Time to reflect on the Mayflower case, which has resulted in no charges being brought against PwC or members of the finance function at the transport group's subsidiary, Transbus. To recap, Transbus’s former financial controller Ian Shelton had been accused of iffy invoicing practices designed to retain cash in the business and flatter its cashflow; PwC was charged with failing to test those practices and thereby signing off a dodgy audit.
The case was the first big test of the Accountancy Investigation Discipline Board, the supposedly more open replacement for the behind-closed-doors Joint Disciplinary Scheme. But on Monday, the AIDB decided to drop the case against Shelton and yesterday decided PwC also had nothing to answer for. (Mayflower's FD, David Donnelly, is still waiting to hear how he'll fare on seperate charges.) In fact, Shelton's old boss at Transbus, FD David Berry, was out of the country when the hearing was held. Shelton admitted he'd done wrong by not blowing the whistle; but he blamed Berry, saying if he'd refused to manipulate various spreadsheets, he'd have been fired.
Two points. First, because the financial controller is the individual closest to the preparation of the accounts - and also has close proximity to the banks, the raw numbers and the grunts in the finance function - they're inevitably going to get caught up in any dodgy dealings. As Sherron Watkins, a group financial controller in all but name, showed at Enron, you have to speak up when you discover things smell bad because otherwise you're taking a hit that'll be worse than losing your job. Hell, that's what chairmen are for.
Second, what a disappointment the AIDB is. Check out its web site - its first big case is closed (albeit only partially, and not terribly conclusively) and it has nothing to say (as at 11.40am on the day after it dropped the charges against PwC). And the fact that a key witness can disappear to South Africa and thereby (seemingly) derail its case is a damning indictment of its effectiveness just at the moment that it needs to prove that it's an able watchdog for an accountancy profession struggling to re-establish credibility in many people's eyes. The much maligned JDS took over eight years to rule on Coopers & Lybrand's failure to audit Robert Maxwell's businesses. The senior audit partner involced had died before that case was heard; the JDS report blamed him and said anyone below him was "just obeying orders". So no-one was struck off. Sound familiar? There's no suggestion Berry was in on the fiddle (although as FD, if he didn't notice what was happening, he should have been fired anyway). But blaming someone who's not actually answering charges? It's deja-vu all over again.
Looks like honest FCs are the best guarantee we have of ensuring a clean and clear accounting profession...
29 September, 2006
28 September, 2006
Big companies and their crazy nomenclatures
Always nice to report FCs taking a step up. It's not uncommon, of course, in bigger companies for divisional FCs to move into divisional FD roles - like Nic Nicandrou, who has been promoted to the role of finance director of Aviva’s UK life business, Norwich Union Life. His successor will be Tim Harris from PwC (which happens to be Aviva's auditor - I thought there were rules about that sort of thing now...).
But here's the thing. Nic, and now Tom, is called "group financial control director". Whoa. Two things: first, I don't really care if it is a huge company: "directoritis" is a real pain wherever it crops up. If you're the group FC, then you're the group FC, yeah? Helps everyone understand what's going on - and having a "GFCD" sounds almost like some marketing guy six years ago got uptight about not being "director of somethingorother", so he got the title and the HR department then upgraded everyone else at that pay grade to "director" status. Second, it does make the FC role at growing companies seem that much more attractive. In most entrepreneurial businesses, you may get called something simple like "FC", but you can bet your bottom dollar you'll see a lot of action outside the finance function. That's not only more interesting - it's better for your career, too. (Mind you, after PwC, anything in business probably looks like a trip to Vegas...)
But here's the thing. Nic, and now Tom, is called "group financial control director". Whoa. Two things: first, I don't really care if it is a huge company: "directoritis" is a real pain wherever it crops up. If you're the group FC, then you're the group FC, yeah? Helps everyone understand what's going on - and having a "GFCD" sounds almost like some marketing guy six years ago got uptight about not being "director of somethingorother", so he got the title and the HR department then upgraded everyone else at that pay grade to "director" status. Second, it does make the FC role at growing companies seem that much more attractive. In most entrepreneurial businesses, you may get called something simple like "FC", but you can bet your bottom dollar you'll see a lot of action outside the finance function. That's not only more interesting - it's better for your career, too. (Mind you, after PwC, anything in business probably looks like a trip to Vegas...)
27 September, 2006
Ambitious FC? Get a mentor (the older the better)
The new age discrimination laws are coming into effect on October 1 - that's next week. You don't even want to think about how easy it's going to be to fall foul of them, and there are sure to be a whole raft of test cases after companies leave subtle references to age in job ads, hand people a golden carriage clock on their 65th birthday (and then clear their desks), or tweak their benefits packages according to their decrepitude.
Ach, most of this kind of legislation is poorly drafted, over-fussy and fails to protect those most in need. But... smart companies do know that with age comes wisdom and experience, which are hugely valuable commodities. Just take a look at Anite Group, where FC Neil Bass is facing a taxing time in the absence of FD Christopher Humphrey, who's been out of action since earlier this month with health problems. He's set to be off for a few weeks yet, so Anite has brought in Geoff Bicknell, a seasoned FD with bags of experience in the IT services sector, to act as interim.
