building the cfo function: roles and responsibilities
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Singapore Management UniversityInstitutional Knowledge at Singapore Management University
Research Collection School Of Accountancy School of Accountancy
11-2012
Building the CFO Function: Roles andResponsibilitiesAndrew LEESingapore Management University, [email protected]
Chunqi (Tracey) ZHANGSingapore Management University, [email protected]
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CitationLEE, Andrew and ZHANG, Chunqi (Tracey). Building the CFO Function: Roles and Responsibilities. (2012). Research CollectionSchool Of Accountancy.Available at: https://ink.library.smu.edu.sg/soa_research/977
Building the CFO Function: Roles and Responsibilities
Andrew Lee and Tracey Zhang
Singapore Management University
15 November 2012
CFO Connect Symposium 2012
Supported by:
15 November 2012
Objective and scope of study
To achieve a better understanding of the CFO function
Fundamental question: What do CFOs actually do?
Examined several facets to this question:
1. Roles and responsibilities of CFOs
2. How those responsibilities are structured
3. Whether those roles have changed in importance over time
4. What roles occupy the most of the CFOs’ attention and time
5. What factors are challenging the effectiveness of the CFO
function today
6. What factors are enabling CFOs’ effectiveness
Slide 2
15 November 2012
Survey
Online questionnaire survey in Aug-Sep 2012
Group CFOs of 700+ SGX-listed companies
Received 117 complete and usable responses (16.2%
response rate)
We partitioned responses into three groups by companies’
market capitalization
Large-cap (>S$1 billion)
Mid-cap (S$300 – S$1,000 million)
Small-cap (<S$300 million)
Interviews with three CFOs – to garner their views on
some of the survey results.
Slide 3
15 November 2012
Profile of CFOs – by company size
Slide 4
Company
size
Market
capitalization
(S$ mil)
No. of
responses
Response
Rate
Large-cap > $1,000 24 24.5%
Mid-cap $300 – $1,000 18 18.9%
Small-cap < $300 75 14.2%
TOTAL 117 16.2%
15 November 2012
Profile of CFOs – by age group
Slide 5
8%
17%
29%
42%
72%
41%
46%
6%
23%
Large-cap
Mid-cap
Small-cap
30-39 40-49 50-59 60-69 years
15 November 2012
Profile of CFOs – % with accounting qualification
Slide 6
79% 89% 89% 92%
Large-cap Mid-cap TOTAL Small-cap
15 November 2012
0% 20% 40% 60% 80% 100%
Financial reporting
Analysis of business unit performance
Financial risk management
Cash management
Tax planning and strategy
Investor relations
Mergers & acquisitions
Capital structure management
Strategic planning
Enterprise risk management
Talent management
Functional responsibilities of CFOs
Slide 7
% of respondents:
15 November 2012
0% 20% 40% 60% 80% 100%
Raising of capital
Capital structure management
Tax planning and strategy
Mergers & acquisitions
Stock exchange reporting
Internal audit (or Internal control)
Legal
HR management
Talent management
Large-cap
Mid-cap
Small-cap
Functional responsibilities (by firm size)
Slide 8
% of respondents:
15 November 2012
Importance of function now vs. 3-5 yrs ago
Slide 9
Enterprise risk management
Strategic planning
Financial risk management
Analysis of business unit performance
Capital structure management
Forecasting
Investor relations
Financial reporting
Mergers and acquisitions
Raising of capital
1 = Much LESS important now
3 = Little change
5 = Much MORE important now
15 November 2012
What do CFOs spend the most time on?
Slide 10
0% 20% 40% 60%
Analysis of business unit performance
Strategic planning
Stock exchange reporting
Mergers & acquisitions
Financial reporting
Enterprise risk management
Investor relations
Capital structure management
Financial risk management
Talent management
Forecasting
% of respondents:
15 November 2012
Spent most time (by firm size)
Slide 11
0% 20% 40% 60%
Analysis of business unit performance
Capital structure management
Investor relations
Strategic planning
Raising of capital
Enterprise risk management
Mergers and acquisitions
Financial reporting
Stock exchange reporting
Large-cap
Mid-cap
Small-cap
% of respondents:
15 November 2012
CFO as Business Partner
Slide 12
1 0 3
29
84
1 1 3
43
69
Stronglydisagree
Somewhatdisagree
Neither agreenor disagree
Somewhatagree
Stronglyagree
No
. of
resp
on
de
nts
Business partner to CEO
Business partner to Heads of business units
15 November 2012
Factors CHALLENGING the CFO Function
Slide 13
0% 20% 40% 60%
Ability to attract and retain talent
Ability to manage enterprise risk
Uncertain or volatile economic conditions
Compliance burden
Board and governance processes
Organizational strategy
Investor expectations
Organizational complexity
Complexity of financial reporting standards
Ability to manage financial risk
% of respondents:
15 November 2012
Factors ENABLING the CFO Function
Slide 14
0% 20% 40% 60%
Relationships between finance & BUs
Competency of finance staff
Board and governance processes
Ability to manage financial risk
Organizational strategy
Ability to manage enterprise risk
Access to capital
Ability to attract and retain talent
State of in-house finance processes
State of in-house IT processes
% of respondents:
15 November 2012
Board and governance processes: Challenging or Enabling?
Slide 15
0%
20%
40%
60%
Small-cap Mid-cap Large-cap
Challenging
Enabling
15 November 2012
Ability to manage financial risks: Challenging or Enabling?
Slide 16
0%
20%
40%
60%
Small-cap Mid-cap Large-cap
Challenging
Enabling
15 November 2012
Ability to manage enterprise risks: Challenging or Enabling?
Slide 17
0%
20%
40%
60%
Small-cap Mid-cap Large-cap
Challenging
Enabling
15 November 2012
Ability to attract and retain talent: Challenging or Enabling?
Slide 18
0%
20%
40%
60%
80%
Small-cap Mid-cap Large-cap
Challenging
Enabling
15 November 2012
Key Takeaways
Traditional controllership and compliance functions of CFO
office have not changed. However, CFOs also assume
many additional roles.
Enterprise risk management is increasingly very important
Ability to manage enterprise risks among the most challenging
to finance’s effectiveness
Improving certain organizational processes and capabilities
can potentially enhance effectiveness of finance function:
Board and governance processes
Ability to manage enterprise risks
Ability to attract and retain talent
Slide 19
Thank You
Supported by: