Strategy+Business has an interesting article on the changing role of the CFO.
Few business roles have changed as dramatically during the last generation as that of the chief financial officer. The classic model — the CFO as chief accountant and technical expert focused narrowly on the firm's financial statements and capital structure — has been pass� for a decade or more. The CFO has long since operated as more of a business partner with the CEO, closely involved in designing and overseeing strategy, operations, and performance.
This is a topic that Mrs. Businesspundit and I talk about a lot, her being an auditor and all. She is a big proponent of the idea that one new role of CFOs should be to be active in developing the corporate culture. There was an article yesterday in the Wall Street Journal about the cost/benefit tradeoff of auditing since SOX that failed to bring up a major point about auditing. Ultimately, accounting controls are only as good as the people that use them.
As Mrs. Businesspundit pointed out last night, you could establish a control that says a certain V.P. has to sign off on a certain kind of accounting document. Yet, the signature itself doesn't really mean the V.P. read it. And American business people are notorious for complying with the letter of the law instead of the spirit of it. Somehow we come to think the signature is what matters, when actually it is the review that we really need. That said, the best way to make sure things are done properly is not hiring more auditors or taking more ethics courses, but setting up the right corporate culture. Conservative accounting with proper controls is not a bad thing. CFOs can no longer push too hard to manipulate earnings for the sake of Wall Street. AFter all, business is rarely smooth and even, so why expect earnings to be that way? The necessary changes have to come from the top, and the CFO is in a prime position to set a good example and to promote the right corporate culture as it relates to financial and accounting matters.