The Role of the Chief Financial Officer

Essentially, the role of a chief financial officer (CFO) is to partner with the chief executive officer (CEO) in helping a company achieve its goals. Aside from handling company finances, the CFO may, at times, exercise supervision on other departments such as IT or HR. The CFO is also responsible for seeking investments from public financial markets or launching public offerings.


To qualify for chief financial officer, you must be a member of a duly recognized organization of professional accountants or you must be a university graduate, with at least five years of experience in managing corporate finance.


The CFO is mostly responsible for presenting the company's financial position as well as its financial projection. S/he is required to present information and analysis as well as his/her suggestions and recommendations on issues with regard to the company's financial aspects.


In order for the Board of Directors to reinforce its corporate decision making, the CFO needs to furnish, along his executive resume, the following information for the BOD's review and consideration. These include yearly annual cash flow projection, financial forecasts and long term business planes; company budgets consisting of capital, overhead, and manpower budgets with their corresponding variance analyses; company's quarterly operating results; default in principal payments and of public deposit, dues to  lending institutions as well as penalties on overdue payments (if any); joint venture details and vendor agreements; liability claims issued against the company and the company's failure to recover its inter-corporate finances and trade liabilities.


The Chief Financial Officer is also required to supply data needed for the Director's Report. To do this s/he needs to make sure that the following responsibilities are carried out consistently and effectively. The Chief Financial Officer should prepare the financial statement, which presents the company's cash flow, operational affairs and results and changes in equity with accuracy and transparency. S/he should also ensure that the company's books of accounts are properly maintained. Moreover, the Chief Financial Officer should, at all times, use appropriate accounting standards in preparing financial statements, seeing to it that the figures are based on prudent and unbiased judgment. Other functions of the Chief Financial Officer include keeping track of the company's internal control system, in that it has carried out and monitored effectively as well as ensuring that the company continues practicing corporate governance at best.


The Chief Financial Officer's responsibilities are extensive, in that his /her reporting functions are both internal and external. The CFO processes and presents all necessary information needed by the Board of Directors for making decision affecting the company. Moreover, the Chief Financial Officer fulfills external reporting obligations, approving financial accounts before these are disseminated to company authorities concerned.


The Chief Financial Officer plays a highly critical role in steering the company's direction. As in any corporate organization, its financial statement mirrors its performance and gives an overview of where it is heading in the future. Any hint of doubt that may be seen in the financial statement may make the company's performance questionable, if not subject to suspicion. The Chief Financial Officer should therefore exercise his/her responsibilities with care and caution, given that the measure of the company's performance starts with him/her. The Chief Financial officer must do the job with integrity and competency in order to generate financial statements that present accurate and credible information. Guidelines are stipulated in the Code of Corporate Governance.

 

Gail Esparan