As you know, earlier this month, the Group of 100 (G100), Australia’s business association for CFOs joined forces with the Australian Financial Review (AFR), to host our congress CFO Live, on 7 November 2019 in Sydney.
CFO Live gathered 200 of Australia’s CFO and Senior Financial executives, to voice their unique operational and strategic perspectives on the issues, challenges and opportunities facing Australian businesses.
The day was fully packed with panels, keynotes and discussions led by our nation’s top CFOs and addressed critical current issues.
Finance Minister Mathias Cormann kickstarted the day with a keynote speech that left the door open to bringing forward income tax cuts to rev up the economy, saying that the Coalition’s instinct is to deliver “lower taxes where that is fiscally sensible”.
“We’ve got competing objectives, and we do want to ensure that we sustainably fund all of those benefits and services that Australians rely on (…) But, of course, if there is scope, we always err on the side of lower taxes. Taxes should be as high as necessary and as low as possible.” Senator Cormann said.
In “The Big picture” panel Alison Watkins, Group MD, Coca-Cola Amatil, Matt Graham, Managing Partner, Assurance, PwC Australia, Jessica Fries, Executive Chairman, The Prince’s Accounting for Sustainability Project, and Andrew Porter, Chair of G100 and CFO, Australian Foundation Investment Company answered if “CFOs should be responsible for the intricacies of enterprise agreements?” as the government considers banning directors caught up in wage theft scandals.
Andrew Porter, the chair of the G100, said that continuous disclosure obligations create an un-level playing field on sustainability, with litigation funders ready to pounce on the slightest slip-up. “Continuous disclosure provides good protection for all stakeholders,” he said. “But what we see at the moment is not a level playing level because these requirements appear to only apply to listed companies.” He questioned why there isn’t more focus on the sustainability of super funds – “I mean they manage a lot of people’s money,” he said – or private players. “The fact that we have 25 litigation funders in this country waiting to pounce shows that there must be an issue. In Australia, this is considered a free lunch.”
Jessica Fries, Executive Chairman, The Prince’s Accounting for Sustainability Project gave her keynote speech on how to embed sustainability into a businesses DNA and said that sustainability is now a cornerstone of a successful business.
There are five critical areas, Ms Fries said. The first is the embedding of sustainability questions into every action of a business; the second is recording the impact of your companies on local communities and stakeholders; third is a focus on short, medium, and long-term planning; fourth is investing a sustainable supply chain or as she calls it a “value chain”; and finally a shift from a focus on shareholders to stakeholders.
A second panel brought together Anthony Gianotti, CFO, Wesfarmers; Alison Harrop, CFO, Dexus, Sherry Duhe, CFO, Woodside Energy, and Nick Ridehalgh, National Leader, Better Business Reporting, KPMG CFO Advisory. The panel discussed how CFOs can create new value and drive productivity gains, and what skills today’s CFOs need. They also took a look at how reporting is changing to reflect broader expectations of company performance. The accounting expert on the panel, KPMG’s Mr Ridehalgh, said his firm has been working on digital solutions to help companies either do their own or outsource the transparency requirements of accounting.
Nick Hawkins, CFO, IAG, Gillian Larkins, CFO, ASX, Luke Bortoli, CFO, Afterpay, and Gina McNamara, CFO, SAP, discussed undergoing digital transformation in finance. They all agreed that technology, and access to real-time data specifically, free up their time to value-add in other parts of the business. Leadership and data skills were both put forward by the panel as key to the CFO of the future.
Mr Hawkins said having more time to engage in other parts of the business has expanded his role as CFO within IAG, allowing him to take on work that’s not just in the “finance bucket”.
“Expectations are to be enterprise leaders who just happen to be in charge of finance,” Mr Hawkins said, predicting this trend will continue over the next five years.
Jeremy Hirschhorn, the ATO’s Second Commissioner, presented his keynote on tax transparency and he made it clear that the ATO’s focus on increasing transparency is here to stay, highlighting a range of measures aimed at improving tax transparency to the public in Australia. The corporate tax transparency measure, which sees the ATO report the gross accounting income, taxable income and tax paid of the largest companies, the voluntary tax transparency code, and the requirement for some significant global entities to lodge general purpose financial statements even if ASIC doesn’t require them.
APRA Capability Review chairman and former competitive watchdog head Graeme Samuels discussed the separation of audit and non-audit work and other lessons from Hayne, especially regarding audit quality.” We should be expecting compliance with the accounting standards and the presentation of reports that comply with those standards, but I’m not sure that we can expect auditors to pick up every fraud that occurs.” But material fraud and illegality should be picked up, he says.
Several submissions to the parliamentary inquiry in audit quality have called for the separation of professional services firms’ audit and non-audit divisions. Mr Samuels said that Hayne looked at demerger processes and dismissed them. He said those calling for it should “just quieten down”. But he is on board with firms being limited in the non-audit work they do for audit clients.
On How CFOs can better deal with investors, Michelle Lopez, Head of Australian Equities, Aberdeen Standard Investments, Emma Fisher, Portfolio Manager, Airlie Funds Management, and Paul Koppelman, CFO, Nine gave their thoughts. “Communication is so important,” said Ms Lopez. Ms Fisher outlined honesty and transparency as significant factors:” Think about your long-term relationship with investors as something you want to nurture throughout your career (…) a straight shooter and no BS. That’s the sort of qualities we want to see.”
On managing risk and uncertainties Brent Cubis, CFO, Cochlear, Vicki Brady, CFO and Strategy & Finance Group Executive, Telstra, and Wayne Banks, CFO Practice Lead, Workday, continued on a consistent theme of the day, that of the changing role of the CFO. The Telstra CFO stepped up to the position in July, after spending the last 12 years in the company outside of finance roles.” CFOs need to broaden and be thinking about the non-financial risk, the operational risk, and in Telstra’s case, they are many of our most significant risks,” she said. Mr Cubis said CFOs now need to be across a far broader range of risks than they used to.
What is the career path of a CFO? Fergus Kiel, National Managing Partner, Financial Officers Practice, for Heidrick & Struggles said that” increasingly, boards are getting more and more involved with the appointments of CFOs, (…) now it is such a forward-facing and important appointment.” In recent appointments he has assisted with, Mr Kiel says CEOs have wanted CFOs they can “whiteboard with”, meaning they will help come up with ideas.” They want CFOs who can, with the executive, accelerate performance.” He says the best CFOs are invited into the divisional meetings because they can help.