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2The mission of the International Federation of Accountants (IFAC) is to serve the public interest by:contributing to the development of high-quality standards and guidance; facilitating the adoption andimplementation of high-quality standards and guidance; contributing to the development of strongprofessional accountancy organizations and accounting firms and to high-quality practices by professionalaccountants, and promoting the value of professional accountants worldwide; and speaking out on publicinterest issues.The Professional Accountants in Business (PAIB) Committee serves IFAC member bodies and professionalaccountants worldwide who work in commerce, industry, financial services, education, and the publicand not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants inbusiness. To achieve this objective, its activities focus on:• increasing awareness of the important roles professional accountants play in creating, enabling,preserving, and reporting value for organizations and their stakeholders; and• supporting member organizations in enhancing the competence of their members through developmentand sharing of good practices and ideas.IFAC will use this Discussion Paper in conjunction with outreach to initiate a global debate among variousstakeholders. Respondents can also submit their comments electronically through the IFAC website,using the “Submit a Comment” button. IFAC encourages a global dialogue involving a broad range ofstakeholders, including professional accountancy organizations, employers, regulators, and professionalaccountants.Additional resources on the topic, as well as a summary of this paper that includes specific discussionquestions, are available on the IFAC website.The approved text of this guidance is published in the English language. The PAIB Committee welcomestranslation of its publications in other languages. Please contact permissions@ifac.org.Exposure Drafts, Consultation Papers, and other IFAC publications are published by, and copyright of, IFAC.IFAC does not accept responsibility for loss caused to any person who acts or refrains from acting in relianceon the material in this publication, whether such loss is caused by negligence or otherwise.The IFAC logo, ‘International Federation of Accountants’, and ‘IFAC’ are trademarks and service marks ofIFAC.Copyright © October 2013 by the International Federation of Accountants (IFAC). All rights reserved.Permission is granted to make copies of this work to achieve maximum exposure and feedback providedthat each copy bears the following credit line: “Copyright © October 2013 by the International Federationof Accountants (IFAC). All rights reserved. Used with permission of IFAC. Permission is granted to makecopies of this work to achieve maximum exposure and feedback.ISBN: 978-1-60815-163-9Published by:


3Table of ContentsPREPARING PROFESSIONAL ACCOUNTANTS FOR FINANCE LEADERSHIP 4HOW THE CFO ROLE IS CHANGING 7PRINCIPLES GUIDING THE ROLE AND EXPECTATIONS OF A CFO 10RECOMMENDATIONS FOR THE ACCOUNTANCY PROFESSION ANDEMPLOYERS OF PROFESSIONAL ACCOUNTANTS 23


5of professional accountants, who also directlyinfluence preparation for leadership.Finally, this discussion is also relevant to theregulatory community that is striving for wellgovernedorganizations and market integrity. TheCFO is a critical part of a chain of actors, includingthe governing body (i.e., board of directors), chiefexecutive officer (CEO), audit committee, andauditor that all have their respective responsibilitiesto ensure that business reporting providesrelevant, faithful, and comparable informationon the financial position and performance of anorganization. Having professional accountants inkey finance leadership roles is an important part ofensuring well-governed organizations.Unlike the role of auditors and assuranceprofessionals, which is typically subject to oversightand registration, qualification, competency, andlicensing requirements, finance leadership inorganizations is largely unregulated. In this context,the onus is on organizations to ensure they employfinance leaders with the prerequisite professionalqualities and competence. In 2009, in its submissionto the Group of Twenty (G20), IFAC recommendedthat the G20 call for the establishment of aninternational, principles-based competencythreshold for senior financial officers in publicinterest entities. 3The increasing expectation of CFOs and financeand accounting (F&A) functions also extends togovernment and public sector organizations,where there is a clear need for enhanced financeleadership and public financial management toimprove the quality of public sector transparency,accountability, and outcomes.The transparency, financial stability, andperformance of governments and public sectororganizations are closely linked with quality andprofessionalism of the CFO and the F&A function.Consequently, CFOs’ expertise and advice areessential elements in an effective leadership teamas well as for ensuring that strong managementpractices and information systems, supported by anappropriate governance infrastructure and ethicalculture, are in place.3 Recommendation Four, Recommendations for the G20 Nations – Meeting ofSeptember 24 – 25 (IFAC, 2009), and Recommendations for Working Group1–Enhancing Sound Regulation and Strengthening Transparency (IFAC, 2009)


6Professional Accountants in BusinessProfessional accountants in business refer to all those members of the profession who work incommerce, industry, financial services, education, and the public and not-for-profit sectors. Professionalaccountants in business work as employees, consultants, and self-employed owner-managers or advisersand support their organizations in a wide range of job functions at various levels.Professional accountants working in business can typically be found in four types of roles: as valuecreators, enablers, preservers, and reporters. The CFO principles relate to these roles and will need toensure success in each by:• creating value—developing strategies for sustainable value creation;• enabling value—supporting the governing body and senior management in making decisions andfacilitating the understanding of performance of organizational functions or units;• preserving value—asset and liability management, managing risk in relation to setting and achievingthe organization’s objectives, and implementing and monitoring effective internal control systems;and• reporting value—ensuring relevant and useful internal and external business reporting.Depending on the route they have taken, professional accountants may have trained and qualifiedwhile working in public accounting and, later in their career, moved to work for an organization.Others, typically known as management accountants, have trained and qualified within a corporate orpublic sector environment. Professional accountants are recognized by different designations aroundthe world—for example, Chartered Accountant (CA), Certified Public Accountant (CPA), CharteredProfessional Accountant (CPA), Certified Accountant, Chartered or Certified Management Accountant(CMA), Expert Comptable, or Contador Publico.


