Article written by Professor Alex Watson.
75% of the chief financial officers (CFOs) of JSE top 200 are CAs(SA), while 1 in 4 of all the Directors of JSE top 200 are CAs(SA). If you are aspiring to be one of those CAs who assumes a leadership role in South Africa, you need to take every opportunity to find out more about business and the role of the CFO.
Historically the role of a CFO was focused on keeping track on the finances of the business. More recently, CFOs have begun to play a more strategic and integrated role in an organisation. CFOs are generally part of the team that decides on the strategy and objectives of the organisation, as well as assuming responsibility for reporting on the extent to which those objectives have been met. This requires a thorough knowledge of the environment in which the organisation operates, including the governance and legal requirements. The CFO needs to have a thorough understanding of the business model and the resources that will be needed to continue adding value in the future. In addition to this, they need to able to identify any potential threats relating to their continued availability.
The International Federation of Accountants (IFAC), the global accounting body of which SAICA is a member, published a discussion paper on “A Global Debate on Preparing Accountants for Finance Leadership” in October 2013.
This paper identifies the following as the principles guiding the role and expectations of a CFO, which include:
• Being an effective organisational leader and a key member of senior management;
• Balancing the responsibilities of stewardship with business partnership;
• Acting as the integrator and navigator for the organisation;
• Being an effective leader of the finance and accounting function, and
• Bringing professional qualities to the role and the organisation.
As South African CAs, we can be proud of the proactive steps that SAICA has taken to ensure that the CA qualification remains relevant to the role that a CFO should play as a member of a responsible leadership team. SAICA has taken a leadership role in promoting integrated thinking – which leads to decision making and actions that consider the creation of value over the short, medium and long term. The changes to the qualification process of becoming a CA that are effective in the 2014 “part 2” assessment, i.e. the Assessment of Professional Competence (APC), will better equip a CA(SA) to be a responsible financial leader. The APC has increased the focus on professional competence, as well as strategy, risk management and governance. APC candidates are assessed for professional competence in an integrated case study format, which will require them to consider all the business and technical issues in dealing with the type of task that a newly qualified chartered accountant should be able to perform.
If you are an aspirant CFO and are considering your choice of APC professional programme, you should bear in mind the extent to which the programme will prepare you for your professional career and not just for the APC exam. You need to learn as much as possible about different business industries, the business models within those industries and the related goals, risks and performance. Reading selected extracts of integrated reports is an efficient way to increase your understanding of the strategy, governance, performance, prospects and external environment of the business. Go here for further discussion on the usefulness of integrated reports.