1. Economics 194 Financial Management R. C. Lowes

2. Functional Evolution of Finance Cash Language of Finance Business Analysis Business Planning Business Partner

3. The Role of Finance Variables –Type and Size of Business –Financial Health of Business –Personalities and Backgrounds of Senior Management and Directors

4. The Minimal Roles of Finance Demanded & Unavoidable 1 st – Administrate Money for Company 2 nd – Provide the Language of Finance as a Common Denominator

5. The Larger Role of Finance Applying Financial Skills to the Broader Context of the Total Business… Current & Future as a Business Partner to General Management

6. CFO Career Grid Corporate Cost Acct. Planning, Reporting, Investor Relations Business Analysis, Treasury Strategic Planning Acct. Audit Tax Entry Manager New Co.’s International Cross-Functional

7. Skill Curve Entry Middle Sr. Mgmt. Technical Skills Managerial Skills Political & Leadership Skills

8. Lessons Learned Play to Your Strength Stay Ahead of the Curve Manage Up as well as Down Network … Internally & Externally Understand the Impact of Job Changes Communicate/ Communicate/ Communicate

9. L.L. II Make Decisions Work on People Skills Be Humble Keep Learning Careful of Image & Impact on Others Learn to Play the Cards you have

10. L.L. III Learn to Live with Change –“Change what you can, accept what you can’t and God willing you’ll know the difference.” Learn to Lead, Manage, and be a Team Player Eat Elephants one small bite at a time Don’t Believe or trust your own press

11. Lipset’s: Politics of Scarcity Anarchy Balance Shortages Dictator Abundance Democracy CountriesCorporationsTeams

12. Internal Audit First thoughts? “NCAA” (No Clue At All) “Accounting Practice” “Boring” “Reviewing Accounting Records” “Bean Counting”

13. Purposes of Internal Audit Understand the Nature and Scope of the Activity/Function being audited Check Administrative Efficiency of Polices and Procedures (P&P’s)

14. Purposes of Internal Audit Ascertain the Extent to which Company Assets are Accounted Safeguard from Losses of All Kinds Determine the Reliability of Management Data developed within the Organization

15. Purposes of Internal Audit Determine the Extent of Actual Compliance Appraise P&P’s for Possible Improvement Increase Efficiency by identifying any other means by which the activity/function can be made More Effective –shared best practices

16. Internal Audit Structure Function of Ability to Control Cash Complexity & Knowledge of Business Quality/ Integrity of Personnel Centralization vs. Decentralization Report to Audit Committee (vs. CFO) Security Department (should be included)

17. Internal Audit Responsibilities: Operation Audits Financial Audits Cooperation with External Audit –can drive positive  within company Evaluation of Internal Controls

18. Internal Audit Needs: Management Support of Audit Computer Skills Legal Interface

19. Internal Audit Program Risk Assessments Size, Amount of Change, Previous Reports Cycle Approach Based on Risk High Risk First Visit Everyone within 2 to 5 year Cycle

20. Internal Audit Program MIS Implications (Security Systems) –External Hackers –Internal Theft –Disgruntled Employees Statistics Pinpoint problems by Variance

21. Internal Audit What “I” need to know in order to be successful: Familiarity with some element of the business operations, not just “text book” learning. –Internal audit is a great job if you have 2-5 years of work experience in another department (especially IT/Systems). –Or, a strong ability to compare experience-to-date to the company’s business processes.

22. Success at Internal Audit Get to the Root of the Problem –Focus on the Cause, Not on the Symptoms. Strong Written and Verbal Communication skills The ability to structure work, be a self starter, stay on-time and budget, etc… –Strong Project Management Skills

23. Skill at being “Non-Threatening” in a threatening role Be a Consultant, a Listener with a Purpose Make Connections with people in a short time frame. Success at Internal Audit

24. Internal Audit – ‘the Dark Side’ If you don’t have some other work experience, you can get Stuck in Audit –Best Sequence: Functional Role 2-5 yrs. Internal Audit 3+ yrs. (longer if promoted in audit) Back to a Functional Role

25. Internal Audit – ‘the Dark Side’ Testing Compliance can be Boring Many people think its Not a good work experience You Travel a Lot (60% 0n the Road) “What Personal Life ?”

