Tom Hood is one of the most influential leaders in accounting. The Executive Vice President, Business Growth and Engagement, at American Institute of Certified Public Accountants (AICPA has been named the Second Most Influential Person in Accounting since 2011 by Accounting Today Magazine (only pipped to the post by AICPA CEO Barry Melancon). In giving him their award the publication cited his “legendary energy, imagination and ability to foresee the future, and focusing them specifically on management accountants, helping them reimagine “the Future of Finance.” On Linkedin Tom has 780,000 followers and the platform recruited the accounting leader as one of their Top Voices. His passion for technological innovation in accounting has been evident since the early days of VisiCalc to Excel and ChatGPT. This combines with his rigorous enforcement against bad actors in the profession, and optimism about the future.
In this episode Tom Hood describes one of the biggest shifts in accounting as “The Great Join between accounting and FP&A”. Hood says: “We need accounting to make sure the numbers are right and to maintain our stewardship and trust. But we also need the financial viewpoint, which we saw big time in the pandemic. This is needed to reimagine what’s next in the profession.”
Hood also reveals his passion reflecting accounting’s role as one of the most fundamental tenets of business- and wider society“Accounting is a language of business. It is a language that many people‒dare I say most people‒don’t truly understand. You become the value interpreter of everything about a business.”
In this episode discover:
- Tom’s career trajectory from to CFO at to Maryland Association of CPAs to EVP at the (American Institute of Certified Public Accountants (AICPA)
- The merger between the AICPA and CIMA (UK-based) and the global power base this provides the accounting profession
- The Great Join between FP&A and Accounting
- His passion for accounting tech as continuing to revolutionize business – from the dawn of VisiCalc to ChatGPT today
- His role in stamping out unethical accounting practices
- The changing up the CPA Exam and what it means for you
- How AI has already changed the game for accountants and how companies are transforming accounting
- How he got into accounting as a way of getting into the FBI and why that didn’t work out
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Paul Barnhurst:
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Paul Barnhurst:
Hello everyone. Welcome to FP&A Today, I am your host, Paul Barnhurst, aka the FP&A Guy, and you are listening to FP&A Today. FP&A Today is brought to you by Datarails, the Financial Planning and analysis platform for Excel users. Every week we welcome a leader from the world of financial planning and analysis, discuss some of the biggest stories and challenges in the world of fp and a. We’ll provide you with actionable advice about financial planning and analysis. This is going to be your go-to resource for everything FP&A. I’m thrilled to welcome today’s guest on the show we have with us Tom Hood. Tom, thanks for joining us.
Tom Hood:
It’s great to be here. Paul, looking forward to this.
Paul Barnhurst:
Yeah, I really appreciate you carving out some time to us. So let me give a little bit of an introduction for Tom and I’ll give him an opportunity to tell us a little bit of more about himself. So he comes to us from Baltimore, Maryland. He’s the Executive Vice President for Business Engagement and Growth at the Association of International Certified Professional Accountants. He’s also an influencer, and he was given the prestigious de designation of Top Voice on LinkedIn. He has over 7,000 followers. He’s also been ranked as one of the top hundred most influential people in accounting more than 15 times. And he’s been number two on that list since 2011. So, Tom, why don’t I give you an opportunity to just tell a little bit more about your yourself and your background?
Tom Hood:
All right, Paul. So I have to start by saying I’m kind of like a blind squirrel. You know, a blind squirrel can find a nut sometimes. I’ve been honored to get some of those accolades. And just a slight correction. My LinkedIn followers are 700,000. So I’ve got that global, but that’s because I was a original top 100 link LinkedIn influencer. And you know, the rest is history as they say. I, I got in early in social media and that’s been a, a real blessing for me. My background is I am a accounting major. Graduated from Loyola College, went to get my CPA, which I did, and then moved into corporate. I’ve been in corporate finance effectively most of my career. I would argue, I’m still in IT today, an association executive.
About 12 or 13 years into my role as a CFO our company got acquired, basically a hostile acquisition by a big aggregate producer. And I didn’t really want to go with that company. And at that stage, I had been active in the Maryland Association of CPAs and was the prior chairman of the board, et cetera. And the new, the executive director was retiring and they went for a national search. I’m like, this would be a fun job for me because I’m passionate about the profession. And had all that experience at that time highway construction. So that’s what led me to the AICPA last 23 years. And then two years ago, Barry Milan of the AI CPA came to me and said, I wanna see if you’d like a global stage because you’re doing some great stuff there in Maryland and beyond. And so I said, I’m interested and that’s, that led me to this role at the AICPA. We also had formed our Business Learning Institute, which the AICPA acquired, and that’s now part of the AICPA, that’s our learning and talent development mm-hmm. <Affirmative> subsidiary. And so that’s integrated into the AICPA at this stage. So that’s how I got here.
Paul Barnhurst:
Great. And I appreciate the background and it sounds like quite the exciting journey. Definitely a lot of accounting in there that CFO and a lot of great experience along the way for sure. So, you know, talking about that, can you tell our audience a little bit about the AICPA? Like maybe how many members, how it came about, what its purpose is, some of those type of things?
Tom Hood:
Yeah, absolutely. So many people think about C p a certified public accountant and immediately think about the AICPA and all of the state CPA societies that are in, in, in the US market. And while the, the CPA is being offered overseas, the license itself is a unique US market attribute. Now, often people think of CPA and they think of public accountant, but about, I’m going to say 40% of our members are like, I was a CFO controller in corporate accounting and finance nonprofits or government, right? So that’s, that’s the first part of that. About six years ago we merged with CIMA, the Chartered Institute of Management Accountants, which headquartered in the UK but they were operating in about you know, 180 countries. And that led us to really recognizing the folks in corporate finance in the AICPA segment as well. So we wanted to merge so we could bring that, re those resources to our US CPAs and, and expand in the Americas where CIMA didn’t have a big footprint. So that’s the chartered global management accounting credential, CGMA. So together it’s the AICPA&CIMA. And we offer the CPA and the CGMA and right now we have about 700,000 members in 192 countries.
