{"id":81691,"date":"2021-02-08t12:20:19","date_gmt":"2021-02-08t17:20:19","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=81691"},"modified":"2021-03-24t13:17:31","modified_gmt":"2021-03-24t17:17:31","slug":"do-you-have-the-accountant-superpower-of-insightful-storytelling","status":"publish","type":"post","link":"\/\/www.g005e.com\/2021\/02\/08\/do-you-have-the-accountant-superpower-of-insightful-storytelling\/","title":{"rendered":"discover your accountant superpowers"},"content":{"rendered":"

your secret weapons range far beyond mere numbers.<\/b>
\n\"superhero
\nby donny c. shimamoto<\/i><\/p>\n

many people think that the numbers on financial statements or a tax return are the endpoint of what accountants do.<\/p>\n

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but that\u2019s like saying that the words on the page are the endpoint of what a journalist does in an article.<\/p>\n

in reality, the objective of both is to tell a story. the best accountants are gifted story-tellers, as well.<\/p>\n

in an article, a journalist uses a mix of facts and context to tell you about an event or issue. likewise, when preparing a set of financial statements or a tax return, accountants tell a story about the financial state of a business or person\/family.<\/p>\n

for example, when reading financial statements, you can tell not just whether a business has been profitable, but also how its operating costs are structured, and whether its owners or management has incurred a lot of debt to enable it to operate. like mini-articles from journalists, financial statement disclosures tell the story behind particular decisions and provide context for particular aspects of the financial statements. personal tax returns and personal financial statements also tell the story of a person\u2019s or family\u2019s income and general financial situation; this is why banks and other lenders ask to see these as part of qualifying you for a loan.<\/p>\n

unbeknownst to many people, though, is the complex set of tools, techniques, and standards that underly the ability to produce financial statements and other business reports. this is part of the reason why being a certified public accountant or chartered accountant takes a lot of education, training, and experience \u2013 generally the equivalent of a master\u2019s degree and at least two years of work experience. it takes someone intelligent, who can both see the details as well as the bigger picture of the story being told \u2013 and who can also ensure that the story is told accurately to maintain the trust of the public.<\/p>\n

this last element of trust is essential to being a cpa or ca. year over year, research has shown that cpas and cas continue to be the profession most trusted by the public. no other profession is licensed across the world to attest to the truth of statements made by a business or individual to the public. this is why one of the classic superhero personas for accountants is the arbiter of truth.<\/p>\n

what does it mean to provide insight?<\/h3>\n

published in 2012, the aicpa\u2019s cpa horizons 2025 report identified one of the cpa core competencies as \u201csynthesizing intelligence into insights.\u201d i was lucky enough to be part of the advisory panel that helped to analyze the research data that the aicpa had gathered to set the vision for the profession in 2025. when our panel discussed this area many concepts came up: business intelligence, market intelligence, information about the business environment, analyzing information, and much more. in the end, we crafted the competency to represent the accountant\u2019s ability to pull together (\u201csynthesize\u201d) all the information and results of business intelligence gathering into \u201cinsights\u201d \u2013 information that was relevant and provided in a context that enabled a business decision to be made quickly.<\/p>\n

accountants do this by utilizing tools, primarily software, that can be as simple as a spreadsheet (e.g., microsoft excel) but also ranges in complexity and application as you look at software like enterprise resource planning (erp) or corporate performance management (cpm). just google accounting software, erp, or crm to see the myriad of software that is available for use by accountants.<\/p>\n

so it\u2019s not just the tools, but the techniques and standards that enable accountants to deliver insightful storytelling<\/em>. let\u2019s take a closer look at these techniques and standards.<\/p>\n

data analytics and data visualization<\/strong><\/p>\n

in the information age, technology underlies everything that an accountant does, so it probably comes as no surprise that data analytics and data visualization are two techniques used extensively in accounting. while these are both buzzwords today, both of these techniques have been around for decades, they just had to be done more manually or depended upon having an it person program some routines to do the analysis.<\/p>\n

for example, data analytics was first automated for accountants by the personal spreadsheet software, visicalc, in 1979. before this, you needed big mainframes or teams of mathematicians to do highly complex analyses. if you\u2019ve ever watched the movie \u201chidden figures,\u201d accountants are much like those women who helped the space program be successful, except we\u2019re the hidden figures doing the calculations behind business success.<\/p>\n

with data visualization tools becoming more end user-friendly (i.e., you don\u2019t need to be an it expert to use them), they\u2019ve also become an increasingly popular item in the accountant\u2019s toolbelt. data visualization helps by graphically showing trends or patterns in data. however, like x-rays, it takes good training to create them properly and even more education, training, and experience to interpret them correctly to diagnose what they mean. so while the it expert or data scientist may help to craft an analysis or visualization, a good accountant will be able to view these in a relevant context and provide insights to support better decision-making.<\/p>\n

this ability to draw out insights that drive improved decision-making is a key part of the underlying accountant superpower of insightful storytelling. however, note that i talk about this as supporting decision-making \u2013 this is because as accountants we are often not the final decision-maker. the final decision-maker is often another executive or operations person. through accounting, we provide the information and context \u2013 the story \u2013 to help other people make the best decisions for their own success, whether it be a personal \u201chappily ever after\u201d or business \u201cwin.\u201d<\/p>\n

business reporting (financial and integrated reporting)<\/strong><\/p>\n

one of the things that make accounting difficult is the myriad of business situations and financial arrangements that it needs to be able to tell stories about. add in a variety of industries, tax laws and regulations that vary between different countries, and the need to enable comparability among like, and also unlike, entities and financial reporting quickly becomes very complex.<\/p>\n

often more art than science, financial reporting is more than just generally accepted accounting principles (gaap) or the international financial reporting standards (ifrs). at its heart, financial reporting standards are the accounting profession\u2019s mutually agreed-upon way to ensure that there is consistency and comparability among similar and dissimilar entities. rather than being driven by tax law, which may have underlying political motives, the financial reporting standards were created by and are maintained by accountants with the primary intention of being able to tell the financial story of a person or business entity to various stakeholders.<\/p>\n

i use the term stakeholders because there could be a variety of people who are interested in the financial picture of a person or business, including:<\/p>\n