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What's in Store for the CFO Role?

 

Financial reporting, and then some. That’s about as succinct as you can get when describing the ever-changing responsibilities of the chief financial officer (CFO), as explained by VSCPA member Anne Hagen, CPA, in her session “The Evolving Role of the CFO” at the Society’s Business & Industry Conference on May 12 at the Williamsburg Lodge.

The CFO role traditionally encompasses all the financial dealings of an organization, from generating timely, accurate financial reports to developing an organizational budget to audit preparation to timely filings with regulatory bodies. But that’s just the tip of the iceberg for a position that is increasingly encompassing several behind-the-scenes departments.

Many CFOs must fulfill any number of non-accounting roles, including oversight of:

  • Information technology
  • Risk management and regulation
  • Human resources
  • Vendor management
  • Legal/compliance

“The neatest thing about being a CFO, in my opinion, is that we can easily transfer our skill set to supervise other non-accounting areas,” said Hagen, the CFO at the Masonic Home of Virginia outside Richmond. “How many people can really take on the accounting role? There are very few people out there who can be a CFO who are not trained.”

She added: “It’s a lot easier to be a CEO or an operating officer or any of those other types of jobs if you’ve got the accounting background. But not everyone can go the other way and go into accounting. You have to have that specialized background, that education, to be able to do it.”

Take a look at the typical CPA skillset and it’s clear why organizations feel comfortable putting CFOs in charge of non-accounting functions. Successfully obtaining the CPA credential requires attention to detail, comfort with numbers and the ability to prioritize and meet deadlines. CPAs who show the supervisory skills to reach the executive level show those skills and demonstrate acumen in several key “soft skills.”

That goes double for CFOs who work for nonprofit organizations, who must wear several hats in order to help keep costs under control.

“Because a not-for-profit has limited resources, and it’s usually not but so large, you can expand your role,” Hagen said. “CFOs’ roles are often expanded beyond the basics of finance and budgeting.”

As the person in charge of an organization’s finances, CFOs must be good communicators with all levels of the org chart to get the information they need. They must possess the analytical skills to make recommendations on future priorities and policy, and they must stay current on best practices and monitor what’s unfolding in the market.

“You have to engage the people you are working with,” Hagen said. “If you don’t, you are hard-pressed to get that budget to work. If they’re not involved in that process, it just doesn’t mean anything to them.”

And that includes managing up and out, conveying results and metrics to officers and shareholders.

“Don’t let your management take that for granted,” Hagen said. “Say, ‘We got through this and did really well.’”

Deloitte divides the CFO’s role into four areas:

  • Catalyst: Stimulate behavior across the organization to achieve key objectives
  • Strategist: Provide financial leadership to help determine strategic business direction
  • Operator: Balance capabilities, costs and service levels to keep finances healthy
  • Steward: Protect the assets of the organization

According to consulting firm Armanino, 55 percent of a typical CFO’s time is occupied by accounting functions. Ideally, CFOs have more time to focus on the strategic and business leadership side of their roles, currently only 25 percent of the typical CFO’s day-to-day responsibilities.

Today’s CFO must be a complete leader with the perspective to keep a big-picture view of an organization’s finances and priorities. The respect for the CPA credential, combined with demonstrated ability to manage people and systems, means that the CFO carries immense influence in most organizations.

“The CFO is a great position because it gives you the opportunity to make change,” Hagen said. “You’re in a place where you’ve learned a lot. You’ve earned the respect of that organization or you wouldn’t be in the role to begin with. Therefore, your recommendations, if they make sense, are usually adopted. It’s exciting to see something that might not be going quite right, make some tweaks and really be able to make that happen.”

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