Paul Barnhurst:
Wow. That’s a definitely a lot of people. Big, big organization for sure. And so I appreciate giving a little bit of background in how the merger, you know, AICPA and CIMA. So what are some of the programs you guys offer? I mean, obviously there’s the C P A and the CIMA, but you talked about the learning. So maybe just talk about the resources that are available for people with that organization.
Tom Hood:
Yeah, I mean, the, the, so I’m gonna focus on the corporate finance market, which is my, my area, if you will. Sure. so the CGMA, the Chartered Global Management Accounting has a finance leadership program that leads to that credential. It’s a robust set of learning over like three levels that you can go to get that credential. So that’s certainly one of the big resources, obviously one of the objectives we’re working towards. But we also created a future of finance initiative. So one of the first things I did in my new role was started reaching out to our members in the US market and asking them what the top issues were, what they were thinking about and struggling with. And it’s funny because after about three or four calls they were all facing the exact same things.
And after this is, this is two years ago by the way that we actually started all of this. And so then we started to say, okay, if that’s true, would you be interested in getting together to help us redefine and reimagine what the future of finance might look like? And pretty much one by one they all said yes. To our surprise. And so we formed this group and we now have about 50 large corporate CFOs, CAOs controllers that get together from mostly Fortune 500 companies. And then into the middle market though. And we we get together every other month and we literally facilitate a round table about what can, what’s the future finance look like? What can, how can we take it to the next level and, and what’s happening there. And we’ve held two in-person summits.
The first year was in December in Nashville last year in Austin. And this year will be in Orlando. But that then we got together closer to a hundred people in heavy duty round tables, just sharing what’s going on and how we can help them be better senior finance leaders. So interesting enough, one, I’m gonna go a quick sidebar that relates to you and I talking. One of our first members was a CFO of Walmart who has since gotten promoted to a much bigger role. So we, we lost them on our group. He was there for about three months. He said an interesting thing he said, Tom, I think as I’m looking at what’s happening in my finance group here at Walmart, I’m seeing this idea of the great join, the join between accounting and finance. We need accounting to make sure the numbers are right and to keep up with our stewardship and trust notion.
But we need the financial viewpoint, the deal, of course, through the pandemic that showed up big time. And I think that’s why we’re getting this group together, Paul, is because it is needed to reimagine what’s next. Cause McKinsey I think called this the next normal coming out of the pandemic. And that next normal implies more than one Right next, and then next and then next. So I think we’re now redefining the first next, which is the next couple of years. But I’m sure now that we have chat GPT on the scene, we’re probably going to see another next normal. And I I how our group is looking at it. Yeah. Tell,
Paul Barnhurst:
Yeah. I, I I love that. I love the kind of the idea of the next normal. I really like what you said, the person at Walmart, you know, accounting and finance, that merging. If they’re not working together, there’s a huge issue. You know, my career’s been in FP&A, I don’t have a cpa. A yes. Have I taken plenty of accounting courses? Yes. Cuz I’ve done a finance and an MBA and a business and all those type of things. And I feel like I know it fairly well, but, you know, I, I heavily rely on the accountant as I like to say, FP&A’s best friend is a good accountant. Yeah. Because without em, you’re gonna, you’re gonna struggle. So I I’m glad that you’re, you’re covering both of those cuz there’s so much between the two of them and we’ll, yes. We’ll talk a little bit more about that here in a few minutes. But question for you have is it’s clear you have a, you know, just a passion for the accounting profession and moving it forward. Where does that come from? How did you develop such a passion for this field?
Tom Hood:
So in my, in my role as I mean, I guess I, I started out as a junior accountant. I mean, I went to night school and worked during the day. That was the, that was the first part. I went to Loyola University and then they had a nice night school program. So I got my accounting degree in four years, working full-time during the day. Andyou know, it was about a good career. And I remember my first well, first real jump. So after I graduated, then I went to an architecture firm and the CFO there who was a CPA helped support me to get my CPA a and then he said, I’m gonna make you write a check outta your own money to join the AICPA. And at that time, the Maryland Association of cps mm-hmm.
And then he took me to my first meeting <laugh>. And I think that’s the rest of the history because that first meeting they started asking for people to join these committees. And I’m sitting there, you know, relatively new in the, accounting and finance world, trying to find my way and joining a committee was a great way to start getting active in this profession and trying to figure out what was going on. So that led to a couple things, other volunteer roles. But soon I was the chairman of the EDWP committee. Now this will date me, Paul, but <laugh> you have any idea what that might be?
Paul Barnhurst:
You know, I’m gonna have to plead the fifth. The, I have no idea on this one <laugh> assumption
Tom Hood:
That I, so it was, this, this really dates me the Electronic Data and Word Processing Committee, because at that time this new thing called VisiCalc
Paul Barnhurst:
<Laugh>. Yes.
Tom Hood:
Now that’s, that’s how long ago. And it ran on Word. There weren’t even PCs at that time. Yeah. it ran on Wang Word processors and other IBM word processors. It ran, ran on the word processing area. And the first thing we were doing in this, in the architecture firm was, was having to do these big spreadsheets on percent complete for these large architectural project. Mm-Hmm. <affirmative>, big shopping malls and, and office buildings and things like that. So, you know, these massive amounts of data and I was just lazy. I’m like, if I can find a better way to do this, I’m going to, because it’s painful. Putting in all the, you know, cross footing, those big commer pads and all that. So VisiCalc was a game changer. And and the association with other folks teaching as each other. Right. A community to talk about getting better in finance and accounting. And sure enough, that’s what, that’s what fueled my passion. That ultimately I would even join the Maryland Association as their CEO, which is what drove that.
