CFO Responsibilities: How Important is Accounting?

I think a CFO should primarily focus on the future and accounting should focus on the past.

The CFO should ensure the resources are in place to obtain accurate historical reporting (say 20% of his/her time) and then focus 80% on the future, that being future cash flows, liquidity, risk management, strategy, etc.

Risk management in which areas?

I concur the CFO should evolve to spend much less time on accounting and reporting, and most time on value added activities. That is what we get paid for, I believe. Helping the organization understand the financial implications of their decisions, ensuring the CEO and senior staff knows exactly how the organization is performing (the good, the bad, the ugly), and guiding the organization strategically to assist with growth and profitability enhancement (including M&A and financing where applicable) are key activities in creating value. Ultimately being the CEO's close partner in guiding and leading the business is what results.

I feel it is critical to also develop this thinking in your staff as well. Most finance and IT organizations spend too much time on routine, transaction focused activities, yet simplification and automation can streamline these activities to allow staff to add value with other functional partners (operations, sales, marketing).

As an example, we created a key objective on the team to find $500k in margin improvement initiatives throughout the staff. Every employee was looking for how we can help the organization with new ideas. This created great energy and creativity, and we have beat this goal every year.

In my humble opinion, the CFO's that have made the most impact in the firms that I have worked in have left the managerial and the operational aspects of finance to a strong controller (strong management skills) and instead focused on the future and more specifically on the investors.

These strong CFO's know what the street/investors want, work on maintaining a good relationship with the investors and analysts (reliable guidance, strong knowledge of the business, etc...). They also work close to the CEO are are part of the most senior of the executive teams.

They also must have enough clout in the firm to be able to making budget/spending declarations without being vetoed. This is essential. How many firms have had layoff's because nobody listened to the warnings of the CFO? I know several firms where this was the case. Fortunately, I know some were the CFO was heeded, belts were tightened and no layoffs occurred.

Basically, the effective CFO that I am trying to describe can speak his/her mind to the CEO/board, and is trusted enough that if a strategic direction is decided, that the CFO can ensure that fiscal health of the firm and investors are maintained.