Editing Chief financial officer

{{short description|Person in a company or organization responsible for finances}}
{{redirect|CFO}}
{{Use dmy dates|date=September 2015}}
A '''chief financial officer''' ('''CFO''') is an [[Corporate title|officer]] of a company or organization who is assigned the primary responsibility for making decisions for the company for projects and its [[finance]]s; i.a.: [[financial plan]]ning, [[Financial_risk_management#Corporate_finance|management of]] [[financial risk]]s, record-keeping, and [[financial reporting]], and, increasingly, the [[Data analysis|analysis of data]].
The CFO thus has ultimate authority over [[FP&A|the finance unit]] and is the chief financial spokesperson for the organization.

The CFO typically reports to the [[chief executive officer]] (CEO) and the [[board of directors]] and may additionally have a seat on the board. The CFO directly assists the [[chief operating officer]] (COO) on all business matters relating to budget management, cost–benefit analysis, forecasting needs, and securing of new funding. Some CFOs have the title '''CFOO''' for '''chief financial and operating officer'''.<ref>{{Cite web|url=https://wikimediafoundation.org/wiki/Job_openings/CFOO|title=Job openings/CFOO - Wikimedia Foundation|website=wikimediafoundation.org|language=en|access-date=2018-06-11|archive-date=12 June 2018|archive-url=https://web.archive.org/web/20180612142705/https://wikimediafoundation.org/wiki/Job_openings/CFOO|url-status=dead}}</ref> In the majority of countries, '''finance directors''' ('''FD''') typically report into the CFO, and FD is the level before reaching CFO.

==Legal requirement==
The appointment of a CFO or FD may be mandated by law. For example, in India, per the provisions of Section 203 of [[Companies Act 2013]] every [[public company|publicly listed firm]] having a paid up [[share capital]] of Rs. 10 Crores, requires a full time CFO. In the government sector this may be specified also: The US [[Chief Financial Officers Act]], enacted in 1990, created a CFO in each of 23 federal agencies. (See also [[Office of Management and Budget]] and [[Office of Federal Financial Management]].)

==Role==
The chief financial officer was traditionally viewed as a financial "[[gatekeeper]]". 
Over time, the position has become one of an  advisor and strategic partner to the [[CEO]].<ref>{{Cite web|url=https://techcrunch.com/2015/04/14/cfo-role-shifts-from-number-cruncher-to-business-leader/|title=CFO Role Shifts From Number Cruncher To Business Leader – TechCrunch|website=techcrunch.com|date=15 April 2015 |language=en-US|access-date=2018-05-01}}</ref><ref>{{Cite news|url=https://www.forbes.com/sites/forbestechcouncil/2018/03/26/with-ai-cfos-are-poised-to-evolve-their-role-within-organizations/#62b12a4e5175|title=With AI, CFOs Are Poised To Evolve Their Role Within Organizations|last=Harris|first=Aaron|work=Forbes|access-date=2018-05-01|language=en}}</ref> 
According to one source, "The CFO of tomorrow should be a big-picture thinker, rather than detail-oriented, outspoken rather than reserved, prefer to delegate rather than be hands-on, emphasize what gets done rather than how things are done, and make collaborative rather than unilateral decisions".<ref>{{Cite news|url=https://www.entrepreneur.com/article/272476|title=Good Chief Financial Officers Focus on Much More Than Finance|last=Zwilling|first=Martin|date=2016-03-18|work=Entrepreneur|access-date=2018-05-01|language=en}}</ref> 
The duties of a modern CFO, therefore, now straddle the traditional areas of financial [[stewardship]], as well as the more progressive areas of strategic- and [[Leadership#Management|business leadership]], with increasingly direct responsibility and oversight [[operations management|of operations]].<ref>{{cite web|url=https://www.forbes.com/sites/jeffthomson/2016/01/14/why-cfos-need-to-be-chief-future-officers/|title=Why CFOs Need To Be Chief Future Officers|first=Jeff|last=Thomson|website=Forbes.com|access-date=21 November 2017}}</ref> 
This significant role-based transformation is best-evidenced by the "[[CEO]]-in-Waiting" status that many CFOs now hold. 

