Senior Financial Director: Financial Governance, Value Management, and Strategic Control (Revised Edition)

Author: Zhang Yunting
Publisher:
Publish Date: 2003-09-01
Features: The knowledge economy has changed the resource structure of enterprises and enriched the content of resources, leading to the emergence of the concept of "pan-resources." The concept of pan-resources refers to "the collection of all parts that are useful or valuable to the enterprise," extending the traditional concept of financial resources. Pan-financial resources can be divided into two major categories: hard financial resources and soft financial resources. Hard financial resources are tangible resources that exist objectively and can be utilized by enterprises under certain technological, economic, and social conditions. Their main components are natural resources and traditional financial resources. Soft financial resources are intangible resources based on intellect, including knowledge resources and time resources, etc. Knowledge resources are typically classified into four categories: market resources, intellectual property, human resources, and organizational management resources. In line with the concept of pan-resources, the resources allocated by finance should also be "pan-resources." With technological advancement and economic development, the role and relative value of hard financial resources in enterprise development tend to decline, while the role and relative value of soft financial resources tend to rise. Therefore, when managing finances, the Chief Financial Officer (CFO) should respect the role of hard financial resources in the entire pan-resource system while also emphasizing the strategic role of soft financial resources and their regulatory effect on hard resources.
2. Knowledge Capital Enters the Scope of Corporate Finance
Knowledge capital is more valuable in terms of growth than financial capital. Enterprises should cultivate knowledge capital as a strategic capital that determines future development, which requires effective support from finance. On one hand, enterprises should regard the cultivation of knowledge capital as an intrinsic element of financial management. On the other hand, finance should facilitate the cultivation of knowledge capital during capital operations and treat it as a crucial financial management strategy. The capital raised by finance should include both financial capital and knowledge capital, absorbing as much external knowledge capital as possible to improve the environment and structure of the enterprise's soft resources. Through methods such as dissemination, diffusion, and foreign investment, the potential of knowledge capital should be maximized. After being capitalized, enterprises should study the principles and methods for knowledge capital owners to participate in profit distribution. Additionally, they should explore indicators for the value and operational efficiency of knowledge capital to establish a comprehensive financial evaluation system that covers pan-financial resources.
3. Giving Rise to Strategic Management Accounting
The function of traditional management accounting primarily emphasizes internal budgeting and planning control, often relying on financial accounting information and predicting environmental changes based on past events. Financial accounting and management accounting operate separately according to their respective accounting systems, with dual accounting processes aimed at external reporting and internal management, making it difficult to share information between the two sets of data. The knowledge economy challenges the outdated accounting systems built on industrialization, requiring enterprises to abandon conventional thinking and adopt the mindset of strategic management accounting. To adapt to the concepts of pan-resources and knowledge capital, integrate these diversified information indicators into the accounting management system, and achieve data and information sharing, enterprises must apply the principles and methods of strategic management accounting, combining the functions of financial accounting and management accounting while retaining the traditional accounting management content, methods