Full Form of CFO :
Chief Financial Officer
CFO Full Form is Chief Financial Officer. This refers to the corporate officer who is responsible for the financial risks of a company. Other responsibilities of a CFO include record-keeping, financial planning, financial reporting to management, etc. CFO is almost equal to FD or Finance Director in terms of UK.
A CFO reports to the CEO or Chief Executive Officer as well as to the board of directors. He or she may also be a part of the board members. A CFO must possess MBA or MS. or he or she must have a strong accounting background like CPA. Current role of CFO does not just end with managing finance and administration. It also includes the role of being an advisor to CEO.
CFO Full Form – Additional Information
The Chief Financial Officer, which will hereinafter be referred to as CFO throughout the article, refers to a corporate officer who is responsible for the management of financial risks associated with the operations of a corporation. Such officer is also known as Chief Financial and Operating Officer (abbreviated as CFOO). He is one of the essential officers in any corporation tasked with key functions of the same.
A CFO is tasked with the functions of record keeping and financial management. Such officer, apart from the aforementioned responsibilities, has also to report to the higher management. These are the primary functions of a CFO however, there may be additional functions ascribed to it such as in several sectors, a CFO has to undertake an analysis of data. When a CFO undertakes such functions, he is referred to as Finance Director (abbreviated as FD). FD is a title commonly used in the United Kingdom.
All of the aforementioned discussion highlights one important aspect that a CFO is indispensable to a corporate organization. The office of a CFO handles matters that are strategically critical to the overall functioning and organization of the company. It is, therefore, important that other aspects of a CFO are dealt with. So, here are five points about a CFO that everyone must know about:
Qualification for the post of a CFO
Typical qualifications for the post of CFO are generally same in all jurisdictions. CFOs generally possess a Master of Business Administration (abbreviated as MBA), Master of Science (abbreviated as MS), etc. Some even belong to the Accounting field, for example, a Certified Public Accountant. There may be other accountants eligible for the post such as Chartered Accountant, Chartered Certified Accountant, Certified Management Accountant, or any other equivalent status, for example, a Master of Finance. CFO is a prestigious position in a corporation and therefore, the qualification bar is placed at a high level.
Functions of the CFO
As mentioned before, it is the responsibility of the CFO to report to the higher management of the corporation. This higher management comprises Chief Executive Officer (abbreviated as CEO), the Board of Directors (abbreviated as BOD), and other key officials. The CFO has to undertake supervision of the finance unit and act as a spokesperson to the corporation. It also advises the Chief Operating Officer (abbreviated as COO) on matters relating to tactical and strategic issues such as cost-benefit analysis, management of budget, seeking new funding, etc. Many studies state that the functions of a CFO are four-fold, namely, operational, strategic, catalytic, and Stewardship.
Elements incorporated by the federal Government in the United States of America.
There have been several incorporations made by the federal government of the United States of America in respect of CFO, which clearly show much importance the world super power gives to CFOs. The incorporations made relate to the qualifications, functions, and other aspects of a CFO in an American Business Model and therefore, are interesting points to study about. In the year 1990, a breakthrough event occurred, as the Chief Financial Officers Act was enacted which paved the way for the creation of the position of CFO in every 23 federal agencies.
The purpose of the enactment was to ensure the improvement of the financial management of the government and development of standards pertaining to financial disclosure and performance. In this whole set up, the Office of Management and Budget (abbreviated as OMB) is extremely important, as it is tasked with the responsibility of ensuring the development of financial management. It is within this set-up, the position of the Deputy Director of Management has been created by the Chief Financial Officers Act.
Under the Act, a CFO council has been established, which is chaired by the Deputy Director of Management. The council comprises the CFOs, Deputy CFOs from every 23 federal agencies, the Fiscal Assistant Secretary, the OFFM controller, and the head of the Office of Fiscal Service. The function of the council is to counsel the US government in financial management. It focuses on areas such as accountability and financial management.
Changing role of CFOs
There is no gainsaying that the role of CFO has changed. From the traditional point of view, CFO is seen as a financial gatekeeper but there has been expansion in the functions discharged by the CFO. Now CFO engages in providing counsel to the CEO. A Report was published by McKinsey which talked about a survey that was conducted where 164 CFOs stated that corporations now expect from them active participation in the strategic areas of the corporation. As the corporate world is struggling with changing business atmospheres, the roles of CFOs have become critical to the management of the corporation especially in the backdrop of the unstable macroeconomic environment, and others.
These days, CFOs are being relied upon because they handle the business information and manage financial data from the management. They have become increasingly involved in the support operations of the corporation. Thus, the CFOs have tread way ahead of their traditional roles. What is the most interesting developing as far as CFOs are concerned is the emerging “CEO in waiting” status that these officials now possess. Thus, from what we have read so far, CFOs have undergone transformative years and the transformation has been indeed positive to begin with.
A CFO acts as a catalyst in a corporate organization by stimulating and ensuring timely execution of modifications in the financial management of the corporation. A CFO can very well undertake initiatives such as cost reduction initiatives, pricing execution, procurement, etc. A CFO is shouldered with enough power to incorporate innovation in the working mechanism of the company.
Considering the importance of their functions, CFOs are handsomely paid. Some even are blessed with a miraculous package worth $50 million+. Some of the richest CFOs of the world are Anthony Noto of Twitter, Ruth Porat of Google, Arthur Minson of Time Warner Cable, Ken Goldman of Yahoo! Jeffrey Campbell of American Express, etc. All these CFOs are known to earn in millions and this all the more makes the position of a CFO attractive.
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