Paul Barnhurst:
Yeah. Sounds like you had a great boss that introduced you to something that you probably wouldn’t have done on your own and sounds like it’s changed your life.
Tom Hood:
That’s absolutely true.
Paul Barnhurst:
That’s great. And I love the vis calc. You know, for me, I remember, you know, high school getting our first computer, I was in high school in the nineties, you know, I Lotus notes 1, 2, 3 and I still remember the little piece of paper that would sit on the top of your keyboard and have all the shortcuts.
Tom Hood:
Yep.
Paul Barnhurst:
<Laugh>, you know, you’d be looking going, okay, I need to do this. And, you know, the old monochrome or four color monitors, RGB and I, yeah. I think how far we’ve come today and I’m just like, people don’t have an appreciation and you have it even more than I do, obviously, you know, having more of a work experience, but just what it was like before the internet and computers. Cause you know, the internet, I was in high school, probably kind of college when the internet really kind of started late, you know, late nineties there and now it’s like the internet goes down for five minutes. Like what do we do?
Tom Hood:
Yeah, exactly. That’s true. That is true. Now I gotta tell you one funny story about that, Paul. The so back in the day when Excel really came into the, when you had PCs in the market Yep. You know, the IBM pc, which is a big mm-hmm. Big thing mm-hmm. <Affirmative> obviously the Mac was around, but, but for business it was the IBM pc
Paul Barnhurst:
Yep.
Tom Hood:
Floppy discs. Right. That whole deal. Yep. at that time there was an article in the Wall Street Journal that said Excel is gonna be the end of accountants. Does that sound like a familiar theme we’re hearing right now with Cat gt? Right. Every time there’s a major innovation in software relative to accounting, they, it’s the end of our profession. They’re gonna be, they’re gonna automate all of us into oblivion. Now, it was seriously funny because the, the subsequently the accountants blew up because now that you could do so much more analysis that the demand for accounting actually went off the charts. Now I understand chatGPT is a different animal, but I would argue the thing that was game changer for me as a CFO was I could finally get things done. And I mean, it took us three weeks to close the books back then, God’s sake. Right. And the CEO’s coming in, we have a, we’d have a recession and he’s going, Tom, what’s going on next? You know, next month. I’m like, I can’t even finish this month. How do I know what’s gonna happen next month? Right. I can’t get a base baseline to, to forecast off of. So as an FP&A guy, you get that. Right. So Yes. You know, now we’re talking about closing in days or even a day. Gartner just a couple weeks ago was talking about an automatic close by 2025.
Paul Barnhurst:
Yep. I’ve heard of the continuous close, which is, you know, another way of, I think kind of the automatic and some of those type of things. And I definitely think, especially for straightforward companies, we’ll get there. Yeah. And some of the more complex, you might not quite get there, but even I can’t imagine, you know, being able to close on day two. Right. I think the best I was like, you know, day five, day six, right. In that range. And you know, my, one of the companies we might have kind of occasionally got day four. Yeah. You know, but that, that was kind of pretty standard. And so even speeding that up to just have it on day one, even if you’re not a continuous close, is a game changer compared to where we were with you. Right. Three weeks that you’re like, okay, honest Cs, c e o I wanna give you the answers, but I don’t even know what her numbers were last month. So it’s hard for me to tell
Tom Hood:
Again, I can couldn’t trust the accuracy. Right. I didn’t know we weren’t all tied out and closed and that was risk. So I didn’t want to end up giving him a bad number and putting the company at risk because we didn’t know what the numbers truly were.
Paul Barnhurst:
Yeah, no, it’s, we definitely, and I, and I think you make a good point. We’ll talk about that here in a minute on the ChatGPT and you know, I always think of for what, for 15 years there, we always heard the next application was gonna kill Excel. Right. The killer application. <Laugh>, you know, we have what, a 700? I’ve heard numbers anywhere from 750 million to a billion people using it. If that’s, if that’s the software that’s been killed, I wanna develop that software . Yeah.
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You know, obviously you have the passion. What’s your favorite thing about the accounting profession? What do you love about it? What draws you to it?
Tom Hood:
So I think when, when I, I mean I had no, I, I was a son of a Baltimore City police officer, so I had no first generation college in our family. So I had no idea what an accountant was or a CPA or any of that stuff. Thank God for college when I got to Loyola at night. Sure. and that’s, that was how I afforded it, right. They, they led us to that CPA and what, what could happen. And I think that the thing that was exciting is being the, I mean, accounting is a language of business. So you’re learning a language that many people, dare I say, most people don’t truly understand. And so you are, you become the value interpreter of everything about a business. And in, in the corporate world, I never did public accounting. And I know public accounting has similar attributes and certainly the audit is a critical public interest function.
But the ability to learn a business and then understand it deeply from a financial aspect and use that to help create the business in a sustainable way. And our purpose now says to power, trust, opportunity and prosperity. And I feel like that even though I didn’t, maybe wouldn’t have said it that way back in the day , that’s what I learned is that the ceo, the bankers, the insurance people, all relied on the numbers that I provided and telling that story about our highway construction company in that instance. Right. And then other companies along the way, architecture book publishing, some of the other jobs that I had. So that, that’s what was exciting about it. You have to understand the business to be able to tell that story. And, and the biggest thing, which is why I was passionate about technology, is the technology was the enabler of getting to those numbers faster. That’s why I loved Excel in the day and that’s why I love ChatGPT. And that’s why I love cloud and a lot of these other technologies that we all rely on today because they enable us to get to the story a lot faster and understanding whether it’s right or not.
