Financial planning and analysis is critical to the finance profession. Yet despite its growing importance and desirability, the FP&A field lacks a set of clearly defined principles and standards of practice. As a result, the field is challenged by inconsistent competencies, standards and organizational reporting structures, as well as limited visibility, professional resources and candidate assessment tools.
Through a number of meetings and formal discussions, AFP determined that a certification program for FP&A professionals would help define universal principles and standards of practice. The program would also recognize FP&A professionals for their understanding and mastery of complex processes, tools and best practices.
As part of this process, AFP and The Caviart Group conducted an analysis of jobs and tasks for FP&A professionals in early 2012. The purpose was to determine specific tasks performed by FP&A professionals and the knowledge, skills and abilities (KSAs) necessary for competent practice. The results of the survey formed the basis of an FP&A certification examination.
The survey determined that those tasks that are always performed by FP&A professionals and that are extremely important to the practice include:
- The use of basic spreadsheet functions
- The ability to validate data
- The use of advanced spreadsheet functions
- The ability to gather the information and data required for analysis
- The ability to build budgets, forecasts, annual plans and so on
- The ability to receive, analyze, integrate and consolidate assumptions and data from business units
- The ability to prepare reports and/or make presentations.
Further, it was determined that those KSAs that are extremely important to the practice are:
- The ability to communicate with and gather information from business partners
- The ability to coordinate FP&A tasks with the corporate calendar or the assigned deadline
- The ability to integrate information and data into analysis
- The knowledge of finance principles and processes
- The ability to synthesize information to create conclusions, alternatives and recommendations
- The ability to create financial statement projections
- The knowledge of spreadsheet and database structures and functions
- The ability to implement basic spreadsheet functions
- The ability to implement advanced spreadsheet functions
- The ability to perform variance analysis and reporting
- The ability to define, incorporate and report on financial and/or nonfinancial key performance indicators.
“In some respects, the current state of FP&A is like the old apprenticeship system,” said David Gorbach, Senior Director of FP&A, PMI Mortgage Insurance Co. “People get hired and learn a particular skill for a particular company in a particular situation rather than having a standardized approach. [The latter] would allow them to follow a defined course of study and then use that to get into FP&A and continue on in their career development.”
Nearly two-thirds of C-level executives (64 percent) report that the FP&A role is the hardest position to fill, according to the American Productivity and Quality Center. Without a set of principles and standards of practice, executives often face the challenge of identifying the best candidate to fill the job without a credible means of validating capabilities and qualifications.
“In the job market itself, it feels like there is a lack of a clear definition of what FP&A is, so you see in postings jobs that should be listed as FP&A based on their responsibilities but that are simply listed as a financial analyst,” said Bill Sayer, Manager, FP&A, Crump Life Insurance Service Inc. “That is because the person doing the posting or the hiring manager describing the responsibilities isn’t aware of what FP&A does. So that creates some confusion for candidates that identify themselves as being in FP&A positions.”
Currently, no certification examination exists that tests the diverse knowledge base of the FP&A professional. Existing credentials in corporate finance, such as the Institute of Management Accountants’ Certified Management Accountant (CMA) and the CFA Institute’s Chartered Financial Analyst (CFA), examine the candidate’s mastery of management accounting, financial management or investment portfolio management.
However, FP&A professionals are responsible for both the analysis and management of financial information and projections. Further, they must deliver this information in a meaningful way to a number of stakeholders, adding a layer of communication requirements not found in similar corporate finance roles. Thus, a certification in FP&A would differentiate those professionals operating in FP&A roles who are knowledgeable and competent in the full array of tasks required for successful practice.
“A certification for FP&A will benefit the finance industry in two ways,” said Matt Shimkus, FP&A Manager, Utilities Inc. “First, it will recognize the absolutely critical role that FP&A professionals play within organizations. Second, it will mitigate the risk of hiring someone who is not qualified for the job at hand. With a certification for FP&A, employers will know what skill sets they are getting when hiring an FP&A professional, and professionals will have confidence in the skills that they bring to the table.”
AFP is on track to develop this certification by the end of 2013. The certification will have a number of benefits, including increased awareness surrounding the FP&A field. Results from the Job/Task Analysis for Financial Planning and Analysis (FP&A) Professionals survey will be used to draft the certification examination for FP&A professionals, and additional research will be conducted where deemed necessary.
For more information on this certification and how you can take part in the development process, visit www.FPAcert.org.
Download the whitepaper, “The Benefits of Certification for FP&A Professionals,” by AFP and Kforce.
Register for the complimentary companion webinar, February 26, here.
A longer version of this article appeared in the latest FP&A newsletter.