What is a Chief Financial Officer?

A chief financial officer is an integral part of organizations in all areas of finance from accounting to forecasting. Chief financial officers have extensive education and work experience in the field, and they are able to support organizations in developing strategic plans for success.

Requirements to Become a Chief Financial Officer

The path to building the qualifications to become a chief financial officer (CFO) generally begins with an undergraduate degree in a related field, such as accounting. As an undergraduate, future CFOs take courses to gain an understanding of how financial operations of a company work, including budgeting, forecasting, accounting systems, and general courses such as communication.

Many organizations require for CFOs to hold a minimum of a master’s degree. In graduate programs, students gain advanced knowledge of financial theory, financial modeling, tools in finance, ethics in accounting, and management techniques and theory. These courses build on the foundation of an undergraduate degree, and graduates are able to build the skills that will help a future CFO make decisions and supervise operations.

Professional Certifications

In addition to academic degrees, a majority of CFOs will complete professional designations in the finance field. This further illustrates the ability to handle the various tasks of the position. Common certifications include the Certified Public Accountant (CPA) and Certified Management Accountant (CMA) designations, according to the Institute of Management Accountants.

The Role of a Chief Financial Officer

A CFO has a broad scope of responsibility, sometimes depending on the size of an organization. One of the tasks that is typically assigned, however, is to manage departments related to financial matters, particularly accounting departments. This includes everything from scheduling to hiring to employee professional development.

Additionally, CFOs are in charge of financial reporting, developing and implementing systems for reporting on financial matters. This involves tasks such as creating annual reports for companies, submitting monthly status reports, and ensuring that accurate documents are kept related to accounting systems. This also enables a CFO to manage budgeting, making recommendations to other executives and managers for spending, investment, acquisitions, and risk assessment.

With an understanding of the financial situation of a company, a CFO is able to develop strategic plans for company growth, making additional recommendations for salaries, predictions for future success and growth, and implementation of new processes.

Compliance and Ethics

The responsibilities of a CFO range a number of different areas, particularly depending on the size and structure of an organization. In all positions, however, a CFO will also be responsible for ensuring that a company’s operations are in compliance with all state and federal guidelines for financial reporting and transactions. Consumers, employees, and the public, too, are increasingly looking for transparency in company operations, and CFOs use business codes of ethics to drive the decisions an organization makes.

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An understanding of subjects from economics to accounting information systems helps a CFO make the decisions and recommendations a company needs to ultimately be or stay successful. With the right background, a future chief financial officer is able to begin driving financial operations for this success.