What is a 'Chief Financial Officer - CFO'
A chief financial officer (CFO) is the senior executive responsible for managing the financial actions of a company. The CFO's duties include tracking cash flow and financial planning as well as analyzing the company's financial strengths and weaknesses and proposing corrective actions. The CFO is similar to a treasurer or controller because he is responsible for managing the finance and accounting divisions and for ensuring that the company’s financial reports are accurate and completed in a timely manner.
BREAKING DOWN 'Chief Financial Officer - CFO'The CFO reports to the chief executive officer (CEO) but has significant input in the company's investments, capital structure and how the company manages its income and expenses. The CFO works with other senior managers and plays a key role in a company's overall success, especially in the long run. Pursuing a career as a CFO requires considerable financial management experience as well as educational training in accounting or finance.
For example, when the marketing department wants to launch a new campaign, the CFO may help to ensure the campaign is feasible or give input on the funds available for the campaign.
The CFO may assist the CEO with forecasting, cost–benefit analysis and obtaining funding for various initiatives. In the financial industry, a CFO is the highest-ranking position, and in other industries, it is usually the third-highest position in a company. A CFO can become a CEO, chief operating officer or president of a company.
The CFO must report accurate information because many decisions are based on the data he provides. The CFO is responsible for managing the fiscal activities of a company and adhering to generally accepted accounting principles (GAAP) established by the Securities and Exchange Commission (SEC) and other regulatory entities. CFOs must also adhere to regulations such as the Sarbanes-Oxley Act that include provisions such as fraud prevention and disclosing financial information.
Local, state and federal governments hire CFOs to oversee taxation issues. Typically, the CFO is the liaison between local residents and elected officials on accounting and other spending matters. The CFO sets financial policy and is responsible for managing government funds.
The CFO role has emerged from focusing on compliance and quality control to business planning and process changes, and he is a strategic partner to the CEO. The CFO plays a vital role in influencing company strategy.
The United States is an international financial hub and global economic growth increases employment growth in the U.S. financial industry. Companies continue to increase profits leading to a demand for CFOs. The U.S. Bureau of Labor Statistics predicts the job outlook for financial managers to grow 7% between 2014 and 2024.