Paul Barnhurst:
Couldn’t agree more. They really make it much, it’s getting much easier to understand the data and to do things quicker. And we’ll continue to see that. Yeah. You know, the advancements we’re making right now sometimes are mind blowing how quick things are going as we watch it all. But one thing you said that I really liked is, you know, about empowering trust or building trust. Cuz we’ve all seen it been broken. You know, we think of the Enrons, the MCI, the whole Arthur scandal. And so I really appreciate you saying that because I know I’ve seen those situations where somebody’s like, well, can’t you do this? Or, well, can you book that number? And you’re like, you know, I’d rather stay outta jail, but thanks for asking, you know, type of thing. And so, you know, what are you guys doing just kinda in your organization, how, how do you focus on empowering that trust and making sure people can rely on those numbers? Because it’s just, it’s a bedrock of the stock market and society that you have accurate numbers.
Tom Hood:
Correct. That’s right. And then, and a lot of people don’t understand that it’s the foundation of the whole capital market structure, right. Whether it’s small business in Main Street or global Fortune 100 s, right. They’re all mm-hmm. <Affirmative> rely, people are relying on those numbers to loan money if it’s your local bank or provide insurance if it’s right. All those pieces rely on good solid financial numbers, just not unlike a family and getting a mortgage, right? Mm-Hmm. <affirmative>, you gotta give them your financial information and if that’s inaccurate, you got a problem that we’ve had before also. So I think, but what, what our role is, that’s why we also merged with CIMA, was to create the, you know, the world’s largest kind of body of accounts. So we have a seat at the table globally to push and power that trust opportunity and prosperity because we think if the numbers are accurate and the CPAs and the CGMA make them trustworthy, then the businesses will make the right decisions and they won’t do bad things.
And that obviously that’s not, you can’t guarantee that, but it’s certainly more likely. And we focus on ethics as part of the whole credentialing process. And then we do ethics enforcement for both corporate or management accountants as well as CPAs in addition to the law. So the state boards of accountancy and the S E C, but we actually enforce ethics ourselves. So if you had an unethical situation with a, a member CGMA or CPA, you would report that we would investigate it and it could mean sanctioning or kicking that member out, or even referring them to a, to a state state board of accountancy or a regular regulator for further investigation. So it’s that it’s that much in our d n A to protect that notion, and that’s why we’d like to, to continue growing and expanding that influence. So we think if we have a seat at the table, people will understand who we are and what we’re doing, and that will drive more people to get those designations. And we have people reporting with self-study, making sure they’re taking continuing professional development. All those pieces are helping to keep this profession, you know, rock solid from a trust perspective.
Paul Barnhurst:
Got it. And that, that’s great that you’re doing that. I really like that you have, you know, the ethics standards. I think it’s very important to organizations. It’s critical, like you said, it’s that bedrock of foundation that we can trust the numbers our capital markets depend on it, they ha has to be there. So, you know, we’ve talked a little bit about technology and I want to go go there a little bit. So, you know, how are you working to keep CPA and CGMA designations relevant in this rapidly changing world, right? With big data, ai, technological advancements, how are you making sure you know what you’re teaching and the, the designation is relevant for today’s world and for tomorrow’s normal Yeah. As we talked about. Yep.
Tom Hood:
So so it’s interesting, there’s two pieces to that On the CPA a side, we just finished what we call the CPA Evolution project. And we’re actually changing up the CPA exam for the first time in a, a bit. But that new pathway forward will allow a couple of, of deeper dives, more, a lot more technology and a lot less to esoteric really challenging issues that we had on the old CPA exam. So we had, I don’t know, maybe pension accounting was a big thing. So pension accounting, how many people really need to know that? And it’s probably one of the hardest things there is to learn, right? So so those kind of things, we started to like pull some of that down and increase things like data, good financial reporting, like in the corporate side mm-hmm. <Affirmative>. And then obviously the audit getting more technology oriented around how we audit.
So we baked in a lot more technology, clearly a lot more of the changing standards around all that. And that’s the new exam, which starts in January, 2024, where you will be able to take what was the b e c of business environment and concepts, and you’ll be able to pick a specialty under that one of three. And that will be a little bit of a deeper dive. So it could be in financial reporting, it could be in auditing I think info systems is the third one. And that would give you that ability to do that. So that’s, that’s one big way I’ll let you mm-hmm. <Affirmative> ask questions there or anything around that.
Paul Barnhurst:
I think that’s great you’re doing that. I saw something similar. You know, CFA just made some changes to theirs as well where they added a practical session where you can do, like, I think it’s data science or modeling or something to take that, a little bit of that deeper dive. So I think that is definitely something we’re seeing with some of these different certifications, and that’s exciting to see. It’ll be out, you said next year? Is that when that comes? Yeah,
Tom Hood:
It’ll be January of 23 will be the first no, January of 24 will be the first edition of that exam. So there’s a, there’s a whole, you know, transitional period for people that are already partway through the old exam, if you will. Sure. But that’s what we’ll be seeing from that standpoint. Now the other, the other part of that on the CGMA side, that curriculum we own, that’s a credential that we created over the UK is qualified Got it. Around the world. And so that we update every two years now. So that already has a whole lot including like some ESG concepts, obviously a lot more of the technology piece. So that’s getting continually updated with all those exact kind of, of current notions. So it’s in the, it’s in the update phase now and will be released I think early next year with the new edition of that. So that’s where that goes.
Paul Barnhurst:
Got it. So on the CGMA, you completely own that accreditation and CPA you’re dealing with state boards and Correct. Probably a very complex regulatory environment, I would imagine it
Tom Hood:
It is. Which, which is where the whole debate around the 150 hour issues coming around. Many don’t realize that that is actually in the state law. So it isn’t something we actually control. We can influence it if we work with the state society, we can, you know, appeal to the, to the legislator folks, but even the state boards of account don’t own that exam or nasba, it’s actually in the state law. And that state law would have to be changed as you do that. So right now, we are the most reciprocal and mobile profession in the United States. Lawyers, doctors, engineers, none of them have the level of mobility. Meaning I could take my CPA license in Maryland and I can go to dc, Virginia, Pennsylvania without any re-licensing, very minimal stuff to get practice in those environments. And that’s different than almost all nurses are the only close second, and I think they’re just about above 40 now. And that’s through this idea of a compact. But we’re definitely the model there. And so we’re trying to preserve that. And and that’s where we work with the State Sea Bay societies and all the boards and, you know, that, that that complex landscape that you just
Paul Barnhurst:
Refer to. Yeah. And I’ve definitely heard, I know the 150 hour rule, I know there’s a lot of opinions, and I’ve definitely heard people talking about that and, you know, the frustration having not done the accounting degree, but knowing CPAs, working with plenty in my career, I I know that’s a hot button issue. We’ll put it that way.
