The rising role of financial officers
Modern chief financial officers (CFOs) today are swamped by a host of concerns, most prominently that of regaining investor confidence, effective cooperation with chief executive officers (CEOs), corporate finance and the changes that may occur with adoption of the Basle Accord. The second conference of CFOs, organized by business consulting firm KPMG, was held on June 12 and 13 and dealt with these issues and others, with presentations of systems for measuring the efficiency of enterprises, information on changing accounting standards as well as on practical issues concerning taxation. KPMG’s Chairman and Managing Director Marios Kyriakou spoke to Kathimerini about the significance and complexity of the role of CFOs. How important do you rate the changes that have taken place in the world of enterprise worldwide? As a result of the economic and stock market downturns and the economic scandals in America, the changes of the last two years have been very profound indeed. CFOs, CEOs, accountants and auditors have come under strong pressure and serious threats of sanctions, and are re-examining all activities to ensure they are on the right side of the law. What have these changes implied for the Greek market? The legislative changes in the USA have prompted many similar changes in Europe, including Greece, which has imposed restrictions and increased the obligations of mainly listed firms. These include the speeding up of the introduction of corporate governance, independent and internal auditing mechanisms and the restriction of the activities of outside auditors so that they may not also act as consultants. Some countries – France, for example – are trying to adopt the American model of extraterritorial jurisdiction on units based in third countries. Indeed, I believe that pretty soon we shall see US domination expanding throughout the world with the adoption of laws and practices of universal application. In Greece, a law was passed on May 8 toward setting up a body to oversee the work of chartered accountants and auditors, and which will also be responsible for their examinations. How do you see the role of the CFO affected by these changes? I would say that in the last 10 years, no other position in an enterprise has changed so radically as that of the CFO. Without wishing to belittle the role of the general manager, it is obvious that in the environment that has emerged in recent years, the role of the CFO has become more complicated and difficult. But this role had already begun taking on added significance as a CFO had virtually become a managing director’s right-hand man, as he must have close knowledge of all the activities of an enterprise. In effect, CFOs have assumed the role of coordinators, as there can be no strategic planning, or management of finances, human resources, commercial and production activities without their substantial contribution and participation. In many cases, a CFO is a CEO’s confidant and the person who is relied on for support. A CFO is responsible for monitoring changes in the economy at large and any repercussions on all sectors of a firm’s activity. Could we therefore say there is a shift of responsibilities onto the position of the CFO? To a degree, yes. To begin with, the recent changes are evidently rapid and phenomenal, and the operating and supervision mode of listed firms is expected to become more burdensome, in both financial and management terms, in the years to come. The burden of this change mainly falls on the shoulders of CFOs, who will be called upon to assume an even stronger role as coordinators. Let us not forget that financial statements are now subject to much stricter scrutiny by both chartered accountants and the authorities, and so a CFO’s role is also crucial to a firm’s external image.
