Financial Leadership Agenda – Hire Academic Expert

Executive Leadership
and Governance
Financial Leadership
Agenda
Review of Prepare Activities
Cash Versus Profits
Accounting
Review of Apply Activities
Key Performance Indicators
Formative Assessment
Reflection

Topic Learning Outcomes
Appreciate the purpose and usefulness of key financial
statements within a board report
Interpret key financial statements provided within board
reports and evaluate performance based on data
provided

Prepare
Accounting is a service activity. Its function is to provide
quantitative information, primarily financial in nature,
about economic entities that is intended to be useful in
making economic decisions [and] in making resolved
choices among alternative choices of action.

– Accounting Principles Board, Statement 4, AICPA, 1970 (as cited Alexander,
Nobes and Ullathorne, p.4).

Management v Financial Accounting
Source: (Philllips, 2016
Management Accounting Tools
Source: Datapine, 2021
Budgets and variance analysis
Source: Datapine, 2021

Cost item Budgeted spend
year to date
Actual spend
year to date
Variance
Staff costs 275,000 293,224 -18,224
Overtime 23,500 19,188 4,312
Materials – cost 480,000 512,809 -32,809
Materials –
wastage
35,000 22,556 12,444
Overheads 120,000 113,691 6,309
Total 933,500 961,468 -27,968

e.g. budget for production department
Decision making
Source: Datapine, 2021
DECISIONS
• Acquisition of a
business
• Opening a new branch
• Purchase of
machinery/premises
• Making staff redundant
• Choosing whether to
lease or to buy an asset
“Relevant Cost” illustration
e.g. opening a new branch with expected
income of $1m per year. Costs identified are;
• Rent of new premises
• Research costs of finding a suitable location
• 25% of existing regional manager’s salary
• Cost of goods to be sold
• Salaries of newly recruited staff working in the
new branch
Which of these costs should be included in the
financial assessment of whether to make this
investment?

Financial Accounting and Reporting
Source: Sandell and Svensson, 2015)
All companies have to file Financial Statements on an annual basis
These financial statements have to comply with Financial Reporting
Standards, as well as any other standards that local regulators may have in
place – regulation can come from local laws as well as from stock markets if
it is a listed company.
Main Financial Statements:
• Statement of Profit or Loss
• Statement of Financial Position
• Statement of Cash Flows

Accruals Basis
Source: Phillips, 2016
Conceptual Framework of IFRS
Source: Phillips, 2016, p.18
The Annual Report
Source: Phillips, 2016, p.18
A typical annual report will include the following:
• Financial Statements
• Strategic report
• Governance
• Executive Remuneration
• Risk assessment
• Social and Environmental

Essential Reading
Clearly Training, 2012. Finance for Non-Finance Managers: The P&L, the Balance
Sheet and Cash Flow
. [Online] Accessed at https://youtu.be/N5zKAtryZ-w.
Dhamija, S. 2018.
Financial Accounting for Managers. 3rd edition. Pearson.
Gharani, L., 2020.
Cash Versus Accrual Accounting, Explained with a Story. [Online]
Accessed at https://youtu.be/GEZZftO_VrE.
IFRS, 2017.
How are IFRS standards Developed. [Online]
Accessed at: https://youtu.be/SmHDoyKfl0M (3 minutes)
Mclaney, Attrill, Eddie, 2010.
Financial Accounting for Decision Makers. 4th Edition,
Pearson Prentice Hall.
Sandell and Svensson, 2016.
The Language of Failure, The Use of Accounts
in Financial Reports
. International Journal of Business Communication,
53(1) pp.5-26.
Cash Versus Profits
10 minutes
• Download the activity worksheet and review the questions and
prompts
• Discuss your answers as a group using the chat box and give
your answers to the polls
• We will debrief after this where we review the discussion and
poll answers together as a group

Apply
Apply
Leaders will often have to make choices about which
investments to make – this could include investing in a new
piece of machinery, opening a new branch of the business
or even acquiring another business.
In a situation where the company has limited capital
available to invest, how can leaders choose between
different investments?

Source: Mclaney and Attrill, 2010, p.36
Profit and Loss, Position and Cash Flow
Management Decision Making
• Read the instructions in the activity worksheet then
complete the tasks relating to Scootz

Layout

Year 1 Year 2 Year 3 Year 4 Year 5
Cost/income 1
Cost/income 2
Cost/income 3
Etc. etc.
Total cashflow
each year
Total cashflow
for 4 years

Disney Case Study
Reflective Practice
1. What learning will you take away from this webinar?
• Was anything new to you or came as a surprise?
• Is there anything that you will now think about differently?
• What have you found particularly useful?
2. How might you develop you approach to leadership as a result
of these reflections?
• Where do you see these concepts reflected in your own leadership practice?
• Do you have strengths/weaknesses in these areas?
• What concrete things that you can do over the next week or two to improve
your practice?
• What things can you do in the longer term to improve your practice?
• Where do these things fit in your personal development plan?

Recap
• Review of Prepare Activities
• Cash Versus Profits
• Decision making
• Accounting
• Review of Apply Activities
• Key Performance Indicators
• Formative Assessment
• Reflection

Any questions or
comments?

Thank you for your
participation
Next Steps – Consolidate
• Topic Round-Up
• Topic Quiz

References
• Alexander, D., Nobes, C, Ullathorne, 2010. Financial Accounting, An
International Introduction.
4th edition, Pearson. [Online] Accessed
at: https://www.vlebooks.com/vleweb/Product/Index/1999682?page=0.
• Clearly Training, 2012.
Finance for Non-Finance Managers: The
P&L, the Balance Sheet and Cash Flow
.
[Online] Accessed at https://youtu.be/N5zKAtryZ-w.
• Dhamija, S. 2018.
Financial Accounting for Managers. 3rd edition. Pearson.
• Gharani, L., 2020.
Cash Versus Accrual Accounting, Explained with
a Story
. [Online] Accessed at https://youtu.be/GEZZftO_VrE.
• IASB, 2018.
Conceptual Framework for Financial Reporting. [Online] Accessed
at: http://eifrs.ifrs.org/eifrs/bnstandards/en/framework.pdf.

References
• IFRS, 2017. How are IFRS
standards Developed.
[Online] Accessed at: https://youtu.be/SmHDo
yKfl0M.
• Mclaney, Attrill, Eddie, 2010.
Financial Accounting for Decision
Makers
. 4th Edition, Pearson Prentice Hall.
• Philips, F., Libby, R., Libby, P.A, 2016.
Fundamentals of
Financial Accounting.
5th edition, McGraw-Hill.
• Sandell and Svensson, 2016.
The Language of Failure, The Use
of Accounts in Financial Reports
. International Journal of
Business Communication
, 53(1) pp.5-26.