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Evolving Business Demands Are Driving Finance Departments to Focus More on Risk and Performance Management

Press release from the issuing company

Friday, June 24th, 2011

Changes in the business and regulatory landscape are driving more companies to expand the role of their finance departments, according to a new study from Protiviti, a global business consulting and internal audit firm. These departments are being called upon to take on new responsibilities related to financial risk management, performance management, and enhanced nonfinancial and statistical reporting, while also addressing a large number of new and pending changes in accounting regulations. As a result, finance executives and professionals see the need to improve their skills and knowledge in these critical areas.

These are among the key findings in Protiviti's inauguralFinance Capabilities and Needs Survey. In the study, finance leaders from around the world weighed in about their skills and knowledge, along with competencies in need of the most improvement.

"Finance professionals face a new reality – one in which they're responsible for helping their organizations operate more efficiently and profitably and move them into growth mode despite a complex regulatory environment and an uncertain economy," saidJames Pajakowski, Protiviti's executive vice president of global risk solutions. "Protiviti conducted the survey at this critical moment for finance leaders because we believe that measuring capabilities can provide insight into what an organization does efficiently and effectively as well as areas that might be less profitable than they should be."

TheFinance Capabilities and Needs Surveyasked participants to assess their skills and professional development priorities through more than 100 questions covering three major categories: process capabilities (financial analysis and financial transactions), technical capabilities, and organizational capabilities.

Key Survey Findings

Change is a prevalent theme throughout the survey and, not surprisingly, the global financial crisis is a major driver of that change. Notably, in the process capabilities (financial transactions) category, respondents revealed that financial risk management (FRM) is the area they need to improve the most. This high placement is a strong indicator that financial executives are working to ensure that they and their organizations are not caught off guard by events or financial risks they face in their day-to-day operations and activities. Foreign taxes and tax planning round out the top three "need to improve" areas in this category.

Other key findings include:

Executives rank International Financial Reporting Standards (IFRS) as their top improvement priority in the technical capabilities category. “Finance leaders will need to play a key role as convergence of U.S. GAAP accounting principles and IFRS move forwardpending final rulings from the SECto ensure that the integrity of financial reporting processes stays intact,” Pajakowski said. “To fulfill this role, they need to understand the new accounting requirements and their application. This will not be easy when process owners are undergoing the same learning curve.”


Finance professionals are being relied on more to help companies grow and become more profitable as evidenced by the top “need to improve” areas in the process capabilities (financial analysis) category, which relate to driving organizational strategy/direction and improving performance/profitability. The five areas include:



1. KPI (key performance indicator) development;

2. Operational and productivity reporting;

3. Controls reporting;

4. Project management/other statistical reporting (tie).


In the technical capabilities section, the top five areas to improve all relate to looming uncertainties, including: International Financial Reporting Standards (IFRS); Extensible Business Reporting Language (XBRL); readiness for adopting new and pending accounting pronouncements; and fair value accounting and reporting uncertainties to the IRS (tie). “Finance executives are keenly aware that they must be ready to address and adapt to a broad range of recent and pending changesfrom accounting standards to health care mandates,” Pajakowski said. “The big challenge is that many of these changes are evolving quickly, which means that finance executives have to be more nimble than ever before to address them effectively.”


Finance professionals rate their organizational capabilities higher than their skills in any other category in the survey, yet they still see room for improvement. They noted outside contacts/networking, negotiation, and dealing with confrontation as their top areas for improvement. Additionally, as the economy shows some steady signs of improvement, recruiting and retention are becoming higher prioritiesdriving a need for finance executives to hone their management and mentoring skills.
Nearly 200 finance executives – including chief financial officers, vice presidents and directors of finance, and controllers – participated in theFinance Capabilities and Needs Surveyvia in-person and online surveys. To learn more or obtain a complimentary copy of the survey report, visit:www.protiviti.com/FinanceSurvey.