Here, [[CEO]]s increasingly expect their CFOs to be active participants in shaping the strategy of their organizations, including challenging the current strategy.
<ref>{{cite web|title=McKinsey on Finance. No. 27, Spring 2008|url=http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/corporate%20finance/mof/pdf%20issues/mof_issue_27_spring%2008.ashx|work=McKinsey.com|access-date=1 June 2016}}</ref>  <!-- The uneven pace of recovery worldwide has made it more challenging for many companies. ?dated? --> 
CFOs thus play a critical role in shaping their [[business strategy|company's strategies]] today, especially in light of the highly uncertain macroeconomic environments,<ref>{{Cite web|url=https://techcrunch.com/2014/10/22/1071706/|title=When Should Startups Hire A CFO? – TechCrunch|website=techcrunch.com|date=22 October 2014 |language=en-US|access-date=2018-05-01}}</ref> where managing financial volatilities is a centerpiece for many companies' strategies.<ref name="Clariden Global">{{cite web|url=http://www.claridenglobal.com/clariden_leadership_programs.php|title=Clariden Global|website=Claridenglobal.com|access-date=21 November 2017}}</ref> 
Indeed, the 1990s saw the rise of the strategic CFO, and many companies have created a [[Chief strategy officer|chief strategy officer (CSO)]] position.
<ref>{{Cite news|date=2016-01-11|title=Who's Better at Strategy: CFOs or CSOs?|work=Harvard Business Review|url=https://hbr.org/2016/01/whos-better-at-strategy-cfos-or-csos|access-date=2021-05-09|issn=0017-8012}}</ref> 
See also [[Strategic financial management]].

The CFO is then as much a part of [[corporate governance|governance and oversight]] as the CEO, playing a fundamental role in the development and critique of strategic choices. 
Relatedly The CFO is expected to be a key player in stockholder education<ref>{{cite web|url=http://www.slideshare.net/MaureenOConnell/how-cfos-can-turn-stakeholders-into-allies-by-maureen-oconnell-40809275?related=1|title=How CFO's Can Turn Stakeholders Into Allies - By Maureen O'Connell|last=Maureen O'Connell, Scholastic Inc.|date=28 October 2014|website=Slideshare.net|access-date=21 November 2017}}</ref> and communication and is clearly seen as a leader and team builder who sets the financial agenda for the organization, supports the CEO directly and provides timely advice to the [[board of directors]]."<ref>{{cite web|title=What Board expects from CFO|url=http://www.topfinanceprofessionals.com/white-papers/what-board-expects-from-cfo|work=TopFinanceProfessionals.com|access-date=7 December 2013|archive-url=https://web.archive.org/web/20131213080755/http://www.topfinanceprofessionals.com/white-papers/what-board-expects-from-cfo|archive-date=13 December 2013|url-status=dead}}</ref>

The rise of digital technologies and focus on [[data analytics]] to support decision-making, places more pressure on CFOs to  meet the expectations of their [[Corporate title#Senior management|C-Suite]] colleagues.<ref>{{Cite news|url=https://beebole.com/blog/technology-trends-for-cfos/|title=6 Technology Trends for CFOs in 2018: We asked the experts.|date=2018-01-08|work=The Management Blog by BeeBole Timesheet|access-date=2018-05-01|language=en-US}}</ref> 
Here, many organizations have created a Finance [[Organizational_architecture#Differentiation_and_integration|function]] based on four pillars:  
# the [[Accounting#Topics|accounting]] organization as a [[shared services|shared service]] 
# an [[FP&A]] organization responsible for driving [[Financial_plan#Context_of_business|financial planning]] processes as well as increased insight into financial and non financial [[key performance indicator|KPIs]] to [[business performance management|boost business performance]]
# a [[Business_partnering#Financial_business_partnering|finance business partnering]] organization based on leadership of divisions, regions and performance improvement 
# [[Consultant#Role|expertise centers]] specializing in Tax, [[corporate treasury|Treasury]], [[internal audit|Internal Audit]], [[investor relations|Investor Relations]], etc.

CFOs are increasingly being relied upon as the owners of business information, reporting and financial data within organizations - thereby also assisting in [[decision support]] operations to enable the company to operate more effectively and efficiently.
The CFO must then serve as the financial authority in the organization,<ref>{{Cite web|date=2021-05-06|title=What Does a Finance Director Do?|url=https://www.fdcapital.co.uk/what-does-a-finance-director-do/|access-date=2021-06-17|website=FD Capital Recruitment|language=en-GB}}</ref> ensuring the integrity of data, and modeling transparency and accountability. 
CFOs have then become more focused on [[financial reporting]], although (as of 2016) a majority still spend much of their time in traditional accounting tasks such as transaction reporting.<ref>{{cite web|title=Future of the Finance Function Survey 2016|url=http://www.fsn.co.uk/channel_enterprise_financials/fsn_future_of_the_finance_function_survey_2016_reveals_cfos_role_is_overhyped|work=FSN Research|access-date=25 May 2016|archive-url=https://web.archive.org/web/20160529110046/http://www.fsn.co.uk/channel_enterprise_financials/fsn_future_of_the_finance_function_survey_2016_reveals_cfos_role_is_overhyped|archive-date=29 May 2016|url-status=dead}}</ref> 

