What audit committees want from CFOs?
By ClearCycle Team

Being a CFO (Chief Finance Officer) of a big company is no mean task as you are the one responsible for managing the finances of the company. Naturally, you have to make hundreds of decisions in a month that can virtually make or break the company. As a result, the audit committee has certain expectations from you in terms of duties in this role. So, here we take through those seven crucial points where you need to deliver the goods to meet the expectations of an audit committee.

1.There should be no surprises

It would be safe to say that audit committees hate surprises. Yes, when you run a business, surprises are part and the parcel of the game but the audit committee expects the CFO to manage any such issues early on and deal with them, without causing any major upsets in the workflow. They expect you to identify a possible issue and notify them in a timely manner. For this, you should have a healthy relationship with them, which enables you to communicate with them, whenever the situation demands.

To build this rapport, you need to ensure that you meet them outside scheduled meetings as well. You can organise a dinner meeting or a luncheon for the audit committee and other key members of the company. Furthermore, this also helps in building mutual respect and confidence in each other’s work. The idea here is for the CFO to be comfortable enough to communicate with the committee even when then there is no scheduled meeting.

2.Work together with the other leaders of the company smoothly

Not just the audit committee but the whole board wishes to see all the leaders of the company working together as a cohesive unit, as much as possible. As a CFO, you are expected to work closely with the CEO of the company, especially if he or she sees you as more than just a conductor or a steward of the financial operations.

If the board assigns you the role of a financial strategist as well, then you should be capable enough to come up with business and pricing strategies to improve business growth. You can even bring about changes in the process of measuring and rewarding performances. Similarly, you can help in other aspects as well, which will help in company’s overall success.

3.Show confidence in your finance organisation talent

Since timely financial reports are the best way to look at a company’s status in the market, the finance organisation talent in the company is of a lot of interest to the audit committee. As the head of this team, the CFO should ensure that all the members are aligned to your thoughts and are onboard in the right manner to achieve company goals.

The audit committee also expects the CFO to groom a successor to the position. You should allow certain efficient members of the team to present the issues or meetings, so that the audit committee is aware of the talent pool in the company. Furthermore, you should keep the whole process transparent to the audit committee so that they are aware of the things you are doing with the team in order to develop them as efficient assets for the company.

4.Be well-versed with issues related to accounting, finance and business

Even though a lot of CFOs nowadays are appointed based on their finance or business backgrounds, they are expected to be equally good in accounting as well. Technical accounting, financial reporting, tax compliance and planning, finance and control environment are just few of the many aspects that the audit committee expects the CFO to be good at once you are at this position.

If you do not have the accounting background, you should focus on learning it from the experts in the company or from outside resources to get a grip on every element of your job requirement. You can also learn all this from the team of auditors itself, so that you not only learn from the best but also gain confidence in their eyes.

Conversely, if you are a CFO without a business background, then you need to make deep dives in that aspect of the things. The idea is to be efficient in all three aspects – business, accounting and finance.

5.Have a clear idea of the future cash flows

The audit committee expects the CFO to be capable enough to deliver the story behind the predicted numbers you are putting up in the presentation. They expect you to take complete ownership of the forecasting and budgeting aspect of things, while managing the finances of the company. In a nutshell, they want a professional expert who can understand the underlying facts of these predictions and make them understand why such future cash flows make perfect sense. To ensure a good cash flow in a company, you should install automatic expense management systems and efficient disbursement systems like Clearcycle. This not only improves the efficiency but makes the whole process smooth.

6.Manage risks efficiently

As a CFO, your duty is to look for risks based on finance, accounting and regulatory compliances. However, in today’s age, the audit committee expects you to manage enterprise and operational risks as well. The CFO is responsible to ensure that the deployed people, right from the top, show ethics and integrity. There should be a timely flow of risk information, which goes through you, to the audit committee, so that they have a better picture of the things happening in the company.

Moreover, to ensure every risk is mitigated the right way, you can even bring in different incentive programs to encourage staff to perform well. You also need to come up with solutions to mitigate operational risks, like cyber security and business continuity by getting in touch with a good software testing team.

7.Communicate with the stakeholders in a concise manner

As the CFO of the company, being a good communicator is one of the key qualities that you should have. In fact, the audit committee expects you to have great control over the numbers, analysis and predictions related to financing, business and accounting side of things. A CFO should be capable enough to provide key insights about the future performances and inform the audit committee, stakeholders and the whole investor community of the company of the ways you look to achieve the said feats. Such communicative sessions also enable you to form good rapport with the stakeholders and gain their confidence, which is crucial for a company.

Now that you know the things expected from you, it should be easier for you to work efficiently as the CFO of the company. Having a thorough knowledge about business, finance and accounting, leadership qualities and the ability to act quickly can help you in the pursuit of reaching the company goals.


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