REANO, QUEENIE MANUEL BSMA4 - SET2

Enterprise Governance Framework HERE ARE SOME PERFORMANCE DIMENSIONS FOR MANAGEMENT ACCOUNTANTS:
The diagram illustrates the reach of enterprise governance – it
1. Accuracy of Financial Reporting: Management accountants should ensure the accuracy of financial
constitutes the entire accountability framework of an organization.
statements, budgets, and reports. This includes minimizing errors in financial data and ensuring
In general, the conformance dimension takes an historic view while
compliance with accounting standards and regulations.
the performance view is forward-looking. It makes it clear that good
2. Timeliness: Delivering financial information and reports in a timely manner is essential. Delays in
corporate governance is only part of the story – strategy is also
providing critical financial data can hinder decision-making and planning.
important.
3. Cost Control: Management accountants play a pivotal role in controlling costs within an
The lines show that, although conformance feeds directly to
organization. Evaluating their ability to identify cost-saving opportunities and implement cost-
accountability and performance to value creation, conformance can
also feed to value creation while performance can feed to reduction strategies is important.
assurance. The conformance dimension sits on the left hand side of 4. Budget Adherence: Assessing how closely actual financial results align with budgeted figures is a key
the illustration which seems highly appropriate given that this is the side of the brain that governs our logical, dimension. Deviations from budget can highlight areas that require attention.
orderly and analytical functions while right brain thinking tends to be intuitive, holistic and creative! 5. Financial Analysis: Management accountants should be skilled at analyzing financial data to provide
insights and recommendations. This includes identifying trends, variances, and key performance
THE PERFORMANCE DIMENSION drivers.
The performance dimension does not lend itself as easily to a regime of standards and audit. Instead, 6. Strategic Planning Support: Evaluating the extent to which management accountants contribute to
it is desirable to develop a range of best practice tools and techniques that need to be applied intelligently strategic planning and decision-making. This involves their ability to provide financial insights that
within different types of organisation. These tools and techniques are very much the domain of the support the organization's long-term goals.
professional accountant in business. The focus here is on helping the board to: 7. Risk Management: Assessing the effectiveness of management accountants in identifying and
- make strategic decisions; managing financial risks, such as market volatility, liquidity risks, and operational risks.
- understand its appetite for risk and its key drivers of performance, and; 8. Process Improvement: Management accountants should continuously seek ways to improve
- identify the critical points at which it needs to make decisions. financial processes and reporting efficiency. This can include automating routine tasks and
streamlining workflows.
Implementation of strategy and its ongoing relevance and success must then be assessed on a regular basis.
9. Cost-Benefit Analysis: Evaluating their ability to conduct cost-benefit analyses for proposed projects,
It is widely recognised that strategy is the responsibility of the full board. There are, however, a number of
investments, and strategic initiatives.
companies that have a strategy committee which reviews the strategy development and implementation
10. Communication Skills: Effective communication is crucial for management accountants. This
process, challenges the information provided and assesses the key business drivers.
dimension assesses their ability to convey complex financial information to non-financial
There are a range of tools and techniques – eg, scorecards, continuous improvement, strategic enterprise
stakeholders clearly and concisely.
systems, investment committees – which can help boards to focus on strategic direction and its implications
11. Ethical and Compliance Standard: Ensuring adherence to ethical standards and regulatory
for all areas of the business. But these are not often dealt with as a coherent whole by the board. In other
compliance is essential. Management accountants should uphold the highest ethical standards in
words, there could be what we would term an “oversight gap”. We explored whether this was an issue in the
financial reporting and decision-making.
case studies
12. Technology and Data Analytics: In the era of data-driven decision-making, proficiency in utilizing
technology and data analytics tools to extract insights and improve financial management is vital.
1. Business Performance Dimensions:
13. Professional Development: Assessing their commitment to continuous learning and professional
• Financial Performance: Includes metrics like revenue, profit margin, and return on investment.
development to stay updated with evolving accounting standards and industry best practices.
• Customer Satisfaction: Measures customer feedback and satisfaction with products or services.
14. Customer and Stakeholder Satisfaction: Gathering feedback from internal and external
• Operational Efficiency: Focuses on streamlining processes and reducing costs.
stakeholders to gauge their satisfaction with the financial services provided by management
• Market Share: Reflects the company's portion of the total market.
accountants.
15. Cost of Finance Function: Evaluating the cost-effectiveness of the finance function, including the cost
2. Employee Performance Dimensions:
of employing management accountants relative to the value they bring to the organization.
• Productivity: Measures the amount of work an employee can complete in a given time.
• Quality of Work: Evaluates the accuracy and excellence of an employee's output.
• Attendance and Punctuality: Reflects reliability and adherence to work schedules.
• Teamwork and Collaboration: Assesses an employee's ability to work effectively with colleagues.

