Institute news

What’s at the heart of your business model?

Rethinking the Business Model, the CGMA white paper, introduced a business model framework and argued that to achieve success over time, an organisation has to put value at the heart of its business model — value for customers, investors, other stakeholders, and wider society.

The digital age and new technologies, the shift of value to intangible assets, and the skills shortage are just a few of the changes in the operating environment. These could threaten an organisation's long-term sustainability.

Following last year's consultation with board members, academics, and C-suite executives, the Association of International Certified Professional Accountants has updated the CGMA Business Model Framework presented initially in Rethinking the Business Model. This is accompanied by practical guidance to help analyse and adapt how stakeholders' evolving needs are met.

Association financial policy specialist David Hackett, who leads the business model research programme, said: "The model could, for example, be used for budgetary or planning purposes for a strategically led project or used to give a picture of the activities of the business as a whole. You can use the framework's four components to cluster the primary activities of your organisation. The "'define' and "'capture' parts of the framework are what the board should be primarily concerned with, and the "'create' and "'deliver' relate to management's role."

Find out more at cgma.org/business-models.

Members in practice

The UK tax authority, HMRC, has established its register of trust or company services providers (TCSPs). This follows implementation of the Money Laundering Regulations 2017 and the requirement for details of all UK businesses that act as TCSPs to be held on a register.

If you are offering TCSP services, it is a legal requirement that you are on the HMRC register. The Members' Handbook has more information.

CIMA will soon be contacting members in practice to advise them of the requirement to submit their CPD record. If you are a member in practice, we would expect to see how you have been meeting your anti-money laundering obligations as part of your record. If you offer tax services, you must also show how you remain competent to do so.

The 2018 Annual MiP Conference takes place 29—30 June in Nottingham, UK. Find out more at cimaglobal.com.

Draft guidance applies ERM principles to ESG risk

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently issued draft guidance that is designed to help organisations apply enterprise risk management (ERM) principles to environmental, social, and governance (ESG)-related risks.

The draft would be a supplement to the Enterprise Risk Management — Integrating With Strategy and Performance framework that was updated by COSO in 2017.

COSO is a group of five sponsoring organisations, including the American Institute of CPAs, that provides thought leadership on ERM, internal control, and fraud deterrence. The draft supplemental guidance was issued by COSO and the World Business Council for Sustainable Development (WBCSD).

The supplemental draft includes:

  • Methods to overcome ESG-related risk challenges, including identifying and assessing the severity of risks with uncertain financial consequences.
  • Innovative responses for addressing ESG-related risks and seizing opportunities.

"As ESG-related risks are becoming more widespread, organisations need to ensure they have processes in place for identifying, assessing, and managing these complex entity-level risks and opportunities," COSO Chairman Paul Sobel said.

The draft guidance is intended to help organisations respond to ESG-related risks ranging from extreme weather events to product safety recalls, so they can make better business decisions.

Comments on the draft will be accepted up to 30 June and can be emailed to risk@wbcsd.org.

GDPR checklists

The new General Data Protection Regulation (GDPR) came into force on 25 May 2018 in the UK. Please ensure your business is compliant. The Information Commissioner's Office, which upholds the UK's information rights in the public interest, continually updates its resources. It has a number of helpful checklists, which can be accessed here. European Commission guidance can be found here.

CPD monitoring

All CIMA members should be aware that from 1 September 2018, all CPD must be recorded and submitted through the Competency and Learning website (competency.cgma.org). This means that it is now even easier to record and submit your CPD.

If you haven't already done so, please log on and start recording your CPD now. More information is available at www.cimaglobal.com/Members/CPD/CPD-Monitoring.

Disciplinary decision

The Disciplinary Committee found Mark Barnes, ACMA, CGMA, of Bedford, United Kingdom, guilty of misconduct. Barnes's behaviour leading to his conviction for harassment constituted a breach of the fundamental principle of professional behaviour of the Code of Ethics and therefore a failure to comply with the Laws of the Institute. The committee imposed the sanction of a severe reprimand.

Global Management Accounting Principles — Japanese version

The Global Management Accounting Principles — which were created in 2014 and define management accounting best practice — have been launched in a sixth language, Japanese. They already existed in English, Chinese, Polish, Portuguese, and Ukrainian.

Andrew Harding, FCMA, CGMA, chief executive, management accounting, Association of International Certified Professional Accountants, said: "In today's volatile operating environment, all parts of a business need to support the creation of value. ... The principles provide a framework to help leaders identify appropriate responses to business risks and protect the value they generate."

Masaaki Aoki, Ph.D., director of Tohoku University Accounting School who worked on the translation, said that introducing the principles to Japan "will enable our finance functions to benchmark themselves against world-class practices". He added: "We are pleased to make this free resource available in Japanese ... to help finance professionals and business succeed."

For more information about the principles, visit cgma.org/principles. To download the principles in Japanese, go to cgma.org/principles-framework.

Startup Accelerator graduates first cohort

The Association and CPA.com Startup Accelerator are graduating their first cohort of startup companies that aim to help transform the accounting profession. The accelerator was launched at the ENGAGE 2017 conference in Las Vegas to help springboard innovation in the accounting profession and provide insight into disruptive technologies and automation trends for CPAs and CGMA designation holders. The accelerator focuses on driving innovation in two key thematic areas: (1) technology and financial information and (2) professional competency innovation.

Four entrepreneurial companies were chosen as the initial cohort. Each received a modest amount of seed money and gained access to senior leaders of the Association and CPA.com, as well as to an advisory panel of leading practitioners and thought leaders who collectively provided expertise about global trends and marketplace needs within the accounting profession. Each company's founders will present their company at ENGAGE 2018 in June.

The accelerator will continue with a second cycle. Applications are being received now from early-stage startup companies around the world that can help transform the profession. More information about the Startup Accelerator is available at aicpaglobal.com/accelerator.

Tokyo conference sees report launch

Business, investment, and accountancy leaders met in Tokyo on 28 February and 1 March for a global conference jointly organised by the International Integrated Reporting Council (IIRC) and the International Corporate Governance Network (ICGN).

The event — titled "Journey Towards Longer Term Value Creation" — was hosted by the Japanese Institute of CPAs and the Tokyo Stock Exchange.

The executive chairman of the CGMA Research Foundation, Charles Tilley, OBE, FCMA, CGMA, spoke to launch the report, Purpose Beyond Profit: The Value of Value — Board-Level Insights. It surveyed more than 400 members of the Association of International Certified Professional Accountants from more than 50 countries.