Error message

Image resize threshold of 10 remote images has been reached. Please use fewer remote images.

FP&A Trends

Acquiring FP&A Skills from Unique Experiences

By Karl Kern, Founder/President, Kern Analytics LLC

This blog post  addresses the acquisition of FP&A skills.

People who want to become financial planning and analysis (FP&A) practitioners obtain advice on how to achieve this goal.  One piece of advice is to acquire education by taking courses in subjects like accounting, economics, and finance.  Another piece of advice is to acquire experience by working in companies that have specialized FP&A departments.  These pieces of advice are examples of traditional paths to follow. 

Quality of FP&A: Managing Biases within Financial Analysis

By Karl Kern, Founder/President, Kern Analytics LLC

One can find many definitions of financial analysis.  Investopedia defines financial analysis as “the process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment.”  Wikipedia defines financial analysis as “the assessment of the viability, stability and profitability of a business, sub-business or project.  Practitioners of financial analysis may have their own definitions.  As a practitioner of financial analysis, my definition is “the process of learning about a business in order to understand what it is doing and where it is going.”

I like to emphasize the word “learning” within my definition because learning is not a perfect process.  Human beings will take steps within the process that fail to acquire the necessary insight into what a business is doing and where it is going.  The steps that lead to failure within the learning process are called biases.  Biases are real within the financial analysis.  One cannot eliminate biases but one can manage them.

Financial planning and analysis: a blueprint for analytical transformation

by Graham Buck, GTnews
This article was published first on gtnews.com

Two-and-a-half years since its formation, the London Financial Planning and Analysis (FP&A) Board is setting itself ambitious goals.

The Board has acquired two official sponsors; Michael Page, the specialist recruitment firm, which now provides its central London office as the venue for Board meetings; and Metapraxis, the consultancy, analytics for financial professionals and software provider.

For its 10th meeting, held in mid-March, Board members embarked on developing a generic blueprint for FP&A analytical transformation and an advanced FP&A analytics maturity model.

What are the basic ingredients of advanced FP&A analytics? Getting the discussion underway the Board’s founder and managing director, Larysa Melnychuk, suggested that it should be proactive, forward-looking, agile, available in real-time, multidimensional and integrated – although these elements are no more than the basic essentials.

Two Proven Techniques to Minimize Optimism Bias in Financial Planning & Analysis

By Karl Kern, Founder/President, Kern Analytics LLC

One of the realities that FP&A professionals need to realize is people tend to be too optimistic in their financial plans.  People tend to expect higher revenues, lower expenses, or less time to recover the amounts of their investments.  Psychologists label these expectations as optimism bias.

As an accountant, I am guided by the conservatism principle.  The conservatism principle frames financial reporting around errors.  The errors that I don’t want to make is overstating assets and net income.  Making these errors create an impression that I am presenting a situation that looks better than it is.  At its extreme presenting a situation that looks better than it is may be perceived as a fraud and this perception damages the most important qualification of an accountant, integrity.

Why Driver- Based Planning and Dedicated Planning Systems Matter for FP&A

By Elena Kiristova, CFO Russia and CIS at Groupon

Integrating actuals into the planning cycle is usually not an easy task. Financial and operating results are spread across multiple databases. Actual results and plan detail are at different levels. Lack of underlying volumes and rates make meaningful causal analysis difficult.

BUT - You want apples to apples. Too often you get a fruit salad.

With today’s more intensive focus on driver-based planning and key performance indicators, this  article will help management and FP&A staff think through the issues for better Variance Analysis and Corporate Performance Management.

Pages