New survey finds that finance functions to 'break free' of constraints of annual cycles - with 82% saying stakeholders need more than financial performance measures

NEW YORK, Nov. 17, 2022 /PRNewswire/ -- A new global survey of more than 3,000 finance professionals finds that real-time analysis, and data beyond the financial, hold the key to navigating volatility and transitioning to a more sustainable future.

The report,  Planning and Performance Management Paradigm, by ACCA (the Association of Chartered Certified Accountants) and Chartered Accountants Australia and New Zealand (CA ANZ) in association with PwC, explores the current state, the drivers for change, and the future vision of planning and performance.

You can access the report at www.accaglobal.com/PPMP.

Globally, respondents reported too much focus on past financial performance and limited insight to the other data needed for environmental, social and governance (or, ESG) purposes. Only 16% said ESG forecasting was 'fully integrated' in their financial planning and performance process, while 82% said stakeholders needed new performance measures beyond the financial. Just over half (56%) of respondents said they currently give 'equal' focus to financial and non-financial areas, such as operational objectives

Commenting on the report, which is being launched at the World Congress of Accountants in Mumbai, ACCA chief executive Helen Brand OBE said, "Finance professionals play a vital role in guiding organisations towards their strategic goals through highly uncertain times. In a rapidly challenging economic environment, with increasing urgency to reach net zero targets, finance teams need real time, organization-wide data to rapidly identify and respond to changing circumstances."

She added, "Performance drivers are no longer just financial – sustainability and non-financial disclosures need to be integrated into planning and performance processes to create a multidimensional picture beyond the constraints of annual planning cycles. For many organizations, this will mean transformation of planning and performance management processes and culture."

CA ANZ Chief Executive Officer Ainslie van Onselen said that financial professionals have the skills to evolve planning cycles and performance measurement – but development and continuous learning, as detailed in the report, is required.

"The role of financial professionals and CFOs is increasingly holistic and value centric, and accordingly they need to develop new forms of performance measurement for investors, analysts and capital markets, over and above pure financial measures," she said. "Financial professionals need to continue to develop the skills to build a business and value case for change and investment prioritisation. This playbook provides tools and information to assist with this."

In North America, more than 60 finance professionals responded. While 58% of respondents from that region reported that there is an equal focus between financial and non-financial objectives in planning and forecasting, the overall perception remains that these processes are overly financial focussed and backward looking.

Further, the survey found:

• ESG dimensions are rarely incorporated into planning and performance processes; 57% of the North America respondents report doing so now, and this is expected to increase over the next three to five years.
• An overwhelming majority - 84% of respondents in North American - support the call for newer forms of performance measures, not simply to address the ESG related concerns and demands of investors, analysts and capital markets but also to support agile and dynamic responses to the elevated uncertainties and complexities in the business environments and outlooks of today.
• The key areas of focus of Financial Planning and Analysis (FP&A) activities in North America are currently oriented towards the "performance" angle in explaining historical variances against plan (59% vs. 57% globally). The focus on the "planning" angle, however, is not insignificant. North America respondents demonstrated a lesser focus on the planning angle than their global counterparts: leveraging on predictive analytics in forecasting (36% vs. 47% globally) and employing robust what-if scenarios (20% vs. 24% globally).
• The use of technology appears mixed when carrying out the broad spectrum of planning and performance activities; spreadsheets are still the predominant tool used in planning and performance processes. Conversely, only a minority of respondents use to a great extent scenario modelling tools and xP&A tools in the region.

The global report recommends that planning and performance models be data-driven, agile and use real-time data where possible. The process should be forward-looking, with scenario planning and integrated forecasts. Data and technology are key to achieving this and, where feasible, should be integrated in the organization's Cloud-based application architecture. This is currently a potential stumbling block, with the research finding this to be "disjointed", and organizations still relying on spreadsheets and not harnessing new technology efficiently.

Brian Furness, partner and global head of finance consulting at PwC, said, "There's a huge opportunity for finance teams to drive value and a more rounded view of organizational performance through collaboration, digital innovation and data analytics."

"CFOs can lead this move by focusing on a set of broader metrics and value drivers for the organization rather than limiting themselves to the traditional financial performance agenda," he added. "To do this, finance teams need to collaborate across the organization and, externally, become more comfortable with exploring and analyzing non-traditional data sets such as supply chain, logistical and operational data, all of which provide insights into future performance. While traditional annual plans give a point in time, a more agile approach to planning is needed in times of uncertainty and greater stakeholder expectation."

Research for the report was undertaken in July 2022 as the economic prognosis in many developed economies was starting to worsen. The report builds upon earlier ACCA / PwC finance function research as well as the themes of analytics and transformation that were developed in the ACCA / CA ANZ research.

ACCA is the Association of Chartered Certified Accountants. We're a thriving global community of 241,000 members and 542,000 future members based in 178 countries and regions, who work across a wide range of sectors and industries. We uphold the highest professional and ethical values.

We believe that accountancy is a cornerstone profession of society that supports both public and private sectors. That's why we're committed to the development of a strong global accountancy profession and the many benefits that this brings to society and individuals.

Since 1904 being a force for public good has been embedded in our purpose. And because we're a not-for-profit organisation, we build a sustainable global profession by re-investing our surplus to deliver member value and develop the profession for the next generation.

Through our world leading ACCA Qualification, we offer everyone everywhere the opportunity to experience a rewarding career in accountancy, finance and management. And using our respected research, we lead the profession by answering today's questions and preparing us for tomorrow. Find out more accaglobal.com.

Chartered Accountants Australia and New Zealand (CA ANZ) represents more than 134,000 financial professionals, supporting them to make a difference to the businesses, organisations and communities in which they work and live. Chartered Accountants are known as Difference Makers. The depth and breadth of their expertise helps them to see the big picture and chart the best course of action.

CA ANZ promotes the Chartered Accountant (CA) designation and high ethical standards, delivers world-class services and life-long education to members and advocates for the public good. We protect the reputation of the designation by ensuring members continue to comply with a code of ethics, backed by a robust discipline process. We also monitor Chartered Accountants who offer services directly to the public.

Our flagship CA Program, the pathway to becoming a Chartered Accountant, combines rigorous education with practical experience. Ongoing professional development helps members shape business decisions and remain relevant in a changing world. Learn more at: www.charteredaccountantsanz.com.

SOURCE ACCA: ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (USA CHAPTER)