Additionally, many CFOs have made the realization that an operating environment that values cash, profit margins, and [[risk mitigation]] is one that plays to the primary skills and capabilities of a [[procurement]] organization; CFO's have been encouraged to appoint a [[chief procurement officer]] (CPO) where this post does not exist, ensure the post-holder is accountable for procurement success, and to become increasingly involved (directly via oversight or indirectly through improved collaboration) with the procurement function according to several research reports which have looked at the CFO's relationship with the procurement function and the CPO.<ref>Aberdeen Group, [https://www.sipm.com/Procurement-Academy/Articles/Finance/cfo_view_procurement.pdf The CFO’s View of Procurement: Getting More to the Bottom Line], published September 2005, accessed 23 January 2024</ref><ref>Aberdeen Group, [https://www.globenewswire.com/en/news-release/2009/12/09/994013/0/en/The-CFO-S-View-of-Procurement.html The CFO’s View of Procurement: Work in Progress], published November 2009</ref><ref name="Ardent">{{cite web|url=http://ardentpartners.com/research/index.php?main_page=product_info&cPath=4_12&products_id=1|title=The CFO and the CPO: One World, Two Worldviews Chief Financial Officer (CFO) and Chief Procurement Officer (CPO)|website=Ardentpartners.com|access-date=21 November 2017|archive-date=24 September 2011|archive-url=https://web.archive.org/web/20110924045005/http://ardentpartners.com/research/index.php?main_page=product_info&cPath=4_12&products_id=1|url-status=dead}}</ref>  Due to their importance, CFO departures—whether due to retirement, dismissal, or new opportunities—can significantly affect a company’s direction and stability, especially given the CFO’s growing role as a strategic partner to the CEO.<ref>{{Cite journal |last=Zhang |first=Ziheng |last2=Mount |first2=Matthew P. |last3=Zhang |first3=Stephen X. |date=2025 |title=A database of chief financial officer turnover and dismissal in S&P 1500 firms, 2000–2022 |url=https://sms.onlinelibrary.wiley.com/doi/pdf/10.1002/smj.3693 |journal=Strategic Management Journal |language=en |volume=46 |issue=5 |pages=1293–1321 |doi=10.1002/smj.3693 |issn=1097-0266|doi-access=free }}</ref>

==Qualifications==
{{see also|Financial analyst#Qualification|Outline of finance#Education}}
CFOs and FDs often hold a [[Professional accounting body|professional accounting qualification]] - the [[Certified Public Accountant|CPA]], [[Chartered accountant|CA]], [[Certified Management Accountant|CMA]], or [[Chartered Institute of Management Accountants|CIMA]] - along with its [[Bachelor of Accountancy|requisite bachelors]] and/or [[Master of Accountancy|masters in accounting]]. The certification is specified given that responsibilities extend to [[tax]] and [[financial reporting]].<ref>CollegeGrad LLC, [https://collegegrad.com/careers/top-executives Top Executives]</ref> Similarly, [[financial manager]]s are often [[qualified accountant]]s.{{cn|date=November 2023}}

In large companies,{{citation needed|date=May 2021}} CFOs and FDs may hold additional [[postgraduate]] qualifications,<ref name="Arnold_Woledge">Hugh Arnold and Ross Woledge (ND). [https://www.rotman.utoronto.ca/ProfessionalDevelopment/Executive-Programs/FeaturedArticles/aspiringCFOs Want to be CFO one day? You need to take control of your career]</ref> such as a [[Master of Business Administration]],<ref name="Dahlquist">[https://openstax.org/books/principles-finance/pages/1-4-careers-in-finance Careers in Finance]. §1.4 in {{cite book |title=Principles of Finance |date=2022 |isbn=9781951693541 |first1=Julie |last1=Dahlquist |first2=Rainford |last2=Knight |first3=Alan S. |last3=Adams |publisher=OpenStax, Rice University |url=https://open.umn.edu/opentextbooks/textbooks/principles-of-finance }}</ref> 
or [[Master of Science in Finance]];<ref name="usnews">[https://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/2015/02/09/determine-if-a-masters-in-finance-is-the-right-move ''Determine If a Master's in Finance Is the Right Move''], [[usnews.com]], Feb. 9, 2015.</ref> the [[Chartered Financial Analyst]] is also common.<ref name="Arnold_Woledge" /> These complement the accounting perspective with more general [[business strategy|strategic]], leadership and [[financial market]] considerations, and give exposure to broader financial and operational issues.<ref name="Arnold_Woledge" />
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==Region specific==

===Federal government of the United States===
The [[federal government of the United States]] ha

s incorporated more elements of business-sector practices in its management approaches, including the use of the CFO position alongside, for example, an increased use of the [[chief information officer]] post, within public agencies.