Tom Hood:
Yeah, it’s, I mean, it got decided at our A I C A council meeting in, in just a couple weeks ago in May. And then it is so we’re gonna go with a plan that we have right now called a 12 point plan, and that will hope, hopefully make a, a dent in this pipeline. And then most will say, let’s, let’s hold off on that unless we find a creative way to move to the 120 without calling, causing all that disruption.
Paul Barnhurst:
Got it. That makes sense. So I have one more tech question here, then we’re gonna move a little bit into FP&A and how they work with accounting. Yeah. So, you know, we’ve talked a little bit about it, but just wanna kinda ask a little more direct, how do you see this new technology chatGPT, Bard, you know, other generative AI products changing the accounting profession?
Tom Hood:
Yeah. I mean, it’s already having an impact. One of our, so in, in our future finance group, we just met a couple days ago in our headquarters in Raleigh, Durham. And and all those global executives, finance executives were saying it’s changing the game. A couple of them are software executives and software companies, CFOs, and they said already their board and everybody is, is mandating, they work on AI as part of their new strategy. So it’s influencing even the biggest tech companies immediately mm-hmm. <Affirmative>, which tells me it’s gonna have a huge impact all the way through our profession. But here’s how I’m thinking about it right now. For, for what I would say CPAs or finance and accounting professionals, cgma, et cetera, FP&A folks right now, there’s a, there’s a concept of the fourth industrial revolution. And a futurist named Nancy Giordano wrote a book called Leadering.
Okay. How right. How Visionary Leaders Play Bigger. And I did a LinkedIn live with her, and she was I thought very insightful. She talked about the fourth industrial revolution and how it’s, you know, the exponential technologies are causing dramatic increases in change. And that was way before Chat G P T. And she also made the point that we were only 1% into this new era of AI, machine learning, all these, you know, 4g, 5g, 6g, all, so take bandwidth processing power and storage exponentially increasing. And now it’s combining in these technologies like chat GPT and, and large language models, et cetera. Now. So now what she said about it, I thought, she goes, I’m renaming the fourth industrial revolution to the first productivity revolution.
Paul Barnhurst:
Interest. I like that term.
Tom Hood:
And if Right, I, I know you’re, you’re, I, I see the look on your face. You get it, right? Because what everyone’s doing right now with chat, GPT, is, it’s for professionals. Mm-Hmm. <affirmative>. It’s, it’s incredible. And I think that’s where I think accounting and finance professionals need to start. You have to at least understand it before it starts working its way into every software tool you have. Right. Microsoft’s building it into everything as of now. I mean, there’s pilots actively going on, it’s in teams, it’s in, it’s in Microsoft, it’s in Excel, it’s in PowerPoint, it’s in Outlook, it’s in all those pieces, right? And so that’s, that’s, I think, significant. Now, the other part I think is significant is instead of just focusing on the, you know, shiny thing called chatGPT we need to focus on the trends that are driving that, because the trends are what could disrupt us in our profession, more so than just, just the AI stuff. Now, I, I call this the age of the chatGPT accelerator, because covid accelerated everything by five years according to one of our futurists we work with Daniel Burrus and I think everyone would say that’s true, right? Can you even remember the years back anymore? You get ’em all confused, right? Was it 21 or 20? You know, it’s
Paul Barnhurst:
Like after Covid Before Covid, correct.
Tom Hood:
You can’t put the year on it anymore. Right? It’s just, it’s, I can’t remember when that actually started or ended. So I think we’re in the next phase of that, which is another, at least five year acceleration from ChatGPT
Paul Barnhurst:
Mm-Hmm.
Tom Hood:
<Affirmative> and and, and so our future finance group, again, about 30, 40 leaders yesterday. That’s, yeah. Yesterday I asked them, what do you guys think? Is this an accelerator and what, to what degree? And they said, oh, yeah. It’s, it’s on our minds. We’re all getting asked questions about it. It’s, it’s big. So and then I heard one, one of our CFOs, large software company has an early edition release of the Microsoft copilot. And she said, we had a, we had a meeting on teams. We, we did a transcription, so it’s, now it’s powered by ChatGPT. It transcribed the meeting, then it broke it down into the five actions that were coming out of that meeting, scheduled calendar invites for the people that said they were gonna do it. And literally it was like a, it was a project manager level stuff
Paul Barnhurst:
Mm-Hmm. <Affirmative>.
Tom Hood:
And that was instant, right? Instant. Another, another guy said, I was, I was starting an email, I was trying to find a document that somebody wanted, and the, and then the Outlook went and said, wrote the email and said, here’s where the document is attached it, is this the right one? And then literally it was ready to go. Then he said he would’ve spent probably 30 minutes poking around the, his, his intranet to try to figure out where the heck that file was. Right. I, I can relate to that.
Paul Barnhurst:
Yeah. I, I’ve been there where I’m searching for a file and can’t find it.