7How the CFO Role is ChangingPerformanceProfessionalPAIB asCreator ofValuePAIB asReporterof ValueFinance and accounting leaderCFOOrganizational leaderPAIB asEnabler ofValuePAIB asPreserverof ValueBusiness partner and stewardIntegrator and navigatorConformanceThe past few decades have witnessed significantgrowth in the demands on and expectations offinance leaders, particularly as they have becomecentral to helping their organizations navigate anincreasingly complex business world.Prior to the 1990s, the main emphasis of theCFO’s role was typically as the guardian of thefinancial health of an organization, overseeingand implementing adequate financial controlinfrastructure. This met the needs, in particular, oflarge divisional industrial corporations that strivedfor financial control and transparency across manydivisions and business units. Since then, the rangeof responsibilities of the CFO has expanded, drivenby complexity as a result of globalized capital andmarkets, regulatory and business drivers, growthin information and communications, and changingexpectations of the role of the CFO.In addition to being the financial gatekeeper, theCFO is also expected to participate in driving theorganization toward achieving its objectives. Aspart of the leadership of the organization, CFOsare expected to increase their support of strategicand operational decision making in a “businesspartnering” capacity in addition to fulfillingtraditional stewardship responsibilities relatingto governance, compliance and control, andbusiness ethics. In forward-looking organizations,the CFO and the F&A function are evolving froma transactional and cost efficiency focus to anincreasingly value-adding strategic focus.


8A good CFO should be at the elbow of the CEO, ready to support and challenge him/her in leading thebusiness. The CFO should, above all, be a good communicator—to the board on the performance ofthe business and the issues it is facing; to his/her peers in getting across key information and conceptsto facilitate discussion and decision making; and to subordinates so that they are both efficient andmotivated. Other priorities for a CFO are to have strength of character, personality, and intellect. I takeit as a given in reaching such a position that an individual would have the requisite technical knowledgeand financial skills.—James Riley, group finance director and executive director, Jardine Matheson Holdings Ltd.CFOs continue to be stretched and scrutinized.They need to maintain a high-level view of theorganization and the environment in which itoperates and demonstrate a range of specific skillsand attributes in a variety of different roles andresponsibilities. In addition to overseeing the F&Afunction and related information systems, CFOs’responsibilities typically include:• demonstrating ethical leadership and businessintegrity;• balancing short-term concerns and pressures,such as managing cash, liquidity, andprofitability, and long-term vision and sustainableorganizational success;• fulfilling stewardship responsibilities by ensuringeffective compliance and control and respondingto ever increasing regulatory developments,including financial reporting, capitalrequirements, and corporate responsibility;• sharing strategic leadership responsibilitieswith the CEO and other senior managers andensuring the F&A function supports the businessat a strategic and operational level;• driving and managing change and innovationwithin the organization; and• engaging and communicating effectively withcolleagues, investors, customers, suppliers,regulators, and other internal and externalstakeholders.The contemporary CFO is increasingly focusedon being a key organizational leader andcommunicator, which requires a strong professionaland ethical foundation. Given their professionaleducation and training, and relevant careerexperience and aptitude, professional accountantsin the CFO role should be well placed to managethe requirements of varied expectations andresponsibilities.Is There a Typical CFO Role?The expectations of CFOs change over time andare influenced by various external and internaldrivers that affect organizational circumstances andrequirements. External drivers include prevailingeconomic and business challenges, characteristics ofthe industry and competitors, and the demands ofinvestors and key stakeholders.Organizations shape the CFO role to meet currentneeds and expectations, particularly in terms of theexpectations the CEO and chair have of the CFO,and in relation to the existing composition and skillsof senior management. The type of organization,whether it is in the public or private sector, and itshistory and culture will also influence the type ofCFO required.Organization size is also a crucial determining factorin the type of CFO employed. Small businessesgenerally need to consider the appropriate timeto hire a CFO; an important internal tipping pointis when information needed to help the businessmake timely and important decisions is not beingprepared. 44 Jeff Thomson, “Signs a Small Business Needs a CFO,” Forbes, February 14,2013


9Professional accountants with strong commercialand leadership skills help develop areas such ascustomer profitability, pricing, sales, and marketing.In a small organization, professional accountants areoften the only professionally qualified members ofa staff and will need to assume the role of trustedadvisor of the entrepreneur(s). 5For larger organizations, four distinct profiles of theCFO role have been identified—the finance expert,the generalist, the performance leader, and thegrowth champion—to illustrate how the CFO role ismultidimensional. 6 The type of CFO could also varydepending on whether the role is at the corporatecenter, in a division or business unit, or within abusiness line such as operations or sales.5 Chartered Institute of Management Accountants, Finance Transformation: AMissed Opportunity for SMEs?, 2011 and Association of Chartered CertifiedAccountants, Accountants for Small Business, 20136 Ankur Agrawal, John Goldie, and Bill Huyett ,”Today’s CFO: Which Profile BestSuits Your Company,” McKinsey, January 2013


