In this environment of extreme uncertainty, CFOs are providing forward-looking insights to boards and management teams. To do this, they are relying on emerging technologies, such as predictive analytics. At the same time, they are continuing to perform the activities that would have been the mainstay of the CFO’s role in the past – activities such as managing the company’s cash and liquidity, overseeing the financial reporting processes, and establishing and monitoring internal controls. It’s important that there is a strong relationship between the CFO and the audit committee, with trust as its bedrock.
Given this context, the strength of the relationship between the CFO and the board – and more especially the audit committee – is a matter of great strategic importance. COVID-19 presents some significant financial reporting issues in areas such as asset impairment, contract accounting and going concern. So, it is important that audit committees are kept well informed, and there is a strong relationship between the CFO and the audit committee, with trust as its bedrock.
Regular meetings between the CFO and the audit committee are essential. They foster open, regular communication and enable pertinent issues, such as risk management, to be discussed in a timely manner. As well as covering important corporate reporting and accounting issues, the meetings should explore wider strategic issues that might have a short- or long-term impact on the performance and value of the business.
They can also be an opportunity for the audit committee to gain a better understanding of the quality of the relationships that the CFO has, not only with the board and the CEO, but also with other members of the management team and senior-level executives. The audit committee can further recognize the CFO’s expanding responsibilities and strategic remit by ensuring that the finance function has the right talent to support the company’s objectives going forward.