Cfo Changing Roles

Touro University International

Hanumanthappa C VijayaKumar

Course: FIN501

Module 1: Introduction to Financial Management

Case Assignment: CFO

Professor: Dr. Geoffrey Clarkson

Introduction:

In this case study we will articulate why CFO's role is getting more and more complex and is getting multitasking along with some regulations passed post Enron and post worldcom era. The CFO's role is not only expanding but also demanding regulatory compliance which has made the role much challenging. A recent Survey shows at CFO.com that most of the finance manager would not like to take the post of CFO in near future because of the complexity of the role and new regulation like SOX in place. SO The CFO Job has become less desirable with all the new developments.

CFO Then and Now:

In the traditional executive suite the CFO's role was to keep tabs on the money - what came in and what went out - and then make sense of that information for the board of directors and top management. Today CEO's are delegating high level management responsibilities at such a rapid rate and regulations are piling up that CFO's are being stretched even further putting them on the hot seat. Now CFO's not only need to have finance expertise and leadership but also integrity, strategic vision, communication skills and business acumen. Other than the CEO, the CFO is the only executive who touches every aspect of the business, internally and externally. Now they have to be savvy enough to be effective in operational reviews and to play coach. Growing competition, a sharper focus on corporate governance and technological innovation all play a part in radically changing the way CFOs impact an organization. The CFO must have an array of skill sets to survive and thrive. Sarbanes-Oxley has stepped up accuracy, but the pressure to get the numbers right is weakening finance executives' threshold for risk.

Today's CFO clearly needs to be a partner with the CEO and, in the case of larger businesses, heads of the major business units to help shape corporate strategy, drive alignment across the organization and achieve success.

Knowing the financial tools of the trade - they are becoming more technologically sophisticated by the day - is vitally important, particularly from an efficiency perspective. Financial reports must be generated accurately, as always, but more quickly than ever before.

The CFO also needs to be a sounding board, and have the freedom to offer his or her financial perspectives on a whole host of issues, without fear of stepping on anyone's toes. Importantly, he or she must communicate in a credible and clear fashion inside the company to the executive team and to employees, and outside to customers, shareholders, regulators and others. CFOs today have to look well beyond the balance sheet to truly understand and manage risks and opportunities. In this era where businesspeople are no longer respected as they have been in the past, we must have a very high test for financial integrity.

In this complex world, the CFO must also drive a focus on risks all across the company. He or she must be asking: Are we measuring all of the risks and are we managing all of them?

And finally, the CFO must be an agent of change to help challenge the status quo, to understand trends, to be questioning the business model, and to help move the organization forward. A CFO should never be too content with today's success. What about tomorrow?

The outcome of successfully accomplishing these roles can be quite rewarding, especially for shareholders. It's also personally rewarding in the sense CFOs today have a great opportunity to help drive positive change in an organization. At the end of the day, the CFO is a team member first, serving as a bridge between business line units, management, the board and shareholders

The challenges for CFO has changed significantly. Then, CFO had to worry about

a. what has