Tom Hood:
Yes. And they say professionals lose like some ridiculous amount of productivity looking for things they know they have, but they can’t find where they are. Guilty. Right. Guilty as charged. So, so how do we, yeah. And, and so I think that’s where we start. Now, the other part, I did a poll on LinkedIn for finance professionals. And I said, where are you with ChatGPT? Have you started are you thinking about looking at it? Are you already using it, you know, for a couple months, et cetera? And I think it was like 66% said not touching it. Now that’s only a couple months old, but that went to like, I think it was like 36,000 people responded to that poll. So when I looked at that, I meant, I said, you know what, this reminds me of early days of the internet when everybody was like afraid to do anything. And so finance folks, I think they look at this like a rattlesnake. They like to look at it, but they don’t want to touch it. So the answer is, right now, we’re gonna have to touch the rattlesnake. We’re gonna have to learn, pick it up, learn how to pick it up safely, look at it, figure out how do we deal with this thing.
Paul Barnhurst:
A hundred percent agree. And you know, a couple things I’ve even done is I recently did some, some training. I have a course I’m getting ready to release smart driving value through smart analysis. And I, the, the longest video in it is about 15 minutes. And it’s three examples of how to use chat GPT to help with some analysis, showing both that it gets some things wrong, but also can be help you be more productive. And, you know, I do some Excel training and sometimes I’ll do the same type of thing with Excel. I’m like, learn how to use it to help you. You gotta be smart enough to validate what it’s returning is correct. But it can save you a ton of time. And I’ve seen so many amazing examples. I was at a conference last weekend in California and we had, you know, four demos from finance software of how they’re using FP&A.
We had you know, a polymath that’s developed. He’s helped involved in the first artificial kidney that’s AI driven to help with not kidney. I was pancreas. Pancreas, wow. To help with insulin. He was talking about how he helped build that. And so just the things we’re seeing is amazing. And I’m like, you, anyone who’s not at least learning about it and trying it is doing themselves a disservice for their career. Because I’ve seen, they showed a demo of copilot and the things that we’ll be able to do, if you’re not using it, you’re gonna be way behind in productivity. You’re gonna be working later or you may be out of a job because well, so-and-so’s doing three times as much work as you. Correct. Why is that?
Tom Hood:
Exactly. Yeah. I think you’re spot on there, Paul. And I think that’s why our, our our tribe, if you will, FP&A, finance and accounting, all all of us have to embrace it a bit safely. Now, don’t go popping all your company data into the openChatGPT initiative or Bard, but you have to, if you can get the private instance or your company does, then you can do it, but certainly use it at least for the productivity pieces that aren’t confidential. So that can get a feel for how this, not only how it works, but how fast it works. It’s incredible, right? If you typed in stuff and watch it just spit out good stuff, like summarize this 25 page PDF and you get instantly, here are the five things you need to see in this document. That’s, that’s incredible.
Paul Barnhurst:
And, and then there’s people like my 10 year old daughter that spend, wants to spend all day on it asking it to write bloopers about Paw Patrol and Sonic and other stuff. And it’s funny, she’s used both Bard and GPT and the other day I asked her, I go, so Hannah, which do you prefer? You know, Bard or chat G P T? And she goes, I prefer Chat G P T. And then she was worried how Bard would feel. And so she goes, but I’m glad Bard’s not self-aware. I’m glad it’s artificial intelligence, not real intelligence. So that’s probably been my favorite thing so far on ChatGPT and Bard. That’s,
Tom Hood:
I might have to tweet that with attribution to your daughter. That’s pretty cool.
Paul Barnhurst:
Feel free to use it. It, it was very cute. I wrote it down. I’m like, I gotta remember that one. It’s not
Tom Hood:
Self-Aware. That’s a classic.
Paul Barnhurst:
So, you know, so moving on, talking a little bit about FP&A, we’ve covered a lot on, you know, the accounting, but just from your per perspective know, what do you see the key differences between the accounting role and the FP&A role?
Tom Hood:
So I, I think the worlds are colliding. I think they’re blending a lot. I think they need each other, quite frankly. . And that’s what I’m seeing when I talk to these large corporate structures. I mean, the difference with FP&A is you guys, as far as I know, are to, and gals are totally focused on the future trying to project and forecast and tell the business here’s what’s coming. Whereas we know the accounting folks that, obviously the controllers they’re worried about today, although even they are beginning to look at the integrity of the data in, in like how it feeds the forecast. Yep. So that’s critical as we work more together in this area. Obviously the CFO office or treasury doing cashflow projections and all that. And that’s where they all over, if you did a Venn diagram right? They’re all intersecting.
And then what’s happening is we’re probably intersecting faster and more now that we’re closing books faster, we’re getting the core data right. And then being able to use it in that way. So I think it gets to having really good business partner relationships with FP&A, controller, right. Finance folks and mm-hmm. <Affirmative> and even into this statutory reporting, et cetera. So that you’ve got all these pieces working well together and there are sometimes FP&A folks who’ve been moving into the controller and, and some of those roles and vice versa finance folks from those roles coming into fbna. It really is a bit of a blurring of the, of the lines of distinction there.
Paul Barnhurst:
I agree. And I really like how you said, having to work together. I still remember one role I had, I was in the control talking to controllership pretty regularly because we had a number of sticky accounting issues, things we were trying to clean up. We had some markets that really hadn’t had FP&A support and corporate hadn’t really been watching globally cuz they were very small and now we were trying to standardize ’em. And so, you know, accounting wasn’t always being done right. They were things that should have been done differently. And I still remember the one time I, I spent a lot of hours with controllers and one day he goes, why do you always come to us with difficult questions? Well if they’re easy I wouldn’t be coming to you <laugh>. You know, but we, we worked through a number of issues and I was so grateful I had them as a resource.
Especially going back to the business because say, look, I’ve asked, I could have told you from upfront, you probably couldn’t do that, but I’ll ask the question of the controller, say, look, from the official rules is we can’t, we can’t go there. Or here’s what we can do. Yeah. And having those discussions, what are our options? Cuz there’s obviously times where there’s flexibility in how you treat things and understanding that is was invaluable to have that controller. So I, I’m completely with you that there’s a blurring there’s definitely a partnership that needs to happen. And so speaking to that, how do you think accountants, you know, FP&A, how do we work better together? What can we do to make sure we’re kinda on that same page and all working to help move the company forward?
