By Cenen Herrera
Writing from Manhattan, New York, USA
Starting 2011, LJ Roth Reconstruction, Inc (LJR) will have a new corporate mantra: Collaborative Innovation (COIN). LJ Roth Reconstruction, Inc. (a U.S. based company with over 40 years of restoration service) was incorporated in 1976, but was founded by our President - Larry J. Roth in 1971. In line with the company's new corporate vision of "Restoring Quality Living with Speed, Craftsmanship, and Innovation," the new LJR Management Team is starting the new decade by trying to reach all our employees, to have more interactive activities, to keep all our employees fully informed in our rapidly expanding business activities, and of course to enhance the reputation of our company. Leadership at LJ Roth Reconstruction Inc. believes that collaborative innovation could be a strategic winning gambit for its stakeholders.
According to Peter A. Gloor, Research Scientist at the Center for Collective Intelligence at MIT's Sloan School of Management, within a decade, the most successful companies will be those adept at unleashing the power of Collaborative Innovation (COIN) or what we call "swarm creativity." These are companies that give power away, in order to gain power - be it as growth in market share, in revenue, or both. These companies trust the principles of self-organization, ethical behavior and collaborative innovation. At the heart of COIN is the creation of self-motivated teams, a collective vision, and the sharing of ideas, information and work. This is what the newly launched LJR newsletter is all about. It encourages everyone to send articles that are informative, passionately positive and stimulating to the mind. At the end of the day, a company's newsletter is a forum where everybody's voice should be heard, appreciated and encouraged for facilitating continuous learning.
Strategy & Stewardship Consultant in International Finance
Helping Create a Culture of Competitiveness through Diversity, Change & Innovation!
Sunday, December 26, 2010
Sunday, July 11, 2010
Stewardship Role of the CFO
By Cenen Herrera
Writing from Chicago, USA
In many of the Boardroom discussions I have attended about the financial prospects of the organization, the review of financial performance reports had typically evolved around the complex scenarios prepared by the Chief-Financial-Officer(CFO). These financial scenarios are oftentimes loaded with examples that contain large amounts of asset/liability/equity/income/expense transactions which are sometimes up to six or even nine digits long. Even if these financial reports are rounded to the nearest thousand or million, I find them meaningless if they are not summarized into a "big picture" format. After all, Board discussions are strictly time-bound, and Board expectations are high that only the most significant items that strategically impact on corporate values, financial issues, operational challenges, administrative issues, and regulatory compliance should be discussed.
Scenario planning is an essential tool that CFOs undertake in their normal functions. The scenario planning exercise begins by evaluating the current results of operation using the company's decisive financial indicators. The CFO then coordinates with marketing and operational functions to determine the short and long-term prospects of the organization. Assumptions are then used as inputs for the scenario planning exercise. The important findings of these planning scenarios are then brought by the CFO to the attention of the Board. As the CFO is primarily charged with the management of the company's financial resources, the CFO's responsibility is heavily focused on providing the Board with a dynamic financial framework that could achieve the mission of the organization.
Rolling financial reports, e.g., rolling financial budget, rolling financial forecasts, rolling risk assessments, rolling marketing goals, rolling operational targets, have become the most sought after reports by the Board in its periodic review of the company's performance. To help the Board understand the complexity of these reports, the CFO should find a simple way of explaining the findings of these reports. At the end of the day, the Board heavily relies on the judgment of Management and the CFO's stewardship role in crafting the future direction of the company.
Writing from Chicago, USA
In many of the Boardroom discussions I have attended about the financial prospects of the organization, the review of financial performance reports had typically evolved around the complex scenarios prepared by the Chief-Financial-Officer(CFO). These financial scenarios are oftentimes loaded with examples that contain large amounts of asset/liability/equity/income/expense transactions which are sometimes up to six or even nine digits long. Even if these financial reports are rounded to the nearest thousand or million, I find them meaningless if they are not summarized into a "big picture" format. After all, Board discussions are strictly time-bound, and Board expectations are high that only the most significant items that strategically impact on corporate values, financial issues, operational challenges, administrative issues, and regulatory compliance should be discussed.
