July 2016 Article Archives

Zero-Based Budgeting Is Not a Wonder Diet for Companies

Published on July 25, 2016

Zero-based budgeting (ZBB) is elegantly logical: Expenses must be justified for each new budget period based on demonstrable needs and costs, as opposed to the more common method of using last year’s budget as your starting point, then adjusting up or down. ZBB is a straightforward, intuitively simple way to aggressively strip out costs that cannot be rationally justified. Who would argue that a business should not eliminate unjustifiable costs?

ZBB has been around for decades, but is currently enjoying a revival driven by powerful investors like 3G Capital Partners, the force behind the 2015 merger of Kraft Foods and H.J. Heinz. Such high-profile exposure has prompted more companies to view ZBB as a fresh “wonder diet” for achieving radical corporate leanness. ZBB’s resurgence is further fueled by the uncertain markets hindering many companies’ efforts to attract fresh capital, as we see venture capital and private equity funds increasingly pushing ZBB on their portfolio companies, in the hope of securing a more rapid and profitable exit on their investments.

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To Hold Someone Accountable, First Define What Accountable Means

Published on July 25, 2016

At the end of a meeting, most leaders know that they should recap next steps and determine who is accountable for each. As prescribed in the commonly used responsibility models — RACI, RAPID, and the others — accountability should fall to one (and only one) person per item, even if the work involved requires input and contributions from others. Unfortunately, over the years we’ve spent advising organizations, we’ve found that the word “accountable” can mean different things to different people.

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Keeping Up with Tech Is Accountants' Biggest Annoyance, Survey Says

Published on July 25, 2016

The biggest technology “annoyance” faced by accountants is keeping up with changing software, according to a recent survey, with security and risk management in second place.

The accountants responding to the recently released Third Annual Accounting Firm Operations and Technology survey also reported several challenges in their day-to-day practice. The biggest one, unchanged from previous years, is workflow efficiency (34 percent). A new category for this year, security, came in second place with 19 percent citing it as their biggest concern. Fourteen percent of respondents indicated that getting clients on board with working with the firm in a more digital way is their biggest challenge.

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How to tackle implementation of multiple high-profile accounting standards

Published on July 25, 2016

A wave of significant accounting standard setting has created heavy compliance burdens that many company finance departments are struggling to handle.

Just 37% of more than 140 companies surveyed by KPMG LLP said they are on the right track in their implementation of the new revenue recognition standard issued by FASB and the International Accounting Standards Board (IASB), which takes effect at the beginning of 2018 for public companies.

Meanwhile, new lease accounting requirements have companies attempting a challenging process of locating all their lease agreements and extracting data points from them that haven’t been necessary for accounting in the past.

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