10Principles Guiding the Roleand Expectations of a CFOPrinciple AThe CFO should be an effective organizational leader and a key member of seniormanagement.As an effective leader and key member of senior management, the CFO needs to facilitate the delivery ofsustainable value creation and preservation.As a senior manager, the CFO’s primaryresponsibility is to provide shared leadership andvision to the organization, its employees, andother key stakeholders. Although this should notbe misconstrued as assuming the role of the CEO,CFOs are an integral component of leadership.To be effective leaders, CFOs need to createan environment where employees and otherstakeholders, such as suppliers and customers,are able to understand and share the vision andaspirations of the organization. The CFO has apivotal role in facilitating all organizational parts toreach common performance objectives.To perform effectively as leaders, CFOs needthe requisite leadership and interpersonal skills,including communication, strategic thinking,change management, emotional intelligence,analytical problem solving, and decision-makingskills. These are critical in all organizational settings,including the public sector where the CFO isincreasingly expected to be involved as a partnerwith the decision makers at the highest levels. 7CFOs are expected to facilitate organizationalaccountability and transparency, while providingstrategic leadership. They do so by helping anorganization focus on creating and maintainingsustainable value for shareholders and otherstakeholders, which involves more than simplymaximizing revenues and minimizing costs. Itrequires a focus on decisions that maximizeexpected economic value, while taking into accountwider sustainability considerations and otherstakeholder interests. The focus on sustainable valuecreation and preservation requires CFOs to strike abalance between coping with volatility, uncertainty,and short-term pressures and executing the longtermvision and objectives of the organization.CFOs need to develop effective partnerships withother members of the leadership team, creatinga common vision and view of organizationalperformance and challenges and opportunities.Other members of senior management often seethe CFO as the voice of reason and reflective secondthought, and as provider of alternative options.The role of CFOs is also outward facing, involvingvarious stakeholder relationships and engagements,including with the external auditor, investors andanalysts, banks, regulators, government, industry,and trade groups. The range of internal andexternal stakeholders CFOs work and build effectiverelationships with is large and requires a CFO tobe an effective and influential communicator andnegotiator.CFOs may also take on oversight responsibility forother organizational functions and aspects, suchas infrastructure management, IT, human resourcesand payroll, operational responsibilities, andadministration. This is often the case in small- andmedium-sized organizations, where CFOs frequentlyneed to fulfill various roles and responsibilities. 87 Chartered Institute of Public Finance and Accountancy, The Role of the Chief FinancialOfficer in Public Service Organizations (2009) and Institute of CharteredAccountants in England and Wales, A CFO at the Cabinet Table? StrengtheningUK Government Finances for the Future (2013)8 IFAC, The Crucial Roles of Professional Accountants in Business in Mid-sizedEnterprises (2008)


11An expanded operational role has led to some CFOstaking responsibility for traditional chief operatingofficer functions. This broader operational remitprovides opportunity for CFOs to align supportfunctions and create high levels of effectivenessand efficiency by ensuring that processes transcendfunctional boundaries and are integrated to bettersupport business needs and objectives (see PrincipleD).CFOs have to position themselves as primary drivers of corporate strategy along with CEOs. They haveto work as a strategist rather than a tactician to ensure the financial health and sustainability of theirorganizations and, most importantly, to ensure that shareholder expectations are met.—Dr. Murtaza Abbas, CFO, Siemens (Pakistan) Engineering Company Limited


13The CFO is the key person in supporting management teams to make strategic decisions on how theorganization will sustainably create value. Although providing financial and non-financial informationand analysis is part of the role, and plays to the traditional strength of professional accountants, a CFO isexpected to contribute to strategic and management thinking as the partner to the business unit heads.At the end of the day, the organization and CFO are judged on the success or failure of the strategicchoices made.—Ed Lam, chief financial officer, Li and Fungboard to broaden his/her understanding of boardresponsibilities. In some jurisdictions, such as theUS, the number of CFOs who are directors of theirown boards is in decline, reflecting a general trendfor greater board independence with the CEO asthe only executive director on the board. 12While fulfilling a stewardship role, CFOs arealso expected to help drive the performanceof the organization by participating in strategydevelopment and validation, implementation, andevaluation. In strategic performance management,CFOs need to ensure that the F&A functionsupports strategic and operational functions andthe delivery of business objectives and providegreater visibility and understanding of performance.Providing greater insight on business performancealso typically requires CFOs to oversee data andinformation management, including implementationof information systems, business intelligence, anddata mining. 13 Ultimately, CFOs need to go beyonddelivering numbers and information to deliveringinsights into performance and the factors affectingit. For CFOs in technology companies, data andperformance analysis can be a significant part of therole. 14Delivering business insights requires CFOs to havea good understanding of the external and internalbusiness environment, including the complexitiesand challenges faced by various organizationalfunctions as well as by the organization as a whole.12 Maxwell Murphy, “A Waste of a Board Seat,” Wall Street Journal, October 15,201213 IFAC, Predictive Business Analytics: Improving Business Performance withForward Looking Measures (2011)14 David McCann, “A New Breed of CFO,” CFO Magazine, July 25, 2013This awareness leads to more effective businesspartnering with the CEO and leadership team,and being able to add greater value to businesssegments and operational units. Business partneringincludes supporting others to deliver strategic andoperational objectives, whether around market,cost, or innovation leadership.Effective business partnering involves managingcollaborative relationships and potential conflicts,and being a trusted and proactive partner indecision making. Business partnership andstewardship responsibilities can be likened to theaccelerator and brakes on a car, which are bothneeded and not in conflict with one another.Safeguards need to be built into organizationdesign, reporting structures, and professionaldevelopment to deal with all the risks associatedwith driving business performance and growth,particularly with short-term business objectives inmind. Managing cultural clashes between differentparts of an organization can also be critical, such asthose that may arise between the team responsiblefor ideas and innovation and the F&A function,which might apply traditional finance metrics anddecision rules to early stage ideas rather than moreflexible portfolio approaches to project evaluation. 15As business partners, CFOs need to be alert tosituations that might compromise their professionalobjectivity. The most effective safeguard againstaccountability confusion arising from potentialtensions between stewardship and businesspartnership is to adopt a business mindset without15 CGMA, Managing Innovation: Harnessing the Power of Finance (2013)


