedaglobal.com Corporate Governance Risk Management Compliance Assurance Strategy Business Reporting

19. 19 Agenda APPROACH Your understanding Review of the overall concept CIMA Essential Tools Other standards and approaches Practical examples and case studies TOPICS 1.Governance 2.Business Strategy

20. 20 1. Governance

21. 21 Governance and YOU… 1.What does it mean? 2.What is all the fuss about? 3.What is YOUR role in Governance?

22. 22 Corporate Governance in action Board of Directors & Committees Monitoring Enterprise Risk Management Disclosure & Transparency Business Practices & Ethics Legal & Regulatory Communication & Trust But what is the missing link?...

23. 23 “Corporate governance… is the system by which organisations are directed and controlled. It provides a structure through which the organisation’s objectives are set, as well as a basis of attaining those objectives and monitoring performance.” Key issues: Compliance vs. Performance focus Establishing a robust framework Understanding stakeholder needs The meaning of corporate governance?

24. 24 Objectives of corporate governance The objectives of corporate governance should be to ensure that: o the directors act in the best interests of the shareholders (and not in their own self-interest) o the board provides suitable strategic leadership o there is proper accountability of the directors to the shareholders, and a constructive relationship between the directors and shareholders To achieve these objectives, there must be principles, guidance or rules for companies to follow.

25. 25 The Good… the Bad… and the Ugly… Problems Most issues seen in large public companies, where the separation of ownership and control is a major problem. History of corporate failures due largely or entirely to bad corporate governance + Misleading financial reporting A particular problem has been the domination of companies by an all- powerful CEO/chairman e.g. Maxwell and the Daily Mirror Benefits Better stakeholder relations Enhanced reputation Good communication Better risk management Market confidence from positive messages More investor support when ‘non-compliant’ or when problems arise

26. 26 CIMA: Governance for Performance Corporate governance practice must not lose sight of its underlying purpose – the long- term sustainable success of the organisation. The primary role of the board is to approve, oversee and determine: short and long-term strategy an effective business model risk appetite. Particular areas of focus where organisations and their boards need to focus are: strategy and risk oversight boardroom behaviours the relationship between the board and management. Frameworks and tools include the CIMA Strategic Scorecard®, the board mandate and the COSO Enterprise Risk Management Framework.

27. 27 CIMA Enterprise Governance Framework

28. 28 CIMA Boardroom Leadership Model

29. 29 CIMA: Further reading

30. 30 Governance in the UK and Ireland Listed companies need to make a statement about: (a) how they have adopted the UK Corporate Governance Code (updated Combined Code) ‘Principles’; and (b) comply with detailed Provisions, giving reasons for non- compliance - “comply or explain” The Code has been ‘adapted’ for a range of sectors – Private companies, NHS, Charities, Local Govt. Focus on ‘Guidance and best practice’, although some recent ‘regulation’ under the UK Listing Rules and CA 2006 Compliance driven by the markets and to date no individual penalties….. the key driver is flexibility

31. 31 The UK Corporate Governance Code - updated 2010-12 SECTIONPRINCIPLESPROVISIONS A. Leadership [New] A.1 The role of the Board A.2 Division of responsibilities A.3 The Chairman [New] A.4 Non-Executive Directors [New] 31133113 B. Effectiveness [New] B.1 The Composition of the Board B.2 Appointments to the Board B.3 Commitment [New] B.4 Development B.5 Information and support B.6 Evaluation B.7 Re-election 24322322432232 C. Accountability C.1 Corporate Reporting C.2 Risk Management and Internal Control C.3 Audit Committee and Auditors 327327 D. Remuneration D.1 The level and make-up of Remuneration D.2 Procedure 5454 E. Communication E.1 Dialogue with Shareholders E.2 Constructive Use of AGM 2 4 53 Schedules A. Provisions on the design of performance related remuneration

32. 32 UK Corporate Governance Code 2010-12 Code Introduction…

33. 33 UK Corporate Governance Code 2014 (updated) Main changes (September 2014) Going concern, risk management and internal control (C1 and C2) o Going concern basis of accounting o Principal risks - how managed and mitigated o Solvency and liquidity risks o Disclosures in Strategic Report = ‘safe harbour’ Remuneration (D1 and D2) o Policies for long-term success of company o Recovery or withhold variable pay Shareholder engagement (E2) ‘Tone from the Top’ – culture and values Board diversity

34. 34 Quoted Companies Alliance (‘QCA’) 2013 Code Growth in the long term 1.Vision and strategy 2.Risk management and internal control 3.Corporate communication 4.Needs of shareholders 5.Stakeholders and social responsibilities 6.Cost effective + added value Flexible, efficient and effective framework 7.Developed structures and processes 8.Responsible and accountable 9.Balance on the board 10.Board skills and capabilities 11.Board performance 12.Information and support

35. 35 Annual Report Getting the basics right A single story How money is made What worries the board ConsistencyClaritySummarise Explain change Cut the clutter True and fair The Strategic Report