Tom Hood:
Well, I mean it gets down to communication, shared understanding, right? That’s critical. I think it gets to collaboration. How can we collaborate together to get a better ultimate product? But, but the big buzzword in the corporate finance world is the idea of a finance business partner. And they’re moving controller functions often into the business units, probably alongside FP&A people. Mm-Hmm. <affirmative>. And that’s where they have to really partner together. Because sometimes I think FP&A folks might know a little bit more about forecasting and projection type stuff and the controller or the CFO types will know more about the data coming out of the finance system and where you can take it and move it, what’s right, what’s right to start with or what might be wrong. And they can identify problems if they should they exist.
Paul Barnhurst:
Completely agree. That makes, makes sense to me that yes, they’re gonna understand the, the financials better, they’re gonna understand where the issues might be, the accounting, the data, and you really need to rely on them because I know I’ve tried to forecast with bad data, it’s not fun. Nobody wants to try to figure out the future. I’m sure you dealt with this as a CFO where you’re trying, okay, how do I make a projection with this? I don’t even know if it’s right. Right. Like you mentioned earlier.
Tom Hood:
Exactly.
Paul Barnhurst:
You know, a, a question I get asked a lot, I’d say particularly by people working internationally, but sometimes in the US but I get asked regularly, probably almost at least weekly on LinkedIn by accountants how to make the transition from accounting to FP&A. Yeah. A lot of ’em wanna go and, you know, they wanna be a little bit more business facing. Yep. And that’s where they, they often see that opportunity. Any advice you would offer to people working in accounting that wanna make that transition? Things you’ve seen that works or thoughts?
Tom Hood:
Well, I think so if they come from a pure accounting background or even a CPA a background and they haven’t been in corporate or in the business world per se, they’ve been in like a public accounting, then they need a lot more skills, right? To get mm-hmm. <Affirmative> to move up. They probably have skills at a basic controller plus level right now. But to go to that CFO, you’ve gotta need a lot of strategic for foresight and strategic thinking. You’re gonna have to understand like projection techniques and those kind of things. And so I think the notion is you have to start learning the new techniques about what the business is gonna need in a more complex environment. And by the way, in our CGMA model at the strategic level, which ACPA could go right to, but FP&A folks could get to that and take that with whatever the prerequisites are.
Mm-Hmm. <affirmative>, they would get to all these things like supply chain forecasting, understanding complex capital structures, how about business models, emerging business models and all those things. Cuz everything’s in flux right now. It’s, it’s very complex environment, but we need folks that can understand with a finance background to be able to say, what’s going on and what can I forecast about? So I would say you have to learn a lot about business models, a lot about strategy, a lot about forecasting software and techniques. Cashflow is king right now. So you’re gonna need to make sure like, you know, you can’t just do the indirect cash flow statement in this environment. You need a real cash flow that’s forecasting all the key attributes of the balance sheet and income statement. So those, those would be where I would say you have to start at the AICPA and CGA we’ve got lots and lots of training resources to help build that out. So I would say we’ve got some of that stuff, but that’s what I would say you have to do. What do you think about that?
Paul Barnhurst:
I I I tend to agree. I tell people, you know, most, most of the time people get there trying to figure out how to get a job and make the switch. And I say one of the things first is, is are you sure it’s what you wanna do or is it just because it looks attractive? Or it may be a promotion in that, you know, if you really enjoy process and you really enjoy everything being precise and knowing what the numbers are, then it may not be right first you gotta have that passion for the business. It’s really about you gotta be willing to learn and be able to be forward thinking. One of the biggest things I say is you gotta, like you said, strategy, understanding the business. There’s those technical and the other skills you talked about. And I give the example, I worked with the guy that great accountant really liked him and I was looking to hire an analyst and I asked him, Hey, would you be interested in this role?
He is like, oh no, no I did that for 10 months. You guys, it’s all fuzzy math. Is the way you put it. Like, I like to know that the answer is right. He’s like, you can go find somebody else. And I just kind of chuckled, <laugh>, you know. And so that’s kind of the first thing I I try to tell people is, is, is it right for your personality? Why are you doing it? Because I think sometimes people think, well I can get the promotion and oh yeah, they’re, they have that seat at the table cuz FP&A is often talking to the CFO or sometimes the CEO and supporting senior leaders. So first is understand your personality and then make sure you get the skills to be successful in the role.
Tom Hood:
I like that. I like that a lot. I think you’re right And it and, and your the personality piece which ties to your, you know, what kind of those in internal, in internal personal skills you have makes an impact there, right? Because you’re gonna have to be a good communication and storyteller, which which is also in the CFO remit as well. So again, lots of combinations but I think the best answer is to figure out how they can work really well together. Because then you’ve got one plus one equals three
Paul Barnhurst:
A hundred percent agree. Anytime you have a team working together all in the same direction, you get more done, you’re more productive. Everybody wins. You know, a few months ago we had a, I did a LinkedIn live, we had a lot of people attend, you know, we kind of for fun called accounting versus FP&A and talked about at first how there’s conflicts. Yeah. Cause almost everybody we had on the call had worked pretty much in both. And so they’d experienced both sides of the fence and talked about some of the challenges and then we really spent the last time for focusing on how if you work better together, you accomplish more. Yep. Like evenly. And you need to understand why like fp and a isn’t mad at you personally because they don’t have their numbers and it’s workday six. It’s that they have the CEO or the CFO breathing down their back because it was expected yesterday. Yeah. And so when you lay out those clear expectations and everybody understands why it builds a lot more empathy and understanding even if you can’t change what’s going on.
Tom Hood:
Yep. Exactly. Yeah.
Paul Barnhurst:
This question here, this is kind of a new one we’ve added that we just started here for this year’s season. And so this, what I wanna ask is, if you could talk to one person in the world, dead or alive, who would it be and why?