14Business partner:Driving profitablegrowthSteward: Ensuringbusiness integrity,financial health,and controlThe partnership and stewardship roles should have a dynamic, complementary relationship.sacrificing the objectivity and skepticism thatCFOs require to persuasively challenge potentiallyimprudent managerial decisions. The trainingprofessional accountants bring to the CFO role isan advantage in terms of uniting an ethical mindsetwith expert-level business acumen. Providingcollaborative challenge to peers requires a businessunderstanding and intimacy that extends beyond anunderstanding of financial performance.CFOs should be able to balance and manage bothstewardship and business partnering without 16compromising their responsibility to connect,support, and challenge the organization. Thisimproves the quality of important decisions toensure business strategy delivers the highestfinancial value at an appropriate level of risk.16 Nederlandse Beroepsorganisatie van Accountants, “Hein van den Wildenberg:‘Ik geloof in evolutie’”, July 16, 2013Finance has a seat at the table in the management team of the business; however, we have to prove ourvalue every day. The financial professional has to find the balance between supporting the business andchallenging where necessary, which involves holding up a mirror to business colleagues. Effective businesspartnering requires a combination of a straight back and commercial insight.—Hein van den Wildenberg, vice president, control, governance, risk and assurance, Shell 1616 Nederlandse Beroepsorganisatie van Accountants, “Hein van den Wildenberg:‘Ik geloof in evolutie’”, July 16, 2013


15Principle CThe CFO should act as the integrator and navigator for the organization.With their broad perspective of the organization and the environment in which it operates, CFOs needto help their organization navigate through the processes and challenges of strategy development,management, and execution. As integrators and navigators, CFOs should facilitate the sustainablecreation of value by helping to ensure that their organizations incorporate or integrate economic,environmental, and social factors at all levels of decision making and reporting.To perform effectively as integrators and navigators,CFOs need to be positioned centrally, alongsidethe CEO, in the strategic management of theorganization. This involves being able to facilitatea common and unifying perspective on anorganization’s strategic objectives, opportunitiesand threats, business model, and critical successfactors—including resources, capabilities, andcompetences—needed to deliver the strategyin relation to changing circumstances andenvironmental factors and trends.CFOs can leverage their broad perspective ofthe organization, and their understanding andexperience, to ensure that their organizationidentifies and addresses relevant factors. Suchfactors include competitor and market dynamics,technological change, and innovation in the courseof strategy development, management, andexecution, as well as facilitating the sustainable useof resources.CFOs can facilitate integration within organizationsby applying a “systems thinking” approach toimplementing governance, management, andreporting processes, such as risk management,internal control, and business reporting. A systemsapproach enables an understanding of howthings influence one another within a whole andemphasizes the relationships among a system’sparts, rather than the parts themselves. Goodgovernance affects the entire organizational cycleof strategic planning, resource utilization, valuecreation, accountability, and assurance and can leadto cheaper and broader-based capital. Adopting aholistic approach ensures that good governance andrisk management are not “bolt on” but “built in”—integrated into all aspects of an organization. 17Situated at the intersection of strategies, processes,and information, CFOs need to lead and coordinatehigh-quality communications and reporting througheffective reporting processes. 18 Enhanced forms ofbusiness reporting, including integrated reporting,can be used as part of an effective communicationsstrategy for an organization to address the increasein the volume and frequency of informationmade available. It helps to ensure that investorsand other stakeholders gain more insight andunderstanding of the organization’s current andfuture performance.17 IFAC, Integrating Governance for Sustainable Success (2012)18 IFAC, Principles for Effective Business Reporting Processes (2013)The broad-based experience acquired by a professional accountant is sound preparation for the CFO tolead the integration across the entity, supporting the alignment of resources with strategic choices andensuring the organization understands fully the performance and outcomes of such choices as part of acontinuous review cycle. The forthcoming integrated reporting requirements will be a new challenge forus all in helping organizations understand and embrace the spirit of sustainable thinking and actions.—Alan Johnson, CFO, Jerónimo Martins17 IFAC, Integrating Governance for Sustainable Success (2012)18 IFAC, Principles for Effective Business Reporting Processes (2013


16Corporate responsibility, or sustainability, isbecoming a key consideration for managementaction in terms of how to integrate economic,social, and environmental factors in interactionswith stakeholders and business practices. CFOsshould be well placed to take on responsibility inthis area, particularly in integrating and connectingfinancial and non-financial performance. Thisresponsibility requires them to be adept at engaginga wider range of stakeholders and bringing differentparts of an organization closer together, such asthrough efficient integration of business processes,to improve connectivity and understanding ofthe drivers of value. By bringing together variousbusiness functions, processes, and systems, CFOscan also better support the information needsof governing bodies, management, and externalstakeholders.CFOs Increasingly in the Driver’s Seat on SustainabilityIn a 2012 Deloitte global survey, 26% of CFOs reported that they are the person in the organization whois accountable to the Board for their company’s sustainability strategy—a nine point increase over 2011.A majority of CFOs (53%) said their involvement in sustainability increased in the past year; even more(61%) expect greater involvement in sustainability in the next two years.