The [[Chief Financial Officers Act]], enacted in 1990, created a chief financial officer in each of 23 federal agencies. This was intended to improve the government's financial management and develop standards of financial performance and disclosure. The [[Office of Management and Budget]] (OMB) holds primary responsibility for financial management standardization and improvement. Within OMB, the Deputy Director for Management, a position established by the CFO Act, is the chief official responsible for financial management.

The [[Office of Federal Financial Management]] (OFFM) is specifically charged with overseeing financial management matters, establishing financial management policies and requirements, and monitoring the establishment and operation of federal financial management systems. OFFM is led by a [[Comptroller|controller]].

The CFO Act also established the CFO Council, chair by the OMB Deputy Director for Management and including the CFOs and Deputy CFOs of 23 federal agencies, the OFFM controller, and the Fiscal Assistant Secretary, the head of the [[Office of Fiscal Service]] of the [[United States Department of the Treasury|Department of the Treasury]]. Its mandate is to work collaboratively to improve financial management in the U.S. government and "advise and coordinate the activities of the agencies of its members" in the areas of financial management and accountability.

[[OMB Circular A-123]] (issued 21 December 2004) defines the management responsibilities for internal [[financial control]]s in federal agencies and addressed to all federal CFOs, CIOs and Program Managers. The circular is a re-examination of the existing internal control requirements for federal agencies and was initiated in light of the new internal control requirements for publicly traded companies contained in the Sarbanes–Oxley Act of 2002.

While significant progress in improving federal financial management has been made since the federal government began preparing consolidated financial statements, the [[Government Accountability Office]] (GAO) reported that "major impediments continue to prevent [GAO] from rendering an opinion."<ref>{{cite web|url=http://www.gao.gov/press/mediaadv12152006.pdf|title=GAO: U.S. Financial Statements Receive Disclaimer of Opinion For 10th Straight Year|website=Gao.gov|access-date=21 November 2017|archive-date=18 February 2017|archive-url=https://web.archive.org/web/20170218110018/http://www.gao.gov/press/mediaadv12152006.pdf|url-status=dead}}</ref> In December 2006, the GAO announced that for the 10th consecutive year, the GAO was prevented from expressing an opinion on the consolidated financial statements of the government due to a number of material weaknesses related to financial systems, fundamental recordkeeping, and financial reporting.

At the same time, in calendar year 2007, the CFOC announced that for the second consecutive year, every major federal agency completed its Performance and Accountability Report just 25 days after the end of the fiscal year (2006).

=== India ===
As per the provisions of Section 203 of [[Companies Act 2013]] every publicly listed firm having a paid up share capital of Rs. 10 Crores or more is mandated to have a whole time chief financial officer, who must also serve as one of the Key Managerial Personnel (KMP).

The Act does not impose any specific regulations regarding the compensation of a Chief Financial Officer (CFO), unless they serve on the Board of Directors or hold additional managerial responsibilities alongside their role as CFO. Additionally, the Act does not outline any specific qualifications required for the appointment of a CFO. However, according to Section 134(1) of the Act, the CFO, regardless of their status as a Key Management Personnel (KMP), is required to sign the financial statements as they are responsible for overseeing the financial operations of the entire company.<ref>''© ICSI -Reproduction of any material / contents shall be only with prior permission of ICSI Chief Executive Officer [Sec. 2(18)] and Chief Financial Officer [Sec. 2(19)]''. (n.d.). https://www.icsi.edu/media/portals/86/Geeta_Saar_43_CEO_and_CFO.pdf</ref>

Their responsibilities include financial planning and monitoring cash flow. In some companies, the CFO and Finance Director positions may be held by the same individual interchangeably. As an internal member of the organization, the CFO is accountable for presenting accurate and fair financial statements, which are subsequently audited by the company's statutory auditors.
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==See also==
* [[Auditor general]]
* [[Comptroller]]
* [[Treasurer]]
* [[Virtual CFO]]
* [[Financial manager]]

==References==
{{Reflist}}

==External links==
*{{Commons category-inline|Chief financial officers}}

{{corporate titles}}
{{Authority control}}

[[Category:Chief financial officers| ]]
[[Category:Corporate titles]]
[[Category:Management occupations]]
[[Category:Corporate executives]]
[[Category:Finance occupations]]