The important role of CPAs in strategic planning

By Scott Wheeler and Tom Hood

A solid base of strategic planning skills and expertise is becoming an essential part of the CPA's toolkit.

Today, the role of the CPA in the development and execution of business strategy is more important than ever. For the past 20 years, we have watched and participated in the CPA's evolution from a number-cruncher and scorekeeper to a business partner and strategist.

Just as CPAs have begun to fulfill that role, regulators have added a whole new set of expectations and responsibilities to the job description of both corporate CPAs and CPAs in public practice. We believe these roles are complementary and fit the skill sets of the CPA more than ever.

CPAs in traditional accounting firms find themselves supporting client analyses of pending strategic decisions. CPAs in functional financial roles find themselves coordinating strategic decisions made throughout empowered organizations. Rapidly increasing numbers of CPAs in top leadership positions are often charged with leading strategic planning activities across large organizations. In each case, a solid base of strategic planning skills and expertise is becoming an essential part of the CPA's toolkit.

There are several drivers that will continue to increase the breadth of CPAs' roles in strategy, including:

the dynamic complexity of strategic management and reporting,
the increasing recognition of the need for CPAs in top financial roles, and
the need for accounting firms to support clients in effective strategic decision-making.

Strategic management in dynamic business environments

Strategic leadership in today's dynamic business environment is increasingly complex. Most business leaders know the key to long-term business success depends on setting a business apart from its competitors by establishing a strong, sustainable market position.

In spite of this, important decisions are frequently made without ample consideration of strategic concerns. Conflicting demands on leaders' time and decentralized decision-making have increased the management challenge. Strategic positions are easily compromised as business leaders fight to find a balance between long-term strategy and the maintenance of flexibility to respond to rapidly changing competitive and market situations.

CPAs possess skills and hold functional roles that can make them an essential ingredient in enabling organizations to improve their strategic management. Effective strategic execution depends on the successful coordination of both centrally planned initiatives and unplanned changes initiating from decisions made across a business every day. The functional roles CPAs hold in most organizations place them in a unique position to ensure this happens.

CPAs have access to a wide body of information and must ask the hard questions about financial decisions. Additionally, they are now being called upon to create the reporting and performance measures that will account for the execution phase of the strategy.

By leveraging their unique position and skills, strategically aware CPAs can provide thoughtful guidance and analytical support to decision-makers, ensuring the consistency of activities in pursuit of a chosen strategy. Their expertise in the language and systems of the business can add significant value by enhancing the business reporting to align with the strategy and report on the execution phase to a bigger audience of stakeholders, such as corporate boards, management, auditors, investors and lenders.

Disciplined strategic leadership

The recent ethical and financial turmoil in public companies has led to an increased recognition of the importance of comprehensive financial understanding in top leadership. Major strategic decisions can no longer be made without a full understanding of the financial implications in today's complex regulatory environment. CPAs' disciplined education, high ethical standards and reputation for integrity give them the skills needed for an environment of transparency and accountability. As a result, CPAs are increasingly being sought to fill leadership roles, including as CFOs.

CPAs in senior leadership positions improve the opportunity for good strategic management in a business. By the very nature of their experience and perspective, CPAs can drive the careful consideration of major strategic decisions. By bringing their analytical skills into top leadership, they improve the quality of analysis supporting strategic decisions. As a result, a more consistent framework for making strategic decisions develops. CPAs in senior leadership positions improve the quality of strategic decisions and the accompanying bottom-line benefit of sustained results that is the ultimate goal of strategic management.

CPAs' disciplined training in understanding the financial reporting process makes them uniquely qualified to lead the development of performance measures that can track and report on the execution of strategy. Regulators and the public are demanding more disclosures and accountability from business. Management needs reliable information that is predictive in nature to make better decisions in today's rapidly changing environment.

The logical next step for CPAs is to use their leadership positions to link their roles in strategy with their roles in financial reporting, improving their abilities to serve the needs of management and the public interest.

Supporting clients in strategic decision-making

As CPA firms continue to evolve within the constraints of changing financial regulations, new client needs are arising. Stakeholders' and regulators' demands for financially sound, ethical strategic choices in public companies remain high. Regulation limits the ability of CPA firms to advise on strategy decisions. However, firms and clients are increasingly aware that there is a viable role for firms in helping clients develop quality choices to support strategic decisions.

CPA firms can provide truly unique services within this arena. By combining their analytical skills and financial acumen with in-depth strategic knowledge and a wide perspective on business process, firms can provide important guidance to their clients. They can provide support for strategic planning processes that ensure proper consideration of strategic options before a client makes decisions. They can also offer supporting analysis, leveraging a firm's analytical capabilities to support the analysis of decision options for clients.

Developing CPAs' strategic skills

To be effective in their growing strategic roles, it is important for CPAs to be aware of (and a part of) the strategic conversation in their business. Being a part of the strategic conversation requires an understanding of approaches to strategy development, strategy planning tools and techniques, and the competitive environment in which the business operates.

Unfortunately, these areas are often overlooked in traditional CPA education. To realize the full potential of the CPA profession in support of strategic management, it is important that these skills be developed.

At the MACPA, the improvement of CPA skills in strategy development and analysis tools is seen as a vital part of the continuing evolution of the CPA profession. To support this, MACPA is driving a significant expansion of strategy-related training courses provided by the Business Learning Institute's continuing education program.

In December 2004, the BLI piloted "The Role of the CPA in Strategy Development," which provided students with a working understanding of a framework for strategy development and an introduction to a wide range of tools and techniques used in strategic analysis.

"The Role of the CPA in Strategy Development" will be part of the ongoing BLI curriculum. The BLI intends to continue working with MACPA members to further develop a curriculum supporting the enhancement of strategic planning and analysis skills for CPAs. We will provide periodic updates of our course development and invite our members to contact us with insights as we work to develop this important area of the profession.

Scott Wheeler is CEO of Strategy Arts, a consulting firm focusing on strategy development and implementation programs that leverage the extraordinary power of team collaboration. He can be reached by e-mail scottwheeler@strategyarts.com.

Tom Hood, CPA, is CEO of the Maryland Association of CPAs. He is also CEO of the Business Learning Institute, an affiliate of the MACPA and a center devoted to increasing the skills of CPAs in the areas of strategic leadership. He can be reached at tom@bizlearning.net.

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