Who Reports to the CFO?
Chief Financial Officer (CFO) is one of the most important executives in an organization. The CFO oversees managing the financial well-being of the company, and therefore, is key in budgeting, financial planning, risk management, and strategic decision-making. But the CFO doesn’t work alone. To assist in coping with these responsibilities, a powerful team of professionals is usually under the direct reporting line to the CFO.
So, who reports to the CFO? This article dissects the usual departments and offices that are under the leadership of the CFO.
The Structure of the CFO’s Office
It is worth looking at the organizational structure before getting into the individual roles. The CFO also belongs to the executive leadership team and typically reports to the Chief Executive Officer (CEO) or, in other instances, the Board of Directors.
Under the CFO, there are a variety of departments and professionals that make sure that the financial operations of the firm are functioning well.
These include:
- Finance
- Accounting
- Treasury
- Internal Audit
- Investor Relations
- Tax
- Procurement
- Compliance
The Most Common Positions in These Departments that Report to the CFO
Controller (Chief Accounting Officer)
Role Overview:
One of the most important direct reports of the CFO is the Controller, who in larger organizations is called the Chief Accounting Officer. This individual oversees the accounting functions, accuracy in financial reporting, and adherence to accounting standards.
Key Responsibilities:
- Managing the general ledger
- Overseeing month-end and year-end close processes
- Ensuring compliance with GAAP or IFRS
- Preparing financial statements
- Managing audits
Why They Report to the CFO:
Because of the overall financial oversight role that the CFO occupies, it would be highly beneficial to have a direct line of communication to the controller so that the financial reports are timely, accurate, and reliable.
Vice President of Finance
Role Overview:
The VP of Finance is specialized in financial planning and analysis (FP&A). The position helps the CFO to formulate financial strategies, projections, and budgets.
Key Responsibilities:
- Creating long-term financial plans
- Budgeting and forecasting
- Analyzing financial performance
- Modeling “what-if” scenarios
- Supporting strategic decision-making
Why They Report to the CFO:
Strategic financial decisions need accurate forecasting and performance data. The VP of Finance offers such insights, which assist the CFO in making some informed decisions in the business.
Treasurer
Role Overview:
The Treasurer is responsible for the cash, the investments, and financial risk of the company. In bigger organizations, the Treasurer can be provided with a team to manage liquidity and capital structure.
Key Responsibilities:
- Cash flow management
- Banking relationships
- Managing investments
- Hedging and risk management
- Debt issuance and repayment
Why They Report to the CFO:
Financial health is the responsibility of the CFO, and the Treasurer makes sure that the company has the funds to run, invest, and expand.
Head of Internal Audit
Role Overview:
The Head of Internal Audit oversees ensuring that the processes, policies, and financial controls of the company are functioning as per the intended purpose. Although in some cases this role may report to the Audit Committee of the board as being independent, they may in many cases report to the CFO by a dotted or direct reporting line.
Key Responsibilities:
- Conducting audits of financial and operational processes
- Identifying risks and control gaps
- Ensuring regulatory compliance
- Recommending process improvements
Why They Report to the CFO:
Internal controls are vital for accurate financial reporting. The internal audit helps the CFO to determine problems even before they become serious.
Director of Tax
Role Overview:
The Tax Director governs all issues to do with tax compliance, planning, and strategy. Such a role is to make sure that the company complies with its local, state, federal, and international tax payments.
Key Responsibilities:
- Preparing and filing tax returns
- Managing audits by tax authorities
- Tax planning and strategy
- Ensuring compliance with tax laws
Why They Report to the CFO:
The bottom line of a company is significantly affected by taxes. The CFO requires direct control over the tax issues to mitigate any risk and to ensure the financial performance of the company is optimal.
Head of Investor Relations
Role Overview:
The Head of Investor Relations (IR) is in charge of the communication between the company and its shareholders, analysts, and the investment community at large.
Key Responsibilities:
- Preparing earnings calls and reports
- Responding to investor inquiries
- Organizing shareholder meetings
- Crafting financial messaging
Why They Report to the CFO:
The CFO frequently communicates directly to investors because he or she is the public face of the financial health of the company. Reporting to the CFO means that IR will have consistent and strategic messaging.
Procurement or Purchasing Director
Role Overview:
Procurement Director is in charge of sourcing and buying goods or services. This position may report to operations or supply chain leaders in some companies, but in others where procurement plays a significant role in cost control, the position may report to the CFO.
Key Responsibilities:
- Managing supplier relationships
- Negotiating contracts
- Cost control and savings
- Ensuring ethical sourcing
Why They Report to the CFO:
Procurement affects the company’s spending and bottom line. The presence of a CFO contributes towards cost economies and financial prudence.
Compliance and Risk Officers
Role Overview:
In some cases, particularly in more heavily regulated industries such as finance or health care, Compliance Officers and Risk Managers will report to the CFO.
Key Responsibilities:
- Ensuring legal and regulatory compliance
- Identifying financial and operational risks
- Developing risk mitigation strategies
Why They Report to the CFO:
It is the responsibility of the CFO to handle financial risks and make sure the business does not get in trouble and pay fines. These roles provide critical oversight.
How the Reporting Structure Varies
It is necessary to mention that the reporting structure may differ according to:
- Company size
- Industry
- Public vs. private status
- Geographic location
The CFO in a small business may do the work of others directly (e.g. budgeting or treasury). In a large corporation, there can be management layers between the CFO and some positions but the ultimate responsibility still ends with the CFO.
