Chief financial officer

Legal requirement

The appointment of a CFO or FD may be mandated by law. For example, in India, per the provisions of Section 203 of Companies Act 2013 every publicly listed firm having a paid up share capital of Rs. 10 Crores, requires a full time CFO. In the government sector this may be specified also: The US Chief Financial Officers Act, enacted in 1990, created a CFO in each of 23 federal agencies. (See also Office of Management and Budget and Office of Federal Financial Management.)

Role

The CFO serves as the financial authority in the organization. Significantly, the CFO holds ultimate responsibility for the day-to-day aspects of financial management, ensuring an operating environment that values cash flow, profit margins, and risk mitigation; tax management (and optimization) will be a parallel focus. The CFO thus has oversight of risk-, investment- and treasury management: the Chief Risk Officer, Chief Investment Officer and Treasurer will report to the CFO (or in smaller firms, the CFO assumes these roles). CFOs, in some organizations, will appoint a Chief Procurement Officer.

The CFO also drives the company's long-term financial strategy. Here, they will be critically involved in determining the viability and (see below) direction of major capital investments. This extends - as relevant - to e.g. mergers and acquisitions, and to corporate actions more generally. Corresponding to these, the CFO is responsible for managing the company's capital structure; this entails identifying and maintaining the appropriate mix of equity and debt financing — if necessary raising capital via an equity- or debt issuance. This latter will include negotiating with investors, banks, and other financial institutions. See Strategic financial management and Capital budgeting.

A major responsibility is financial reporting - and its related compliance (although many CFOs still spend much of their time in traditional accounting tasks such as transaction reporting). Included here — for listed companies — will be the various mandated security filings and shareholder reports. Typically, then, the CFO is expected to be a key player in stockholder education and communication. The Comptroller, Company Secretary, and Investor Relations Officer will also report to the CFO.

CFOs are thus relied upon as the owners of financial data within organizations; increasingly, this includes business data more generally. In this role, then — as outlined above — the CFO's responsibilities extend to decision support, enabling the company to operate more effectively and efficiently; and relatedly, ensuring data integrity, and model transparency and accountability. The CFO and Chief Information Officer must therefore Meredith Bell (2023). Strong CIO And CFO Relationship Is Key To Business Success, forbes.com collaborate, sometimes sharing KPIs.

This focus on data analytics to support decision-making (along with the rise of digital technologies) places pressure on CFOs to meet the expectations of their C-Suite colleagues. Here, many organizations have created a Finance function based on four pillars:

1. the accounting organization as a shared service
2. an FP&A organization responsible for driving financial planning processes as well as increased insight into financial and non financial KPIs to boost business performance
3. a finance business partnering organization based on leadership of divisions, regions and performance improvement
4. expertise centers specializing in Tax, Treasury, Internal Audit, Investor Relations, etc.

The CFO was traditionally viewed as a financial "gatekeeper". Over time - as outlined - the position has become one of an advisor and strategic partner to the CEO. According to one source, "The CFO of tomorrow should be a big-picture thinker, rather than detail-oriented, outspoken rather than reserved, prefer to delegate rather than be hands-on, emphasize what gets done rather than how things are done, and make collaborative rather than unilateral decisions". The duties of a modern CFO, therefore, now straddle the traditional areas of financial stewardship, as well as the more progressive areas of strategic- and business leadership, with increasingly direct responsibility and oversight of operations. The relationship with the COO mirrors that of the CIO as above.

This significant role-based transformation is best-evidenced by the "CEO-in-Waiting" status that many CFOs now hold. Here, CEOs increasingly expect their CFOs to be active participants in shaping the strategy of their organizations, including challenging the current strategy. CFOs thus play a critical role in shaping their company's strategies, functioning as a leader and team builder who sets the financial agenda for the organization, supports the CEO directly and provides timely advice to the board of directors. This is especially so in uncertain macroeconomic environments, where managing financial volatilities is a centerpiece for many companies' strategies. Indeed, the 1990s saw the rise of the strategic CFO, and many companies have created a chief strategy officer (CSO) position.

The CFO is then as much a part of governance and oversight as the CEO, playing a fundamental role in the development and critique of strategic choices. Due to their importance, CFO departures—whether due to retirement, dismissal, or new opportunities—can significantly affect a company’s direction and stability, especially given the CFO’s growing role as a strategic partner to the CEO.

Qualifications

CFOs and FDs often hold a professional accounting qualification - the CPA, CA, CMA, or CIMA - along with its requisite bachelors and/or masters in accounting. The certification is specified given that responsibilities extend to tax and financial reporting. Similarly, financial managers are often qualified accountants.

Often in larger companies, CFOs and FDs may hold additional postgraduate qualifications, such as a Master of Business Administration, or Master of Science in Finance; the Chartered Financial Analyst is also common. These complement the accounting perspective with more general strategic, leadership and financial market considerations, and give exposure to broader financial and operational issues.

Region specific

Federal government of the United States

The federal government of the United States ha

s incorporated more elements of business-sector practices in its management approaches, including the use of the CFO position alongside, for example, an increased use of the chief information officer post, within public agencies.

The Chief Financial Officers Act, enacted in 1990, created a chief financial officer in each of 23 federal agencies. This was intended to improve the government's financial management and develop standards of financial performance and disclosure. The Office of Management and Budget (OMB) holds primary responsibility for financial management standardization and improvement. Within OMB, the Deputy Director for Management, a position established by the CFO Act, is the chief official responsible for financial management.

The Office of Federal Financial Management (OFFM) is specifically charged with overseeing financial management matters, establishing financial management policies and requirements, and monitoring the establishment and operation of federal financial management systems. OFFM is led by a controller.

