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Financial Directions – CFOs play strategists and stewards

A survey of 500 global senior executives by Deloitte Consulting and BusinessWeek finds that the CFO is in a unique position to act as a bridge between the chief executive and board, thanks to the increasing authority of the board and audit committee, along with the pressure on CEOs to relinquish their role as chairmen.

The report also finds confusion surrounding the responsibility for the growing compliance burden: only 30% of board members agree that the CFO takes charge of regulatory compliance matters.

CFOs are more concerned than the rest of the board that ?finance by committee? may be a result of the increasing role of audit committees. The CFO is said to be moving back into a more traditional ?corporate steward? role in the aftermath of corporate scandals such as Enron and WorldCom. But respondents said their organisation would benefit if the CFO played a more strategic role.

The report argues that CFOs will have to juggle stewardship and strategy in future. But not all CFOs are happy with this: only 35% see strategy as part of their ideal role, while 47% seek a balanced approach.

However, a study by Korn/Ferry International and Oliver, Wyman & Company concludes that CFOs want a more strategic role. The CFO of one insurance company commented, ?Are we about being fiscal traffic cops, or are we about partnering with the businesses to solve business problems??

The study finds that CFOs may split their strategic and finance functions, in response to increasing corporate governance legislation. One company questioned has created an accounting group reporting separately from the CFO. But dividing the functions in this way could create friction and hamper shareholder wealth creation, the survey says. A more realistic option would be to separate financial and management control under the CFO?s umbrella, with a chief accounting officer reporting to the CFO. This new position would have a direct line to the audit committee of the board.

The report finds distinctions in the way CFOs define their role and spend their time. European respondents devote twice as much ?share of mind? to risk management than their North American counterparts, while insurance CFOs expect to increase involvement in strategic planning more than their banking counterparts.

Two-thirds of respondents are currently responsible for corporate development and business portfolio management, and 88% are responsible for investor relations. They stated that risk management and IT are the areas they expect to ?spend more time on in the future?.

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