26. Internal Audit – ‘the Dark Side’ Most people are threatened by auditors and can be defensive (at the least) or aggressive, or even on the attack… –You can have days where very senior people are screaming at you… Works OK with my motto: “Any Exposure is Good Exposure.”

27. Internal Audit – the Good Side: Audit Improves MPNW ( My Personal Net Worth) Broad Exposure to a Business’s Operations –Translates to Functional Experience Work on End-to-End processes, not just in Functional Silos a.k.a. ‘the Force’

28. Internal Audit – the Good Side Opportunities to Learn How the Business Really Works –Functionally –in Different Markets Excellent Opportunity for Networking in the Organization –No other Internal Role give the same Exposure to the same Number of People Great way to Learn about other Areas of the business from a career perspective

29. Internal Audit – the Good Side Interaction & Exposure to Senior Management Can Scope out Future/Potential Roles Unusual for Entry-Level jobs to have such exposure to Senior Management Develops Communication Skills –and the ability to think on your feet!

30. Internal Audit – the Good Side Can get a better understanding of what jobs are like than via an interview process. Great Travel. Experience what it’s like to live all over the world without having to move. Gives you more career paths as you’re learning processes and operational capabilities; not just finance.

31. Lessons Learned – Internal Audit 1.Use and Develop Internal Audit 2.People Development Opportunity 3.Promote and Move Auditors In/Out Eliminate Stagnation 4.If they Object send in More Firepower & more Senior People 5.Prosecute … Hang Publicly 6.High Compensation Doesn’t mean High Integrity

32. L.L. – Internal Audit II 7.Share Findings and Best Practices 8.Build on Audit Experience 9.Utilize in House Consultants to question P&P’s 10.Eyes and Ears in the Field 11.Cross-Train with Systems Personnel 12.Get Audit Involved Up Front on New Systems

33. L.L. – Internal Audit III 13.Don’t Forget to Recognize the Audit Team 14.Be Creative in Road Time Compensation 15.Remember it is Internal Audit They Are Your People, So Keep it in Your House.

34. External Audit Answers to: Government and Accounting Bodies Has become more: Consulting than Auditing of Company Economics is Driving Audit Firm Consolidations & Spin Offs

35. External Audit Fiduciary Responsibility The Audit Committee of the Board –Hiring External Auditor –Reviewing Audit Plan –Reviewing Performance –Review Audit Issues/Recommendations –Insuring Internal Control

36. External Audit Audit Firm Reporting Relationships –Partners –Audit Managers Other Services Dilemma: Conflicts of Interest –Technical Accounting –Systems –Organizational Development

37. Lessons Learned – External Audit 1.Relationships Matter i.Audit to Client ii.Firm to Finance Function iii.Partner to CFO 2.Replace the Partner before the Audit Firm 3.Be Inclusive of External Audit within the Company as a whole

38. Accounting GAAP –Income –Balance Sheet –Cash Flow

39. Accounting Reporting S.E.C. F.T.C. I.R.S. Dept. of Labor

40. Accounting Organizations Consolidations Government Reporting Technical Issues Services

41. Accounting Business Complexity International Compensation Manipulation

42. Lessons Learned - Accounting Understand the Grey Areas –Management Judgment Set Reasonable Policies and Avoid Change Standardized Charts of Account & General Ledger Systems –Are Worth their Weight in Gold!

43. Shared Services Payroll Payables Receivables Financial Systems Property Management

44. Shared Services What Makes It Work: Internally –Service Orientation –Profit Incentives –Mgmt. Communications –Std. Systems & Procedures –State of the Art Technology

45. Externally –Service Orientation –Keeping Clients Happy –Overkill of Problems –Cost Savings –Communication, Communication, Communication Shared Services What Makes It Work: