Finance flash: the TOP-10 articles of week 42


Do you want to keep up to date with the latest developments in finance, but you are short of time? Don't worry. CFO South Africa weekly collects 10 of the most important articles from international media for your convenience.

1. The End of Accounting?
Although the title of the new book Baruch Lev has co-authored, "The End of Accounting," provocatively suggests the finale of financial reporting as we know it, he cautions that he really isn't calling for its absolute elimination. "We don't recommend getting rid of financial reports. Financial reports as an historical document will always be important. You need to have some kind of an historical perspective of the business," Lev, a professor of accounting and finance at New York University's Stern School of Business, acknowledged in an interview with CFO.

2. The Type of Purpose That Makes Companies More Profitable
We hear more and more that organizations must have a "purpose." Purpose is on the agenda of the World Economic Forum in Davos, and discussed by celebrity CEOs like Richard Branson of Virgin Group, who has said, "It's always been my objective to create businesses with a defined Purpose beyond just making money." Oxford University and Ernst and Young found that public dialog on purpose has increased five-fold between 1995 and 2016.

3. Three Key Leadership Compentencies That Will Position Your Company ...
What if I told you that your profits don't come from your great products or services? They also don't come from your latest online campaign, and they certainly don't come from your improved multichannel strategy. So where do they come from? The answer is simple: According to the recent Mercer study, 52% of a company's long-term profitability is directly related to the quality of their leadership team.

4. Four Ways to Make Better Decisions
When experiments are run in which subjects are asked to pick an answer they are 99% confident in, they are usually wrong 25% or more of the time. Overconfidence like this undermines effective decision-making and has real-world consequences. Studies have shown, for instance, that when doctors say they are "completely confident" of a diagnosis, they are wrong about 40% of the time.

5. The 5 Biggest Challenges Facing Data Visualization
Data visualization has changed our society considerably. From the most simple projected line across a football field through to complex graphs outlining market fluctuations, they are changing the way that our society is approaching and understanding data. However, despite the huge impact visualizations have had, they still face considerable challenges in the future. We take a look at the 5 most pressing.

6. Fallout from Brexit vote starting to take shape
The prospect of Britain exiting the EU is not only weighing on the UK currency - the London Interbank Offered Rate for the pound sterling is about 20 percentage points lower than on the day of the Brexit vote - but also on investors looking for a deal. Eighteen months ago, the UK was ranked as the most attractive investment destination in the world by business executives participating in EY's Global Capital Confidence Barometer survey. In the latest edition of the twice-yearly survey, released this week, the UK has dropped to the seventh most attractive investment destination in the world.

7. Can you achieve and sustain G&A cost reductions?
The companies that currently make up the S&P Global 1200 index spend an estimated $1.8 trillion annually in aggregate general and administrative (G&A) expenses. Likely, many corporate leaders believe their organizations can do at least a little better in keeping G&A expenses under control. But we found that only about one in four Global 1200 companies during the period we studied were able to maintain or improve their ratio of G&A expenses to sales and sustain those improvements for a significant period of time.

8. Set goals that won't lead employees astray
Although aggressive goals can spark great accomplishments, they also can lead to bad behaviour by employees who may be willing to bend or break rules in pursuit of those goals. At financial services company Wells Fargo and automaker Volkswagen, aggressive goal-setting led to fraud and cost each company customer trust and record fines, said Bonnie Hancock, executive director of N.C. State University's ERM Initiative. "When the stakes are high - ie, employees worry, 'If I don't meet this goal, I'll lose my job or I'm going to get a poor performance evaluation' - then they may game the system," Hancock said.

9. Lenders are struggling to adapt to IFRS 9 requirements
A lack of collaboration and skills is limiting the ability to meet IFRS 9 requirements, revealed the IFRS 9 Confidence Report from Jaywing. Ben O'Brien, managing director at Jaywing, said: "While some lenders are feeling confident about their progress towards IFRS 9, others say they are struggling." The deadlines to meet IFRS 9 requirements begin in January 2018. It's recommended that models are developed, validated, implemented and tested by the end of 2016.

10. Netflix Isn't Headed Toward a Happy Ending
"We apologize for the volatility." Corporate executives usually don't utter those words. Yet that is how Netflix Inc. boss Reed Hastings closed his earnings call in July, a nod to the sharp moves that have buffeted the streaming service's share price. Netflix's shares remain down by more than 10% this year. Some of that is a giveback from last year's gains when the stock more than doubled and was the S&P 500's top performer. Mr. Hastings described that rally as "a mystery to me."

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