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THE SEVEN PILLARS OF HIGH PERFORMING ORGANIZATION
1. Accountability is as much about a cultural accountability ethos imbuing all members of the organisation,
as it is about holding the leadership team to account in respect to compliance, risk and performance.
2. Awareness requires the right sensors to be in place, an executive that is aware of and who actively
monitors the sensors, understands what to look out and listen for and is capable of interpreting and acting
on the signs that signal the need to adjust.
3. Agility requires flexibility that allows the organisation to rapidly adjust its strategies, technology, and
workforce, to meet changing circumstances and through delegation and devolved decision making,
respond quickly to emergencies.
Delivering High Performance Organizations
through Enterprise-Wide Governance and Strategic Leadership
Traditional top-down corporate governance and the associated strategic decision making models
(strategic planning models) do not provide the speed flexibility and responsiveness needed by the firms to
rposition efficiently and effectively in response to an ever changing global market envireonment.
Corporate governance can influence organizational performance through its influence on the
strategic management of the organization.
Traditional corporate governance largely uses intimidation as means of control and influence at an
organizational level.

4. Adaptability provides the new strategies and products to hedge against vulnerabilities and shapes a THE THREE LAYERS OF GOVERNANCE
hoped-for future, through pliable command and control structures, and a learning culture.

5. Alignment ensures the organisation acts as a whole and remains aligned to a shared vision, to a common
strategy and to consistent and coherent personal goals, even when the organisation is constantly evolving.
Aligned organisations are happy organisations and through positive images of current and future
environments, seek to eliminate noise while creating conditions in which stakeholders can deliver.

6. Action is the prerequisite for success of any high performance organisation. As no work is done until an
object is moved, action is needed to initiate work and ensure that people overcome their own inertia and
act to deliver their piece of the jigsaw. Action is how the other six attributes are implemented or
demonstrated, hence good governance and high performance cannot be achieved without positive
action

7. Achievement both good and bad is the ultimate product of Action. By maintaining a focus on
achievement the high performance organisation ensures it is engaged and is delivering the desired
outcomes while minimising unintended consequences

Although this may sound clear enough, designing a governance model that is appropriate for the organisation is
not an easy task. You will need to consider:

✓ Strategic insight. The governance framework should focus attention on the most important decisions. In
order to identify which decisions have most impact, an organisation must be able to link strategies,
programmes, processes, policies and priorities with its overall strategic objectives. To drive an organization to high performance requires a culture of governance (business ownership and
involvement) to penetrate deeply into the operational layers of the organization and ;to achieve that two other
✓ Culture. Awareness of the personal and cultural issues that surround decision making rights and layers of control and influence are required. These includes
processes will be critical to success, as will being able to match the governance model to behavioural norms
within the organisation. Sensitivity to the political climate and power structures within the organisation is ▪ Strategic Governance – which uses as aspirations and inspiration as its primary means of control and
important, as these determine the mechanics, success and scope within which governance is implemented.
influence;
✓ Change management. Establishing governance often involves making changes to other structures and
processes. It may even be part of a conscious effort to change elements of the organisational culture. This ▪ Operational Governance – which uses intructions, infrastructure and information as a means of control and
requires all the skills that go with any substantive change programme. influence