Scenario planning is an essential tool that CFOs undertake in their normal functions. The scenario planning exercise begins by evaluating the current results of operation using the company's decisive financial indicators. The CFO then coordinates with marketing and operational functions to determine the short and long-term prospects of the organization. Assumptions are then used as inputs for the scenario planning exercise. The important findings of these planning scenarios are then brought by the CFO to the attention of the Board. As the CFO is primarily charged with the management of the company's financial resources, the CFO's responsibility is heavily focused on providing the Board with a dynamic financial framework that could achieve the mission of the organization.
Rolling financial reports, e.g., rolling financial budget, rolling financial forecasts, rolling risk assessments, rolling marketing goals, rolling operational targets, have become the most sought after reports by the Board in its periodic review of the company's performance. To help the Board understand the complexity of these reports, the CFO should find a simple way of explaining the findings of these reports. At the end of the day, the Board heavily relies on the judgment of Management and the CFO's stewardship role in crafting the future direction of the company.
Monday, March 8, 2010
Searching for Cross-Functional Opportunities in Finance: My Mid-West US Experience
By Cenen Herrera
Writing from Mount Pleasant Square, Iowa, USA
I just completed a 3 month project reviewing a sales and consumer use tax audit. There is a cultural metaphor among Finance Consultants that the samples to be selected in an audit should represent the population with a reasonable degree of reliability, i.e., an appropriate margin of error. Cases in sales and consumer use tax audit are readily available in the internet. Most of these cases focus on the sampling methodology that is used during the audit. The main issue is whether the samples selected during the audit represent the population. In addition, when records are inadequate, the question that arises is how sales could be accurately determined to compute the amount of sales tax or consumer use tax due from the entity.
My assignment appeared to be exceptionally boring save for the tension that dramatically transformed a rather lousy linguistic opening into a classic audit gambit. The tense climate was created by the usual hostile auditee-auditor relationship.
Typical reactions I observed during the audit included the following:
Auditee to Auditor: Could you please be more specific in your questions before I waste my time searching for useless reports.
Auditee to Auditor: Time and again, I have told you that the information you are requesting is not available, so please do not bother me next time requesting for non-existing information.
Avoiding a critical recommendation resulting from the audit is the primary reason why some auditees appear to be very sensitive whenever their works are examined by auditors. In such cases, the auditor has to exhibit extreme professional patience (what I call audit gambit no. 1) by outlining the strategic and tactical moves necessary to obtain information, and be prepared to display extreme humility (audit gambit no. 2) by maintaining a positive working attitude despite a hostile environment. In addition, the auditor should maintain a high level of discipline (audit gambit no. 3) by ensuring that audit risk is at a low level, and obtain sufficient appropriate audit evidence (audit gambit no. 4) to support the auditor's overall findings.
Writing from Mount Pleasant Square, Iowa, USA
I just completed a 3 month project reviewing a sales and consumer use tax audit. There is a cultural metaphor among Finance Consultants that the samples to be selected in an audit should represent the population with a reasonable degree of reliability, i.e., an appropriate margin of error. Cases in sales and consumer use tax audit are readily available in the internet. Most of these cases focus on the sampling methodology that is used during the audit. The main issue is whether the samples selected during the audit represent the population. In addition, when records are inadequate, the question that arises is how sales could be accurately determined to compute the amount of sales tax or consumer use tax due from the entity.
My assignment appeared to be exceptionally boring save for the tension that dramatically transformed a rather lousy linguistic opening into a classic audit gambit. The tense climate was created by the usual hostile auditee-auditor relationship.
Typical reactions I observed during the audit included the following:
Auditee to Auditor: Could you please be more specific in your questions before I waste my time searching for useless reports.
Auditee to Auditor: Time and again, I have told you that the information you are requesting is not available, so please do not bother me next time requesting for non-existing information.
Avoiding a critical recommendation resulting from the audit is the primary reason why some auditees appear to be very sensitive whenever their works are examined by auditors. In such cases, the auditor has to exhibit extreme professional patience (what I call audit gambit no. 1) by outlining the strategic and tactical moves necessary to obtain information, and be prepared to display extreme humility (audit gambit no. 2) by maintaining a positive working attitude despite a hostile environment. In addition, the auditor should maintain a high level of discipline (audit gambit no. 3) by ensuring that audit risk is at a low level, and obtain sufficient appropriate audit evidence (audit gambit no. 4) to support the auditor's overall findings.
Wednesday, February 3, 2010
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