Should a CFO be a Professional Accountant?
Stathis Gould | January 6, 2014 |
IFAC’s Discussion Paper, The Role and Expectations of a CFO: A Global Debate on Preparing Accountants for Finance Leadership, highlights the recent increase in expectations on the chief financial officer (CFO)—higher than ever before. CFOs are also now seen as organizational leaders and business partners, in addition to being the financial gatekeeper.
A key theme of the paper is that finance leadership and professionalism apply to both stewardship and business partnership. Finance leadership requires an appreciation of the importance of the dual aspects of compliance and performance. Professional accountants need to live up to these expectations if they are to occupy finance leadership positions.
It is now more important than ever for the accountancy profession to develop outstanding professionals who are well equipped to work in business and government, and well prepared to take on finance leadership roles.
The benefit of professional accountants in CFO roles, and related finance leadership positions, should be more widely understood and valued by regulators, employers, and other stakeholders, as well as better articulated by the profession.
To fulfill the increasing expectations, the contemporary CFO has to be seen as a key organizational leader and communicator requiring a combination of professional and ethical foundation, as well as commercial acumen. Given their professional education and training, and with relevant career experience and aptitude, professional accountants in CFO and related finance leadership roles should be well placed to meet expectations.
However, in some jurisdictions professional accountants in finance leadership roles are far from universal. The most common level of education for a CFO is a degree in finance (29%) followed by a chartered (professional) accountancy qualification (27%) and an MBA (27%), according to a 2010 EY survey of 669 CFOs in Europe, the Middle East, India, and Africa conducted by the Economist Intelligence Unit. This trend has significant implications for the status of CFOs within companies and public sector organizations. It suggests the profession has either not been adequately meeting the needs of organizations or has failed to sell the value of accountancy professionalism to finance leadership.
A professional accountant in business brings the underlying common ethics and mindset of a professional accountant, as well as core technical and commercial skills. The prerequisite organizational knowledge, business acumen and appreciation of the perspective of other disciplines should be achieved through personal experience and development. Combining technical with wider interpersonal and business skills should be seen as excellent platform to add value in organizations in support of sustainable success.
The increasing expectations of CFOs and finance and accounting functions apply to commercial as well as government and public sector organizations. A CFO at the Cabinet Table?, published by the Institute of Chartered Accountants in England and Wales, highlights that in the government and public sector in the UK, financial skills for managing decreasing resources are needed more than ever. However, within government finance directors do not currently have sufficient authority and influence in comparison to their counterparts in the private sector.
Preparing professional accountants for finance leadership is a critical issue for:
- professional accountancy organizations and employers, who prepare accountants for finance leadership;
- regulators, who are striving for well-governed organizations and market integrity; and
- professional accountants, who need to consider how to develop the necessary skills and competences for finance leadership.
With the launch of The Role of the CFO, IFAC is seeking views from these groups on the key implications of these changing expectations for CFOs, especially on five key questions.
- What are the main requirements and expectations of CFOs and finance leaders?
- What are the implications for skills and competency needed?
- What are the key actions for professional accountancy organizations and employers to prepare professional accountants for finance leadership?
- What are the main factors for professional accountants to consider in striving for finance leadership?
- What might regulators and other stakeholders do to influence the professionalism of finance leadership?