36. 36 Case study examples (1) Corporate PLCs  NEDs and Committees  Risk management  Big 4 Auditors  Accounts = ‘War & Peace’ Corporate Private  Exec. Vs. NED  Regulators  Business Advisors  Vision and IP

37. 37 Case study examples (2) Charity / NfP  Trustees and Committees  Risk management  Internal audit  The Charity Commission Public Sector  Stakeholders and the board  HM Treasury guidance  Framework agreements  Annual Governance Statement

38. 38 A Practical Governance Framework Culture, capability and ethics Board procedures and oversight Clear direction Assurance and audit provision Internal control and risk management Structures, policies and procedures Compliance and investor relations Information flow and reporting routines Embedded working practices Objective judgement Independent review 1 Leadership, strategy and guidance 2 3 4 5 6 8 7 Business objectives Annual disclosure Stakeholder confidence

39. 39 2. Business Strategy

40. 40 Business strategy and YOU… 1.What does it mean? 2.Do you have to have one? 3.What is YOUR role in Strategy?

41. 41 Business Strategy A Definition of Business Strategy ‘Business Strategy’ is a long term plan of action designed to achieve a particular goal or set of goals or objectives. Strategy is management's game plan for strengthening the performance of the enterprise. It states how business should be conducted to achieve the desired goals - without a strategy management has no ‘roadmap’ to guide them. Creating a business strategy is a core management activity. However, having a good strategy and executing the strategy well, does not guarantee success. Organisations can face unforeseen circumstances and adverse conditions through no fault of their own.goals or objectives. Creating a business strategy

42. 42 Deliberate or Emergent?... The deliberate strategy is analytical and structured - Vision Statement, Mission Statements, Strengths and Weaknesses (SWOT), Objectives etc. On the other hand, the emergent strategy, as the name suggests occurs by chance or happens within the organisation without any long term planning. It occurs from the day to day decisions made to run the company at the tactical and routine level of the company. “I dream… I test my dreams against my beliefs… I dare to take risks… and I execute my vision to make those dreams come through.”

43. 43 Strategic Frameworks

44. 44 The Strategy Process Corporate Appraisal External analysis Vision & Mission Strategic Objectives Strategy Implementation Internal analysis

45. 45 Tools of the trade?… PESTEL Analysis PESTEL Analysis SWOT Analysis SWOT Analysis

46. 46 Stakeholder mapping A Minimal Effort B Keep Informed C Keep Satisfied D Key Players Level of Interest Power High Low

47. 47 Critical success factors CSFs are product features valued by customers where the business will (and must) outperform its rivals. A business must develop Core Competencies which enable it to have satisfy its customers requirements for its CSFs. It should use key performance indicators (KPIs) to measure its core competences

48. 48 The essential ‘toolkit’ I = Innovation M = Marketing R = Resources Q = Quality --------------------------- L = Leadership M = Mentoring S = Selling P = Presenting N = Negotiating F = Finance Str = Strategy setting

49. 49 CIMA Strategic Framework ® Model

50. 50 CIMA: The “Balanced Scorecard” Kaplan and Norton:1992

51. 51 CIMA: Strategic Mapping Tool

52. 52 CIMA: Porter’s five forces of competitive position

53. 53 Forecasts vs. Uncertainties

54. 54 Strategy and ‘Futures’

55. 55 Case study example Background  City Institution  Commercial vs. Charity  Execs. + NEDs + SMT  Committee structure The Strategic Plan  4 Strategic Groups = 30+ meetings  Mission, Values, Culture  SWOT Analysis  Balanced Scorecard and Priorities  Business Planning  Make a difference / game changer?

56. 56 Turning a strategy into action 1.Start with the right frame of mind 2.Think about implementation 3.Involve and communicate 4.Pare down to essentials 5.Spend – invest in resources 6.Keep it simple 7.Measure success 8.Don’t panic… be disciplined 9.Be flexible and adapt 10.Persist and learn from mistakes

57. 57 Conclusion

58. 58 The role of ‘Finance’ is changing EFFICIENCYINFORMATIONINFLUENCE DATAREPORTSANALYSISINSIGHTINFLUENCEIMPACT

59. 59 Finance professionals may play different roles in the ‘governance’ supply chain, for example: Non-executive directors. CFO – either as an executive member of the board (for example, this is common in the UK) or a member of the executive management team with responsibility for briefing and advising the board. The role of finance is so crucial to the board’s decision-making that finance professionals throughout the organisation, with responsibility for providing management information to support decision-making, will find themselves supporting the governance process. Role of the Financial Professional

60. 60 NEDA: Who we are and what we do A Handbook and guide to performing the NED role Training and education through courses and seminars (Certificate linked to on-line test) Knowledge, news and technical updates Insurance cover (D&O) and risk management advice Recruitment support for both the individual and company Networking opportunities at regular events Mentoring and coaching with access to experienced professionals Partner organisations…..

61. 61 THANK YOU Louis Cooper Non-Executive Directors Association p: 07899 062125 e: louis.cooper@nedaglobal.com ©CIMA

62. 62 BREAK Light refreshments served. Please return at 11.30am