Techno Finance and Executive Diary...

Monday, October 30, 2006

FROM CHIEF ACCOUNTANT TO CHIEF FINANCIAL OFFICER (CFO)

Due to increased governance requirement there arises a need to empower the chief accountant and to make him responsible by requiring him to sign the accounts. There comes the code of corporate governance, which makes the chief accountant powerful and more responsible. With the new role, Chief Accountant becomes Chief Financial Officer (CFO).

Chief Financial Officer now has extensive responsibilities for internal and external reporting. All the information required for decision-making by the Board of Directors and Chief Executive is processed and furnished by the Chief Financial Officer. Apart from this, external reporting requirement is fulfilled by Chief Financial Officer, the accounts and financial statements are signed by the Chief Financial Officer before they are sent to concerned authorities. Major responsibilities include:

• Annual business planes, cash flow projection, forecasts and long term planes.
• Budgets include capital, manpower and overhead budgets along with variance analyses.
• Quarterly operating results of the company as a whole and in terms of its operating divisions or business segments.
• Details of joint ventures or collaboration agreements or agreements with distributors, agents, etc.
• Default in payment of principal and/or interest, including penalties on late payments and other dues, to a creditor, bank or financial institution, or default in payment of public deposit.
• Failure to recover material amounts of loans, advances, and deposits made by the company, including trade debts and inter-corporate finances.
• Significant public or product liability claims likely to be made against the company, including any adverse judgment or order made on the conduct of the company.

The performance of any organization is reflected by the financial statements. Any ambiguity if remains there, makes the reflection of the performance doubtful. Therefore, the role of CFO becomes very important as he controls the reflection of performance, which is reported to different authorities and the organization is assessed by them, and they must perform their job with professional competency and integrity, so that the financial statements give credible information to its users. The code of corporate governance provides the guidelines and opportunity to do this.

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Posted by "CPerformance" :: 12:15 PM :: ---------------oOo---------------