Page 22 - Finance for Non-Financial Managers
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                                                                  Counting the Beans
                               computer. Senior managers and company executives a genera-
                               tion ago were challenged by their lack of knowledge of this new
                               tool, no matter how firmly they knew their own particular areas  3
                               of expertise. The young professionals coming into the business
                               often made their bosses look old-fashioned with their mastery of
                               this impressive and intimidating technology. Soon, as we discov-
                               ered, those young professionals had children, whose computer
                               acumen after being on the planet for only a few years made
                               even their savvy parents sit up and take notice. And so it goes.
                                   Now, as we are learning, finance and accounting are having
                               an impact on many companies in ways never before thought of
                               by managers outside the financial department. The accounting
                               scandals of 2002 showed that financial incompetence, or care-
                               lessness, or simply lack of integrity, could wipe out the efforts of
                               thousands of loyal, hard-working employees. The report card, it
                               seems, has become more important than it ever was when we
                               were in school.
                                   Today we’re finding out that we need to know how to read a
                               report card so we can just keep our jobs, let alone advance in our
                               careers. Boards of directors now need to delve into the reports
                               they have routinely received for years to a degree never before
                               contemplated. They need to understand financial terminology and
                               accounting methods they might previously have taken for grant-
                               ed. CEOs now need to be completely aware of what their people
                               are doing and the financial ramifications, because they will no
                               longer be able to credibly say they didn’t know. And finally, man-
                               agers within a company, whether large or small, are going to
                               need to understand the rules of accounting and the boundaries of
                               proper finance well enough to avoid getting into trouble just
                               because they were aggressively trying to make their goals. As for
                               those who aspire to become managers, they might not even get
                               started up the ladder until they can demonstrate this kind of
                               knowledge. So you see, it touches everyone.
                                   Now, it’s all well and good to say that accounting scandals
                               will make everyone learn more about finance and accounting,
                               but is that the only reason to know this stuff? Of course not!
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