17Principle DThe CFO should be an effective leader of the F&A function.The CFO needs to lead an efficient and effective F&A function, guiding the organization to efficientlyuse resources at the same time as delivering value to its customers. The CFO should be able to assessand optimize the benefits, and manage the challenges, arising from trends, such as centralization,outsourcing, and offshoring of the F&A function, while ensuring that financial talent and capability isretained and groomed within the organization.Providing leadership to the F&A function involvesdeveloping and implementing a vision on what itshould look like in terms of structure and servicedelivery, and how it can meet the needs andexpectations of the organization. A vision andservice delivery model typically involves managingthe cost base, at the same time as sustaininggrowth strategies by providing business insight tosupport decision making. 19 CFOs are expected toensure the F&A function delivers proactive businesspartnering and serves as a role model for otherfunctions in the areas of transparency, quality,ethics, and innovation.Aligning the F&A function with delivering theorganization’s objectives involves developing aneffective talent recruitment and managementstrategy to attract, develop, and retainfinance talent and the skillsets required tosupport stewardship and business partnershipresponsibilities. To create time for the broaderresponsibilities of the CFO role, establishing strongand competent leadership to oversee the variouselements of the F&A function is a critical task.As part of F&A leadership, it is important to havea core of F&A professionals who have undergoneappropriate professional accountancy or relatedtraining and qualification programs, and who havea good understanding of the current requirementsof financial reporting and related compliancework. 20 CFOs also need to consider how greaterdiversity and range of competences can enhancethe contribution of the F&A function. This mayinvolve recruiting individuals from different sectors,with different backgrounds and experiences, whocan fulfill the expanding, and increasingly complex,roles and responsibilities of F&A functions.Career paths within F&A in many organizationsare becoming less clear, particularly driven bythe utilization of shared business services andoutsourcing. Many global organizations strive for aunified F&A service delivery model and, increasingly,a unified wider-business service delivery modelwhere transactional financial and other operationalprocesses and activities are centralized andstandardized.Centralization has coincided with trends towardoutsourcing and offshoring. Although thesetrends have created significant opportunities forstreamlining and increased efficiency, and providingmore time for the retained F&A function to focuson business partnership, they have also givenrise to some potential challenges CFOs have tomanage. These include balancing cost reductionpressures with service delivery quality, securingoperational improvements when process ownershipdoes not transcend functional boundaries, andmanaging talent and career pathways that might befragmented as a result of outsourced or disjointedservice structures.19 Association of Chartered Certified Accountants and the Institute of ManagementAccountants, Finance Leaders Survey Report: December 201220 IFAC, Integrating the Business Reporting Supply Chain (2011), Recommendation:A Minimum Level of Qualification Should Be Required for Preparers ofFinancial Information


18At Unilever we operate a hybrid model, using a number of business process outsourcing relationshipsto provide transactional finance activities, but also we are now setting up operating centres that offerfinance services further up the value chain to the organisation to drive the effectiveness of our financeoperations.In terms of the talent challenge there are some issues from the operating centre perspective—our workis focused on higher-value finance activities and, as we have moved in country finance operations andcentralised them, we have lost some experienced F&A people. So, trying to recruit that level of finance“capability” and tacit knowledge into the centre is always going to be a challenge. It’s about counterbalancinglosing the tacit knowledge in the retained finance function/in country by the benefits andexpertise you get from standardisation and centralisation in the operating centres. Our aim is to buildand retain valuable deep Unilever accounting knowledge in conjunction with centralised finance models,standardised finance processes, and increased automation.—Arnold van Boven, director finance and accounting operation, Unilever 21CFOs are, therefore, expected to assess andoptimize the benefits and address the challengesderiving from these changes. They need to ensurethat a sufficient number of talented professionalsare available in the organization and, whereappropriate, are groomed for senior roles. SomeCFOs are challenging their organizations’ approachto managing F&A operations through outsourcingand offshoring arrangements, particularly as the 21economics of alternative operating models (e.g.,outsourcing versus insourcing) and the extentto which the activities are crucial to day-to-dayoperations, impact decisions. 22In an organization where core F&A processes havebeen outsourced, CFOs often need to combat an“us versus them” culture that can develop betweenthose in a shared service center and those withinthe retained F&A function. In addition to ensuringquality control over outsourced work, CFOs needto ensure that career paths allow the developmentof sufficient knowledge and expertise for bothstewardship and business partnering responsibilities.Facilitating the engagement of F&A with the restof an organization is critical to enhancing trust andcredibility. A key challenge is lack of interactionbeyond the F&A function to arrive at a sharedview on how F&A activities meet business needs.Effective business partnering requires frequentand proactive communication between linemanagers and F&A staff, far beyond the limitedinteraction of periodic reporting. Applying “leanthinking” principles (delivering customer valuewithout waste) can help to better meet the needsof the organization. This involves identifying thoseorganizational objectives and departments that theF&A function is serving and building effective andinfluential relationships with them, including:• operations—enhancing operational and supplychain effectiveness;• marketing and branding—assessing the returnon marketing and brand investment; and• research and development (R&D)—ensuringeffective investment in R&D and innovation.A customer-focused approach helps to ensure theF&A function delivers its products and serviceseffectively and efficiently in a way that meets theneeds of the organization without compromisingthe integrity and objectivity that stakeholders expectto be reflected in the work of the F&A function. 2321 Association of Chartered Certified Accountants, Talent and Capability in GlobalFinance Functions (2013)22 Kathleen Hoffelder, “Controllers Eye Alternatives to Outsourcing,” CFO Magazine,November 14, 201223 Institute of Chartered Accountants in England and Wales, Special Report: LeanThinking (2012). Also see the UPS case study on customer and stakeholder focusfrom the perspective of the CFO in Integrating Governance for SustainableSuccess (IFAC, 2012, p. 21).