Tom Hood:
I think it would be sir Isaac Newton.
Paul Barnhurst:
I like that one. Why? Because
Tom Hood:
He has a, he has a, a, a favorite quote of mine that I somewhat live by that says if I can see farther than people, it’s because I stand on the shoulders of giants. And what he’s saying there, which I think is the future to our post AI existence, is as a profession, I think the human skills are gonna matter more than ever mm-hmm <affirmative>. And it is gonna be who do we connect to? How do we collaborate well and work together, thus standing on the shoulders of giants. I like I talk about our future finance group and I’m like, you are the giants I’m standing on right now cuz you’re giving us all this insight that we can then share for the better of our entire profession. So that’s where I would go with that.
Paul Barnhurst:
I I love that answer and I really, I didn’t realize that quote was from him. I’ve heard that quote. I didn’t remember that it was from him. I think it’s a great quote and I love the way you put that around AI and the future of finance and kind of bringing it back to what we’ve been talking about. So now we have a couple kind of more personal questions. This is one more personal we like to ask, we like to ask everybody something unique about themselves. Something you know the audience wouldn’t know, they’re typically not gonna find online. So something unique about yourself.
Tom Hood:
So there’s I think two unique pieces that are, are worth sharing. One is, the reason I went into accounting, my father being a Baltimore city cop, was the fact I wanted to be in law enforcement and was going to go for the FBI. Cuz the easiest way was accounting degree. It was either account or law. I certainly couldn’t afford a basic accounting degree so I certainly wasn’t gonna afford a law degree. So thus I entered this strange world of accounting that led to a really fun career. Second is on weekends I am a farm hand cuz my wife is runs a school farm in, in Baltimore County, McDonough’s school. And she early childhood, but she teaches K through 12, literally farm to fork because these kids plant the seeds, harvest them and learn how to cook with them. And and then ultimately a lot of that stuff goes to the Maryland Food Bank. So that’s a fun hobby. So you’ll see me on the farm running around with the chickens and trying to plant things and such like that.
Paul Barnhurst:
Great. Sounds like a a worthwhile, both from a service standpoint and just from being out and having fun. I I loved your example of why you did the accounting cuz one of my best friends, that’s what he did. He was going accounting cause he wanted to go F B I and then he got married and his wife’s like, I don’t know if I could have you being an FBI agent. And all of a sudden he’s like, I’m just finishing my degree. Let me just get my last classes and start working. And he never did FBI. I’ve had a very successful career and they’re great together. But you know, everything kind of changed. Yeah. So I’m sure you’re not alone in that is Yes. People wanna go to the FBI, it’s one of the easier or easiest routes to go. So I’m sure you’re not the first or the last to go that route.
Tom Hood:
Yeah. And in my case, my eyesight wasn’t good enough, so you had to have 2020 uncorrected at that time.
Paul Barnhurst:
Got it. And
Tom Hood:
Contacts, but I didn’t have uncorrected, so they were like, you don’t, you just can’t do this.
Paul Barnhurst:
Yeah. I’m sure it was hard at the time, but it sounds like it’s worked out well. I was
Tom Hood:
Very glad for that. Now, in retrospect, <laugh>,
Paul Barnhurst:
I could believe it. So this is a question we like to ask everybody. Our sponsored Datarails, you know, a planning platform that’s built around Excel. So their idea is you’ll bring Excel with you and let us provide the database benefits of our tool. So what is your favorite thing about Excel formula function feature? What do you like best?
Tom Hood:
I would say the, the capability of the formulas and the one I use a lot is the, is the, like the data sort because I do a lot of polling and I have to sort those results quickly and get them so I can use them. Pretty basic stuff by the way. Sure. As compared to what’s capable. But I will say we’ve been predicting the end of Excel now for about a decade. And, and I do not see that end in sight when I talk to finance and accounting pros.
Paul Barnhurst:
Yeah, I, I’m with you. I say even if Excel goes away, let’s just say it does, the spreadsheet is not going away. That form function is just so incredibly valuable. I don’t see an end to excel anytime soon, but I don’t, I don’t know that I ever really see an end to that, that spreadsheet type function. Because you can just, even if you’re just prototyping Yeah. You may not be using it for any of the, you know, the final stuff. But just to test things, it’s just so agile and flexible. It’s incredible. So if someone was starting a career today and they wanted to work in FP&A, you know, particularly they really wanted be in the budgeting and forecasting the analytics side. Any advice you’d offer ’em?
Tom Hood:
I think that they, if you wanna learn a business and help guide it into the future, that’s what a career in FP&A will allow you to be part of. And so that’s where I would look at it. Obviously it’s about understanding the business really deep and understanding new tools and technologies that can help you do that analysis and project what that business will look like into the future, various scenarios, et cetera. So that’s what I would say from that perspective.
Paul Barnhurst:
Got it. I think that’s a great answer. Appreciate that. And then last question, if someone wants to get ahold of you or, you know, reach out to you, what’s the best way to do that?
Tom Hood:
So two places. Linkedin go to my LinkedIn profile, Tom Hood. You’ll see it out there. I think I’m I’ll, I’ll come right to the top of that search now that I’ve got status. Twitter, it’s @Tom Hood, one word and an email. It’s tom.hood@aicpa- cima.com And yeah, send me a, a, a connection request and I’ll connect to you and we’ll go from there.
Paul Barnhurst:
Right. I appreciate that. And we’ll make sure to put those in the show notes and you know, if there’s any other resources or things you want us to mention, you know, feel free to send those over and we’ll add ’em to the show notes. But thank you again, I really appreciate you carving out some time for us. I know you’re extremely busy, but enjoyed chatting with you today. So thank you.
Tom Hood:
It’s great being here with you Paul. Thank you. And to to all the listeners out there, thank you for listening.
