A chief financial officer (CFO) may also be known as the vice president, senior vice president, or executive vice president of finance. Whatever the title, a CFO is responsible for the finance and accounting operations of an organization, including financial reporting, and compliance with accepted finance and accounting standards and regulatory requirements.
In public companies, CFOs literally sign-off that the company's reported financial statements, and financial well being are accurate, free from error and misrepresentations, and are in compliance with all applicable standards and regulatory requirements. There are substantial civil and criminal penalties for CFOs who deliver inaccurate, erroneous, or misrepresented financial information.
CFOs are typically a senior executive and an officer of their company. They typically report into the chief executive officer (CEO). CFOs also have substantial reporting responsibility to the chairman of the board of directors and the head of the board's audit committee.
The job duties of a CFO can differ depending on whether they work for a public or a private company. The job duties of a CFO can include:
* Participating in the organization's strategic business and financial planning processes
* Setting financial goals in support of business operations and strategic directions
* Planning and managing the finances of the entire organization
* Managing securities and cash portfolios, other liquid assets, and debt
* Obtaining financing for major initiatives or acquisitions
* Providing financial due-diligence for any merger and acquisition activities
* Managing people, important vendor relationships, business and financial operations
* Researching and staying abreast of the latest regulatory and financial accounting reporting trends
* Monitoring financial processes, policies, systems and personnel
* Assuring compliance with accepted financial accounting standards, with the recently enacted Sarbanes-Oxley legislation and other SEC regulations, in public companies
* Attending business conferences
* Reporting on the financial well-being of their organization to the CEO, board of directors, stock holders, and regulatory bodies such as the Securities and Exchange Commission (SEC)
* Providing assurance that financial reporting is accurate, error-free, and free from misrepresentation
* Acting as the point of contact with the stock market, business press, and financial analyst community
* Depending on the organization's structure and reporting relationships, a CFO may also have information technology (IT) responsibilities, legal responsibilities, human resource responsibilities, organization responsibilities, and more
As with any senior executive job, the CFO's job can be very demanding. Long hours, including evenings and weekends, and frequent travel, can be a normal part of the job.
CFO Job Skills
As a senior executive, a CFO is expected to have a broad and varied range of skills. These include:
* Accounting and financial management skills
* Understanding of complex financial concepts
* Attention to detail and facility with numbers
* Effective communications skills
* Strategic thinking and planning skills
* Understanding business processes, operations, business strategy, non-financial areas of the business such as information technology and legal; industry trends and market forces
* Leadership, motivation, managerial skills
* Integrity, honesty, and high ethical standards
* Sound business skills and judgement
* Ability to assimilate and evaluate large amounts of information
* Decision making, negotiation, sales, political skills
CFO pay varies greatly depending on the size and type of organization. Compensation of CFOs can include a base salary, bonus, stock options, stock grants, long-term incentives, and other compensation. Other benefits enjoyed by top executives, such as use of company cars, planes, memberships, and other perks, often are also a part of their compensation package.
There can be a very wide disparity in CFO compensation between large and small companies. CFO Magazine reported that median annual compensation for CFOs in 2002 at the largest companies (companies with revenues in excess of $1 billion) was almost $1 million, with additional median pay outs on long-term incentives of $500,000. A larger survey of CFO compensation done by The Todd Organization in 2001 reported that CFOs as a group had a median annual compensation of almost $900,000. CFOs at small companies had a total median annual compensation of almost $600,000, and those at large companies had a total median compensation in excess $2 million.
The formal education for CFOs can vary greatly. No specific degree is an absolute requirement for CFOs, although financially oriented degrees are strongly preferred. CFOs typically have an accounting or finance background. Most would have at least a bachelor's degree in accounting or finance. Many have MBAs and other advanced degrees. CFOs often attend executive education programs to further their skills and understanding of the issues that CFOs manage in their work.
Answered By: Momsey - 2/26/2009