19Effective leadership also involves ensuring theF&A function is adaptive and changes as theorganization and its needs change. This requiresembracing more dynamic and responsiveapproaches to planning and performancemanagement that enable the organization torespond to the uncertainties of a rapidly changingbusiness environment that affect key businessdrivers, such as product/service demand, resourceinput, prices, and availability. CFOs will also have toincreasingly exploit and feel comfortable with newtechnologies that enable new ways of working,such as real-time reporting.It is critical that the Board and the senior management of the organization realize the evolving contributionof the finance-business partnering. Only through this partnership relationship the CFO and his/herteam could deliver results and meet expectations of internal customers arising from the ever changingbusiness dynamics and the fast moving economic cycles. On this, the CFO also has to fulfill a leadershiprole to help establishing business visions and values, organizational structure, culture, and mindset forthe organization to deliver results.—William Lo, executive director—finance, Airport Authority Hong Kong


20Principle EThe CFO should be a professional and bring professional qualities to the role and theorganization.CFOs should bring professional qualities to their role and encourage ethical behavior and decision makingthroughout an organization to ensure sustainable value creation. In performing the CFO role, professionalaccountants are anchored by their fundamental principles of integrity, objectivity, professionalcompetence and due care, confidentiality, and professional behavior.Strong ethical leadership and good governanceare prerequisites for sustainable value creation andrequire organizations to go beyond compliance withlaws and regulations. Organizations that do not actethically eventually lose their “license to operate”with the resulting failure likely to have an impacton a variety of stakeholders. An ethical cultureand accountability starts with the tone-at-the-topand an ethical mindset applicable to all parts ofan organization. CFOs’ most important leadershipcapability is viewed as their ability to demonstrateintegrity, both in their words and actions. 24 Externalstakeholders, such as investors, increasingly placeweight on ethical leadership and good governanceand they value professionalism and objectivity,in addition to business acumen and businesspartnering skills, in CFOs.CFOs have a shared responsibility to ensure theentire organization is attuned to high ethicalstandards and aligned with the values, goals, andobjectives of the organization. Foremost, CFOsshould help to set the tone at the top by displayingand encouraging professionalism and ethicalbehavior. They can encourage an ethical culturein their organization and, if need be, encouragesenior management to proactively demonstratethe importance the organization places on ethicalbehavior. The right tone at the top permeatesthroughout and organization and can be facilitatedby a prominent values-based code of conduct. 2524 Financial Executives International (Canada), Beyond the Numbers: The EvolvingLeadership Role of the CFO, (2011)25 IFAC, Defining and Developing an Effective Code of Conduct for an Organization(2007)New Brooms Sweep CleanWe need to make sure corporate governance clearly defines the mandatory boundaries, but then—atthe same time—it needs to provide space for responsible entrepreneurial behavior. There are a few overarchingprinciples:• focus on the longer term;• work on the real and sustainable values; and• consider the interest of stakeholders.Compliance is not a program, but the foundation of sustainable business. We define clear responsibilityand accountability aligned to our organizational structure and our chain‐of‐command processes accordingly.—Joe Kaeser, former CFO and current CEO, Siemens 2524 Financial Executives International (Canada), Beyond the Numbers: The EvolvingLeadership Role of the CFO, (2011)25 IFAC, “Interview with Joe Kaeser: New Brooms Sweep Clean,” FinancialReporting Supply Chain Theme 1, June 1, 201026 IFAC, Defining and Developing an Effective Code of Conduct for an Organization(2007)