Geoff's seen it all - he was the FD who helped turned basket-case MDIS into rather more successful Northgate Information Solutions, for example. He's been around the block - and the world - a fair few times. Just the guy you need to mentor an FC in this situation - and proof that the senior memebers of the business community have a huge amount to offer, whether they're "protected" by legislation or not. More from Geoff on his interim experiences (and how his plural career is shaping up - "I started going into the non- exec arena, but a full time job, albeit for only a few weeks was an irresistible challenge," he tells me) when he's less busy!
Ach, most of this kind of legislation is poorly drafted, over-fussy and fails to protect those most in need. But... smart companies do know that with age comes wisdom and experience, which are hugely valuable commodities. Just take a look at Anite Group, where FC Neil Bass is facing a taxing time in the absence of FD Christopher Humphrey, who's been out of action since earlier this month with health problems. He's set to be off for a few weeks yet, so Anite has brought in Geoff Bicknell, a seasoned FD with bags of experience in the IT services sector, to act as interim.
Geoff's seen it all - he was the FD who helped turned basket-case MDIS into rather more successful Northgate Information Solutions, for example. He's been around the block - and the world - a fair few times. Just the guy you need to mentor an FC in this situation - and proof that the senior memebers of the business community have a huge amount to offer, whether they're "protected" by legislation or not. More from Geoff on his interim experiences (and how his plural career is shaping up - "I started going into the non- exec arena, but a full time job, albeit for only a few weeks was an irresistible challenge," he tells me) when he's less busy!
From FC to FD to MBO - textbook trajectory
I've got a passing personal interest in this story: "Incisive Media PLC, the specialist business information provider, has recommended a cash offer from Apax Summer worth 195 pence per share, valuing the group at £199m." I know FD Jamie Campbell-Harris a bit - he's been CEO Tim Weller's right-hand man for ome years and they're built the business up from virtually nothing. Now they, and COO James Hanbury, will have an 11.7 per cent stake in the busines as it goes private.
Weller started the original business, City Financial Communications, in 1994; Incisive was launched after CFC merged with Timothy Benn Publishing in 2000. But Campbell-Harris's story is our inspiration here. A CA who moved into treasury at Saatchi & Saatchi in 1994 after qualifying with PW, he became the ad giant's European financial controller in 1996 and then CFC's FC in 1998. The FD role came the following year. But that's a classic trajectory: accounting to a pure-play finance role (treasury), to a financial management role in a big company, then the same role in a smaller company in a related industry - proving his worth as a strategic partner to the entrepreneur to win the top job. Textbook.
(And well done to all on the deal!)
Weller started the original business, City Financial Communications, in 1994; Incisive was launched after CFC merged with Timothy Benn Publishing in 2000. But Campbell-Harris's story is our inspiration here. A CA who moved into treasury at Saatchi & Saatchi in 1994 after qualifying with PW, he became the ad giant's European financial controller in 1996 and then CFC's FC in 1998. The FD role came the following year. But that's a classic trajectory: accounting to a pure-play finance role (treasury), to a financial management role in a big company, then the same role in a smaller company in a related industry - proving his worth as a strategic partner to the entrepreneur to win the top job. Textbook.
(And well done to all on the deal!)
FC to FD - it's the operational skills!
I'm going to be writing a lot about the move from financial controller to finance director here and elsewhere. This is a fantastic example: "Toby Mundy, founder of independent Atlantic Books UK, was among the publishers to look on enviously when Waterstone's overhauled its finances a few years ago. The country's largest high-street retailer squeezed its suppliers hard and ruthlessly streamlined its own stockholding, to the extent that it moved into 'negative working capital' - meaning that it generally sold books faster than it paid publishers for them. Now Mundy has decided he wants a little of that wizardry, and has poached Waterstone's financial controller, Tom Connor, to be Atlantic's first ever full-time financial director. It is not entirely a figures-driven appointment; Connor is known as an astute reader and observer of publishing." Brilliant: he's earned his spurs as a top-notch numbers man, clearly got a rep for some sweet financial strategy, made a visible difference to his organisation - and to top it off, he's known as someone who's in touch with the business. Ideal.
FCs and IT
There's no room to be choosy about your roles at mid-sized companies, especially not if you're FD or even financial controller. So it's good to see an FC speaking out at the Best of British Manufacturing IT conference. "Nigel Nash, financial controller at vitamins and minerals supplier LycoRed, will describe how his company moved to an agile ERP environment consistent with food industry requirements, enabling it to compete with much larger rivals on flexibility, speed, lead times and quality of service." Getting stuck into this kind of project - which any ambitious FC probably will do if their business is even remotely up-to-date technologically - is an absolute must. Not only will it give you the technical smarts and project experience that look so good on the CV - getting a single view of the business you're already in can only make the job easier, more fun and free up time for more sophisticated (and interesting) analytical and strategic roles. Nice one.
UPDATE: Missed this story in a similar vein, quoting GNER financial controller Tim Kavanagh about the train operator's new EPOS system. Intimate knowledge of that kind of project is a major plus if you have ambitions outside the finance function, of course. But then, with the board clear-out at GNER last month - which saw rail division FC Tom Fielden promoted to FD - it's hardly surprising that there are opportunities there to get your fingers into different pies...
UPDATE: Missed this story in a similar vein, quoting GNER financial controller Tim Kavanagh about the train operator's new EPOS system. Intimate knowledge of that kind of project is a major plus if you have ambitions outside the finance function, of course. But then, with the board clear-out at GNER last month - which saw rail division FC Tom Fielden promoted to FD - it's hardly surprising that there are opportunities there to get your fingers into different pies...
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