The CFO Act also established the CFO Council, chair by the OMB Deputy Director for Management and including the CFOs and Deputy CFOs of 23 federal agencies, the OFFM controller, and the Fiscal Assistant Secretary, the head of the Office of Fiscal Service of the Department of the Treasury. Its mandate is to work collaboratively to improve financial management in the U.S. government and "advise and coordinate the activities of the agencies of its members" in the areas of financial management and accountability.

OMB Circular A-123 (issued 21 December 2004) defines the management responsibilities for internal financial controls in federal agencies and addressed to all federal CFOs, CIOs and Program Managers. The circular is a re-examination of the existing internal control requirements for federal agencies and was initiated in light of the new internal control requirements for publicly traded companies contained in the Sarbanes–Oxley Act of 2002.

While significant progress in improving federal financial management has been made since the federal government began preparing consolidated financial statements, the Government Accountability Office (GAO) reported that "major impediments continue to prevent [GAO] from rendering an opinion." In December 2006, the GAO announced that for the 10th consecutive year, the GAO was prevented from expressing an opinion on the consolidated financial statements of the government due to a number of material weaknesses related to financial systems, fundamental recordkeeping, and financial reporting.

At the same time, in calendar year 2007, the CFOC announced that for the second consecutive year, every major federal agency completed its Performance and Accountability Report just 25 days after the end of the fiscal year (2006).

India

As per the provisions of Section 203 of Companies Act 2013 every publicly listed firm having a paid up share capital of Rs. 10 Crores or more is mandated to have a whole time chief financial officer, who must also serve as one of the Key Managerial Personnel (KMP).

The Act does not impose any specific regulations regarding the compensation of a Chief Financial Officer (CFO), unless they serve on the Board of Directors or hold additional managerial responsibilities alongside their role as CFO. Additionally, the Act does not outline any specific qualifications required for the appointment of a CFO. However, according to Section 134(1) of the Act, the CFO, regardless of their status as a Key Management Personnel (KMP), is required to sign the financial statements as they are responsible for overseeing the financial operations of the entire company.

Their responsibilities include financial planning and monitoring cash flow. In some companies, the CFO and Finance Director positions may be held by the same individual interchangeably. As an internal member of the organization, the CFO is accountable for presenting accurate and fair financial statements, which are subsequently audited by the company's statutory auditors.

References

References

1. "Job openings/CFOO - Wikimedia Foundation".
2. (2021-05-06). "What Does a Finance Director Do?".
3. Aberdeen Group, [https://web.archive.org/web/20240123061725/https://www.sipm.com/Procurement-Academy/Articles/Finance/cfo_view_procurement.pdf The CFO’s View of Procurement: Getting More to the Bottom Line], published September 2005, archived on 23 January 2024, accessed on 2 August 2025
4. Bartolini, A. and Dwyer, C., [https://www.globenewswire.com/en/news-release/2009/12/09/994013/0/en/The-CFO-S-View-of-Procurement.html The CFO’s View of Procurement: Work in Progress], ''Aberdeen Group'', published in November 2009
5. "The CFO and the CPO: One World, Two Worldviews Chief Financial Officer (CFO) and Chief Procurement Officer (CPO)".
6. "Future of the Finance Function Survey 2016". FSN Research.
7. Maureen O'Connell, Scholastic Inc.. (28 October 2014). "How CFO's Can Turn Stakeholders Into Allies - By Maureen O'Connell".
8. (2018-01-08). "6 Technology Trends for CFOs in 2018: We asked the experts.". The Management Blog by BeeBole Timesheet.
9. (15 April 2015). "CFO Role Shifts From Number Cruncher To Business Leader – TechCrunch".
10. Harris, Aaron. "With AI, CFOs Are Poised To Evolve Their Role Within Organizations". Forbes.
11. Zwilling, Martin. (2016-03-18). "Good Chief Financial Officers Focus on Much More Than Finance". Entrepreneur.
12. Thomson, Jeff. "Why CFOs Need To Be Chief Future Officers".
13. "McKinsey on Finance. No. 27, Spring 2008". McKinsey.com.
14. "What Board expects from CFO". TopFinanceProfessionals.com.
15. (22 October 2014). "When Should Startups Hire A CFO? – TechCrunch".
16. "Clariden Global".
17. (2016-01-11). "Who's Better at Strategy: CFOs or CSOs?". Harvard Business Review.
18. (2025). "A database of chief financial officer turnover and dismissal in S&P 1500 firms, 2000–2022". Strategic Management Journal.
19. Aberdeen Group, [https://www.sipm.com/Procurement-Academy/Articles/Finance/cfo_view_procurement.pdf The CFO’s View of Procurement: Getting More to the Bottom Line], published September 2005, accessed 23 January 2024
20. Aberdeen Group, [https://www.globenewswire.com/en/news-release/2009/12/09/994013/0/en/The-CFO-S-View-of-Procurement.html The CFO’s View of Procurement: Work in Progress], published November 2009
21. CollegeGrad LLC, [https://collegegrad.com/careers/top-executives Top Executives]
22. Rotman. "Want to be CFO one day? You need to take control of your career {{!}} Rotman School {{!}} University of Toronto".
23. (2022). "Principles of Finance". OpenStax, Rice University.
24. [https://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/2015/02/09/determine-if-a-masters-in-finance-is-the-right-move ''Determine If a Master's in Finance Is the Right Move''], [[usnews.com]], Feb. 9, 2015.
25. "GAO: U.S. Financial Statements Receive Disclaimer of Opinion For 10th Straight Year".
26. ''© ICSI -Reproduction of any material / contents shall be only with prior permission of ICSI Chief Executive Officer [Sec. 2(18)] and Chief Financial Officer [Sec. 2(19)]''. (n.d.). https://www.icsi.edu/media/portals/86/Geeta_Saar_43_CEO_and_CFO.pdf