Strategic business planning and risk management have emerged as the top two responsibilities of Chief Financial Officers in Singapore, finds a new survey by the Institute of Certified Public Accountants of Singapore (ICPAS).
These changes are a result of the CFOs’ evolving role as a key partner to the CEO and a reflection of a changing economic and regulatory environment.
The findings also highlighted that the CFOs deem training in C-suite skills such as leadership, communication and strategic business planning as more important than technical skills as the latter are considered foundational in nature.
The CFOs also expect their “next-in line”, the CFO aspirants, to be more responsible for financial reporting matters and hence deem it more important for them to receive training in technical areas such as accounting and finance.
The ICPAS survey attracted positive interest from the CFO community in Singapore. This includes 144 respondents holding the position of CFO and equivalent and 171 CFO aspirants. In particular, 104 respondents were from public-listed companies while 39 respondents were from organisations with annual turnover of above S$1 billion.
An overwhelming number of CFO respondents (90 percent) indicated that providing strategic support to the CEO is now a critical part of their jobs on top of their traditional role as financial stewards.
In fact, it was found that CFOs in large corporations (88 percent) rated strategic management as an essential performance objective. This shows CFOs are increasingly expected to play key roles in strategy development and actively contribute to shareholder value creation.
Interestingly, while the survey found that the CFOs deem capital/funding management as a key performance objective (70 per cent), only 41 percent of CFOs in large companies prioritise this as a critical focus area as compared to the CFOs of small and mid-sized companies who placed greater emphasis on this component (77 percent and 70 percent respectively).
This could be due to the fact that large companies have more resources that enable them to afford dedicated officers to oversee their treasury function than smaller
A review of 30 companies on the FTSE Straits Times Index (STI) shows that almost half of these large companies have dedicated senior officers, other than the CFO, responsible for the treasury function.
Key Work Responsibilities
With their expanded roles as the CEOs’ strategic partners, strategic business planning and risk management have now become a critical part of a CFO’s work responsibilities (91 percent and 90 percent respectively).
Correspondingly, CFOs are also spending moderate or most of their time on these two areas (80 percent and 76 percent respectively). This reinforces the first finding where the role of the CFO has evolved in the face of an uncertain global economic climate to incorporate more strategy formulation which also involves governance and risk management responsibilities.
Another result of this is that CFOs are more likely to rely on their “next-in line”, the CFO aspirants, to be responsible for financial reporting matters. The survey found that 86 percent of CFO aspirants spend moderate or most of their time on financial reporting duties as compared to CFOs (72 percent). This suggests financial reporting remains the main work responsibilities for CFO aspirants.
However, the survey found that both CFOs and CFO aspirants continue to be heavily involved in the management of working capital. Both CFOs and CFO aspirants view managing working capital as a critical part of their work (88 percent and 89 percent respectively) and consequently continue to spend moderate or most of their time on this technical area (73 percent and 75 percent respectively).
These findings suggest that in an increasingly challenging economic environment, managing funding needs is a collective responsibility requiring significant time and effort from every finance staff.
Strategic and Soft Skills
As CFOs are now expected to possess multiple skills besides being technically proficient, the CFOs have rated C-suite generic skills, such as decision making (92 percent), communication (91 percent) and leadership (86 percent) as competencies they need to develop.
In comparison, technical skills such as financial reporting and accounting and finance are rated as less critical skills (66 percent and 62 percent respectively) since they are considered foundational competencies and that the CFO’s role has evolved to involved more strategic work.
Correspondingly, CFOs tend to want more training in strategic and soft skills. It was found that CFOs would like more training in business (72 percent) and leadership (72 percent) skills as compared to finance/accounting and technical training (54 per cent). This is in line with earlier findings that strategic and C-suite skills are more important to CFOs.
However, the CFOs have also indicated that they have high expectations regarding the financial reporting competencies of CFO aspirants. Over 80 per cent of CFOs deemed it important for CFO aspirants to receive more training in technical skills such as financial reporting and accounting and finance.
This is consistent with the findings highlighted in point two whereby CFO aspirants tend to spend more time on financial reporting matters. This indicates that CFOs would like CFO aspirants to further develop their technical skills to better support them on financial reporting issues so as to enable them to focus on key strategic issues.
“CFOs today operate in a different environment given the state of flux businesses find themselves in, due to the shifts on the economic, business and regulatory fronts," says Ho Tuck Chuen, ICPAS CFO Committee Member and Group Chief Financial Officer, JTC
Chuan adds that the CFO must do more to help corporations thrive by leveraging this knowledge and further develop their competencies to become effective strategists to partner the CEOs in driving the organisation forward.
A majority of the CFOs and CFO aspirants surveyed possess at least 15 years of working experience (88 percent) and hail from diverse industries such as manufacturing (20 percent) and wholesale and retail trade (12 percent).
The survey also drew respondents from a range of company sizes with 56 percent coming from small enterprises (annual turnover of less than S$100 million), 32 percent from medium-sized businesses (annual turnover of between S$100 million to less than S$1 billion) and 12 percent from large corporations (annual turnover of $1 billion and more).