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The following are the range of common themes emerging from those that are poor performances (relatively),
• They usually have a meaningless vision and mission. By that I mean these do little to drive behaviour
within the organisation. The vision and mission act as a Public Relations (PR) statement and its audience
is seen to be the organisation's customers and financiers rather than its employees.
• They usually have a highly centralised management and governance system through which they have a
centralised strategy, risk and compliance manage- ment function, with little delegation of authority and
an ineffective and some- times inappropriate decision making process.
• They have an unclear decision rights management framework or system, and characteristically do not
meaningfully consult key stakeholders and those with real insight over strategic decisions. They prefer to
keep strategic decisions confidential and wholly within the purview and control of senior managers, who
may have the right job title but frequently little real insight or understanding into what is happening on
the ground. Their decisions are often made without a comprehensive risk assessment,making decision
implementation risky and sometime impractical.
• What little risk assessment that may be been done while making a decision, more often than not is
ignored and doesn't get translated into risk management and containment activity.
• Decision, processes and initiative implementations, are often poorly aligned with organisational policy.
Initiatives are started because they seem like a good idea and fit with what the current trends may
indicate is relevant, but have no real alignment with organisational intent or policy.
• They have no information resource that can show what's been done to deliver strategic objectives and
without a formal reporting process and a culture of individual accountability there is little commitment to
delivering the strategic objectives across the organisation.
• The lack of a unified alignment mechanism means there are multiple contradic- tory strategic
programmes under action across the organisation at any one time with little alignment between them, or
with the wider vision.
• Employees keep themselves busy attending meeting after meeting discussing things that may do little to
deliver on the strategies of the organisation. No effective action follows meetings and what should take
weeks or days takes months and consumes valuable resource.
As a result of these observations and much research into academic and practitioner thinking, We have
identified what I consider to be the seven 'virtues of high performance' and seven 'deadly sins of poor
performance'. The enterprise governance framework developed sets out to promote the virtues and
counter the corresponding sins.
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The Link between Governance and Performance in the Corporate World
Within the business world, leadership and governance go hand in hand in successful organisations. For
both to work well you need a clear plan of what you want to achieve. There are different ways to secure
good governance: what you achieve in practice is as important as the formal structures; a strong
relationship between management and the board is important, with trust, challenge, a common goal
and good information flows between them. But it is not just about the board - it is about how
governance is understood and acted on throughout the organisation: 'from the boardroom to the shop
floor'.
CONCEPTUAL GOVERNANCE FRAMEWORK
Typical terminology with
Generic good governance framework
corporate world
Participation: This is considered to be the core of Good Governance Engagement
Freedom to the citizens: Government should aim to ensure this requisite Decision making and challenge
in order for citizens to participate in the decision-making process,
articulate and represent their interests, which get reflected in
policies and programmes
Rule of Law: Governance does not imply arbitrary use of authority. Authority and structure
Any type of governance to be effective needs to be supplemented
by a fair legal framework. This should be supported by appropriate
enforcement machinery, independent judiciary, which instils
confidence in the people
Transparency: This is based on the premise of free flow of information Transparency and audit
and its accessibility to those affected by the decisions taken in the
governance process. People should be in a position to understand as
well as monitor governmental and other sectors' activities, on the basis
of information that is accessible to them within reasonable limits
Responsiveness: The earlier governance mechanisms lacked in their Stakeholder management
approach of bringing all the stakeholders in their ambit. In the present
times, the emphasis is more on institutions being responsive to the
needs of all those who are going to be affected by their actions
Equity: Since governance structures and mechanisms aim at Trust
participation, they have to promote equity. A society's well-being and
development depends on ensuring that all the members have a stake
and role in it and are not excluded from the mainstream activities
Effectiveness and Efficiency: Good Governance and New Public Alignment and efficiency
Management (NPM)a need to aim at effectiveness and efficiency in
usage of resources in consonance with the societal needs and demands.
Result-orientation needs to be the key concern
Accountability: This occupies a central place in Good Governance. The Accountability and compliance
norm of accountability has to ensure answerability as well as proper
enforcement of correct procedure in case of violation of certain laid
down norms. Not only the public institutions, but also the private sector
and civil society organisations need to be accountable to the
public at large and to the other related institutions and stakeholders
"A management philosophy used by governments since the 1980s to modernise the public sector, includes the
wave of public sector reforms throughout the world since the 1980s. The main hypothesis in the NPM
reform: more market orientation in the public sector will lead to greater cost-efficiency for governments,
without having negative side effects on other objectives and considerations
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