Its just a question
Huh?
@Geo the title is the question,its my assumption that unlike the past CFO’S are getting more into corporate finance than before
What do you think CFO’s do, exactly??? It’s pretty much all CorpFin if you are a CFO.
Or did you mean CFA?
Maybe Gabelogan is trying to draw a distinction between CFOs and Controllers, the latter of which is a pure accounting role at some companies. In a larger organization the Controller can take some work off the plate of the CFO by doing things like payroll and tax accounting, which may free the CFO up to pursue more strategic considerations such as M&A or other Corp Fin endeavors. Some large or specialized firms will also potentially have a dedicated M&A finance position as well, it varies widely. The question may also be a nod to the increased M&A activity we’re seeing in this part of the cycle which is a function of living in a 1% LIBOR world, but that’s just cyclical, not a structual change in the CFO role. The question is very broad.
@Bchad & Bromion As far as my limited knowledge in the past due to various reasons the typical CFO was involved alot more with accouting type of work ,these days due to M&A ,or some other complex structure and business enviroment the CFO is doing more of Corp Fin than before,perhaps this is why there are so many
Msc Accounting & Fin Courses much more than before.
In the corporate world, its extremely difficult to be a CFO without a strong accounting background. Yes, they lead M&A, corporate finance, treasury. But they’re also signing off on SOX certifications and are in many cases responsible for IA and compliance. To be honest, even though I’m in the corporate side of things and have a pretty good accounting background, I wouldn’t want to be a CFO. I don’t have the accounting expertise to confidentially put my personal liability on the line for the financial statements of my firm. So from that regard, its certainly not JUST a corporate finance job. Controllers, in all cases I’m aware of, report to the CFO. The majority of CFOs will be CPAs. There is a ton of corporate finance activities outside of traditional banking environments though. I’ve worked on tons of financings and a handful of acqusitions in the corporate world. Lots of modelling, lots of analysis. Of course this isn’t BSD level stuff, but its a great career path that can pay better than 99% of western jobs and you’re not working weekends every week. So its a viable career. But being a CFO of a top corporate isn’t just something you just go do. Its the top of the top of the top that get to do that.
So putting your words into translation,a CFO needs to have:
- CPA level accounting
- Very good finance understanding which doesnt necessary mean CFA
- Cost Accounting,Understanding of controlling and etc.
It is my understanding that in the past only items 1&3 were needed.Times have changed I think
I think #2 always existed and times haven’t changed. Today has lots of M&A, but that’s cyclical. There have been other M&A intensive periods in the past too. CFOs don’t need to know every accounting regulation, but they need to be well versed enough to put their personal liability on the line signing off on financial statements. Lots are CPA, some aren’t. Doesn’t change that this is a large part of the job.
@GEO Its my to some degree inaccurate idea that #2 is something which has become popular recently.Not only M&A but I see CFOs doing FS studies or BP type of work,I met a CFO of a large oil company in ME who also was in charge of analyzing various FS studies or BP presented to his company by smaller subcontractors.
Again I dont have your knowledge but I always thought of CFOs being associated more with accounting and control than with this type of gig.
CFOs have to have strong accounting skills and they oversee all the accounting stuff, unless they are large enough to have a Controller to delegate to, in which case they still have a supervisory role over the Controller. But they are also the responsible for the Corporate Finance sides of things, such as liquidity management, managing the capital structure, and such. If there is a capital raising task, the CEO is likely involved too, but a lot of the day-to-day tasks of making the capital campaign happen fall to the CFO.
So it’s safe to say that the larger the corporation, the less the CFO has to do with accounting and the more pure finance role it is?
For most businesses, yes.
^ Thanks.
So why does no one wants be a CFO ? Every one wants to do everything other than becoming a CFO
Source?
@bromion I dont have a source,its just I see most people want to break into IB,PM,PE or HF. Just look in AF or other “How to Guides”.I should mention I have less exposure than you,far less,so I shall not argue or believe ny stance is so correct.
Because of the perceived sexyness of respective roles.
Finance students see themselves behind Bloomberg screens taking positions in financial markets.
Finance students don’t see themselves discussing reporting issues with controllers and accountants.
That’s for the perception, I guess. Interestingly, in Germany a CFO will tend to be more respected than an investment banker.
In my experience CFOs have alot of knowledge about their company and their market and usually know their companies’ numbers very well. They certainly have good knowledge of their financing sources and their alternatives, and are involved in the strategy side of things.
In Germany, CFOs indeed have good knowledge of reporting and of main accounting issues, but they are not experts on accounting details. CFOs in Germany are usually not certified accountants.
I guess the tasks of CFOs are a blend of (in order of importance) : treasury (liquidity), finance (dealing with banks, M&A, etc.) and reporting.
I know a lot of people that want to be CFOs at hedge funds and that’s generally a lucrative role.
^ A hedge fund CFO is completely different than a corporate CFO. This idea that CFOs didn’t do much financing is likely reflective of the AM business where its more of an accounting role. Yet I disagree with those here saying a corporate CFO doesn’t deal much in accounting. Yes, the controller at large shops handles the financials day to day, but the CFO is RESPONSIBLE for the financial reporting, legally so. So yes they don’t need to have an expert level grasp of the intricacies of lease accounting under IFRS, for example, but they need to know accounting well enough to stamp those financial statements and put their personal liability on the line. That’s a pretty high burden. But again, I disagree that the CFO role is changing. They’ve always been the corporate leader when it came to M&A and such. Europe is less litigious so perhaps that’s why CFOs are less likely to be accounting experts.