The inspiration for this article came from recently having been approached by two separate companies in different parts of the globe to come onboard as their interim or out-sourced CFO. Both are new businesses and are not tech startups but do have a strong tech angle. Both are founded by individuals or teams that have no background in the core businesses of their companies but share a down-to-earth, common-sense approach based on simply, truly understanding their target customers and giving them what they really need and want. I know…it’s quite shocking. The interesting point is that neither of them asked me specifically what I would do for them in this role. Having worked with them on unrelated projects over the years, they simply believed and trusted me that I knew what to do and would follow my lead allowing me to define the scope of the engagements.
So I thought, it would be helpful to put out a series of articles outlining the role and duties of a CFO. Though this is by no means an exhaustive list and in practice varies from situation to situation, I hope that it provides enough insight and context to make the non-financial executive more savvy in discussions with potential CFO’s and better understand how a CFO can be a powerful asset to a business, including SME’s.
Controllership
This can be considered the historical aspect of the role in that it focuses on the past performance of the company covering:
Reporting: Ensuring that historical financial information is presented accurately and on schedule to stakeholders for board meetings, earnings calls and mandatory filings such as quarterly and annual reports. It is critical that this information is accurate as it is the basis of decision making for analysts and for stakeholders who are typically members of the management team and board, shareholders, employees and creditors.
Financial Controls: Ensuring that effective internal processes are in place to prevent financial fraud, embezzlement, money laundering and the now all too famous KYC (Know Your Client) also known as CYA (Cover Your Ass) requirements. These vary from country to country though there is increasing co-operation and convergence between countries as exemplified by FATCA and the Common Reporting Standards initiatives. In the U.S. , the Sarbanes Oxley act of 2002 holds CFO’s along with the rest of the senior management teams and boards of public companies and the accounting firms they engage personally responsible for the accuracy of the financial statements that they deliver. This was prompted by the financial scandals at the time involving Enron, Tyco and Worldcom to name a few.
Compliance: Related to the last two points, the CFO is also responsible for the company complying with the various accounting, financial and reporting requirements of the countries it operates in. These are some of the common areas:
- Accounting & Tax Compliance
- GST or VAT filings and payment
- Monthly, Quarterly and Annual Financial Statement Filings
- Income Tax filings
That’s a quick synopsis of the controllership role. In my next article in this series, I’ll touch on the treasury duties of a CFO. If you would like some extra-credit reading in the meantime, here is a link to an article on a recently closed tax loophole called a “Double Irish with a Dutch Sandwich” that companies like Google and Apple used to save on paying billions in taxes on their overseas income (https://dukeundergraduatelawmagazine.org/2017/06/01/apples-double-irish-with-a-dutch-sandwich/).