21A key advantage and added value that professionalaccountants bring to the role of CFO are theirethical standards and professionalism, which aregoverned by the International Ethics StandardsBoard for Accountants’ Code of Ethics forProfessional Accountants or equivalent nationalcodes. 26 Throughout all the activities they performas CFOs and in diverse settings, professionalaccountants are anchored by their fundamentalprinciples of integrity, objectivity, professionalcompetence and due care, confidentiality, andprofessional behavior that apply in performing aCFO role.• Integrity: being straightforward and honest,which provides the basis of transparency andcan be applied to various aspects of the CFOrole, such as ensuring information is preparedfairly, honestly, and in accordance with relevantprofessional standards, regardless of whether itforms the basis of management information orexternal disclosures.• Objectivity: not allowing professional or businessjudgments to be overridden by bias, conflictof interest, or the undue influence of othersand taking reasonable care and judgment tomaintain objectivity in the CFO’s professionalactivities.• Professional competence and due care:maintaining professional knowledge andskills to ensure the organization receivesprofessional and competent service based on therequirements of various aspects of the role. Inrelation to stewardship, this will involve ensuring26 International Ethics Standards Board for Accountants, Code of Ethics for ProfessionalAccountants (2013)information fairly represents the performanceand condition of an organization, and complieswith all applicable legislative requirements. Asa business partner, professional competenceextends to doing one’s utmost to ensure that thegoals of the organization are delivered.• Confidentiality: not disclosing or usingconfidential information acquired as a result ofa professional and business relationship outsidethe organization without authority or a legal orprofessional right or duty to disclose.• Professional behavior and professionalism:not engaging in any action that discreditsthe accountancy profession and the CFO’sprofessional reputation. Professional behaviorrequires compliance with relevant laws,regulations, and professional and ethicalstandards and being guided by the spirit of thoselaws and regulations as well as the wording.Applying professional qualities, such as professionaljudgment, can involve reconciling conflictingcommercial, financial, sustainability, and stakeholderinterests. Tensions and conflicts can arise at alllevels and, therefore, CFOs will increasingly needto apply their professional qualities and ethicalleadership in support of sustainable value creation.This may involve questioning decisions that appearto be directed at short-term gain at the expenseof longer-term objectives or those decisions madefor personal gain. CFOs are also expected to applytheir judgment to balance a need for organizationalnimbleness, which requires quick and intuitivedecision making, with a need for evidence-baseddecisions. These characteristics are central to thedistinctive attitude, outlook, or way of thinkingthat should be the mindset of an experiencedprofessional accountant in business.With the move toward business partnering, there is a potential threat to finance professionals as theymay lose objectivity. However, this should not be a concern where the organization’s finance staff areprofessional accountants and retain their membership in an accounting institute, complete their continuingprofessional development obligations, and comply with its professional code of ethics.—Keith Luck, strategic programmes director, Serco plc and deputy president, Chartered Institute of Management Accountants27 International Ethics Standards Board for Accountants, Code of Ethics for ProfessionalAccountants (2013)


22Recommendations for the AccountancyProfession and EmployersTo fulfill the expectations placed on CFOsand effectively operate as a key member ofthe leadership team, CFOs, and professionalaccountants aspiring to become CFOs, need abroader perspective and a wider set of capabilitiesand skills than those needed for carrying outonly core F&A responsibilities. From an individualperspective, professional accountants need toconsider how to develop the necessary competencesfor finance leadership, such as through appropriateeducation and experience, and lifelong learning thatcan be enhanced through mentoring and coaching,working closely with others, and networking.A research report from Robert Half ManagementResources reports that a third of surveyed executivesfind it difficult to source candidates with the rightexperience to implement a business partneringapproach. 27The accountancy profession and employers cantake the following actions to help professionalaccountants leverage their technical knowledgeand professional skills, and prepare for a strategicleadership role.FOR PROFESSIONAL ACCOUNTANCYORGANIZATIONS1. Identify and address any significant gapsbetween the skills organizations expect of theirCFOs and finance leaders and the qualificationand professional development of accountants.Bridging any identified gap can involve PAOsreviewing multiple aspects of the work they do,including engaging with various stakeholdersto ensure that the qualification, training,and continuing development of professionalaccountants adequately prepares them forfinance leadership.2. Proactively engage with employers and businesscommunities to understand their needsand requirements, particularly in relation tosupplying relevant candidates for CFO and otherfinance leadership roles. A deep awareness27 Robert Half Management Resources, Business Partnering Report 2013, 2013and understanding of these needs informs thedecisions PAOs make in relation to the contentand delivery of their educational frameworks andsupport services, qualifications, and training atboth a pre- and post-certification level. Employerengagement also allows PAOs to facilitateemployers’ understanding of the benefits thatprofessional accountants can offer in financeleadership roles. This can involve promotingemployers’ awareness of the on-going supportprovided by PAOs to members, includingkeeping members’ knowledge current andproviding business networking opportunities,which has correlated benefits for employers ofprofessional accountants.3. Ensure that the scope of qualification andtraining of professional accountants incorporatesbroader professional and interpersonalcapabilities and skills, which will need to befurther developed and refined throughout acareer. 28 Although these capabilities and skillswill mainly be developed after certification, thefoundation for their development should becovered in accounting education and training.Attention should be given to defining thecompetency requirements accountants need fortheir long‐term careers, without compromisingthe fundamental F&A and human skills thatform the basis of professional accountants’core competence. The core competencies forCertified Public Accountants (CPAs) identified inCPA Horizons 2025 are communications skills,leadership skills, critical-thinking and problemsolvingskills, anticipating and serving evolvingneeds, synthesizing intelligence to insight, andintegration and collaboration. 29 Topics and issuesthat are relevant to a career in business or thepublic sector, which are also relevant to aspiringCFOs and finance leaders, include:28 International Education Standard (IES) 3, Initial Professional Development—Professional Skills, provides the range of professional competence areas andrelated learning outcomes needed by professional accountants to demonstratecompetence. IES 3 was revised and released as an Exposure Draft in 2012. Detailson the revised standard, including tentative timing for final publication, areavailable on the International Accounting Education Standards Board website.29 American Institute of Certified Public Accountants, CPA Horizons 2025 (2011)


23• corporate responsibility and sustainability;• leadership, people, and change management;• managing and dealing with uncertainty;• strategic management and planning;• corporate finance;• performance management;• operations;• relationship and project management;• marketing; and• information technology and systems.4. Foster and encourage a commitment to lifelonglearning among professional accountants.Although it is the responsibility of theprofessional accountant to develop and maintainprofessional competence through continuingprofessional development (CPD) and education,PAOs can facilitate access to CPD opportunitiesand resources, and adopt prescribedrequirements relating to the development andimplementation of appropriate measurement,monitoring, and compliance procedures. 30 TheInternet and mobile technologies also enableprofessional accountants to engage in educationwhenever and wherever it is needed, whichpresents an opportunity for PAOs to be moreinnovative in how they support their members inlifelong learning.5. Engage more effectively with professionalaccountants in business. An increasing numberof PAOs provide specific and targeted supportstructures and services to help their preparationfor senior finance leadership positions. Variousapproaches include:• Establishing, within the PAO, dedicatedgovernance-support structures forprofessional accountants in business to helpidentify and deliver appropriate support anddevelopment activities (e.g., establishingprofessional accountant in business-focusedfaculties, interest or advisory groups, andcommittees). 31• Promoting and supporting credentialsspecifically for professional accountants inbusiness.• Providing a broader range of specific CPDcourses and training opportunities thathelp prepare aspiring accountants to seniorleadership roles, assisting in developmentof business skills needed to be an effectiveCFO. These are often delivered throughcollaboration arrangements with third partyinstitutions and education providers, suchas university business schools, providingaccess to relevant postgraduate educationalprograms that can assist preparation formanagement leadership.Some PAOs currently do not admit professionalaccountants in business as members. ThesePAOs also have the opportunity to help prepareprofessional accountants who wish to move intofinance leadership for the challenges they will facein working in an organizational context.FOR EMPLOYERS OF PROFESSIONALACCOUNTANTS1. Develop closer relationships with PAOs andother education providers to help ensure thatprofessional accountants in the organizationare able to provide effective support andmaximize their potential and the value theyadd to the organization. Where appropriate,establish targeted training schemes to supportthe qualification and training of professionalaccountants in the business environment tofacilitate the preparation of individuals that bringthe relevant skills, competency, and experience30 IES 7, Continuing Professional Development (Redrafted), prescribes the necessarycontinuing professional development (CPD) for professional accountantsrequired to develop and maintain their professional competence so as toprovide high quality services to clients, employers, and other stakeholders.31 IFAC, Establishing Governance: A Guide for Professional Accountancy Organizations(2013)


24into the workplace from the outset of theircareers.2. Ensure that investments in training anddevelopment go beyond developing technicalskills, particularly for prospective financeleaders. Development needs should cover theacquisition of leadership and analytical skillsand the behavioral competence and culturalmindset required to be successful outside ofa specific job or role, which can all be moldedand enhanced by exposure to non-financeareas of an organization, such as operationsand sales. Although poor interpersonal skills areoften the main reason for an employee’s failureto advance in an organization, organizationsare far more likely to offer training in moretechnical categories—accounting or finance, andinformation technology—than in soft skills. 323. Where feasible, provide job rotation andplacements around various parts of organizationto help provide professional accountants withwider business understanding and furtherdevelop their business acumen. After startinga career in one of the key parts of the F&Afunction (e.g., planning and control, decisionsupport, treasury, tax, internal audit, accountingoperations, etc.), job placements or exposureto broader commercial and operational rolesis essential. According to the research reportFuture Pathways to Finance Leadership, ofnearly 750 CFOs surveyed worldwide, themajority (61%) have never taken roles outsideof the finance team, spending their careersentirely within the boundaries of finance. 33 Thisrepresents an on-going challenge for financeleaders in developing their commercial acumenand understanding, and suggests much ofthese developments takes place in the role asCFO, rather than during the career journey.Rotation through, or exposure to, businesssupport services might also be a critical partof developing career paths for finance leaders.This recognizes that prospective CFOs must alsounderstand business service operations and howthe business operates to provide products andservices to customers.4. Develop human resources developmentstrategies that respond to the complexity ofglobal F&A functions that might spread acrossgeographies and, therefore, need to deal withlanguage and cultural differences, and virtualteams located disparately. In this context, theeffective delivery of training and developmentideally requires a combination of face-tofacedevelopment time, on-the-job learning,coaching, and mentoring, as well as digital andreal-time approaches that allow flexibility forF&A professionals to access learning accordingto their preferences and needs. CFOs shouldalso look to support training programs orlearning interventions put in place to facilitatethe development of finance careers and futurefinance leaders.5. Capitalize on professional accountants’ trainingin, and understanding of, ethical conductby, for example, encouraging them to sharetheir knowledge and professional standardsand guidance with others in the organization,including in the context of developingorganizational codes of conduct and ethics.32 Neil Amato, “CFOs say soft skills are needed, but many aren’t offering trainingin them,” CGMA Magazine, July 1, 201333 Association of Chartered Certified Accountants and Institute of ManagementAccountants, Future Pathways to Finance Leadership (2013)


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