How to Divide Responsibilities and Prioritize Communication
The relationship between a fractional or outsourced Chief Financial Officer (CFO) and your company’s public accounting firm should be collaborative, clear, and well-defined. This ensures your company’s financial and accounting needs are met effectively. Here are some guidelines for how they should work together to avoid any potential roadblocks or conflicts.
Define Roles and Responsibilities:
The CFO typically focuses on financial strategy, planning, and management, while the accounting firm handles compliance, audits, and financial reporting. Keep in mind the things a fractional CFO will not do.
Communication and Coordination:
The CFO and the accounting firm should coordinate to ensure that financial data is accurate, up to date, and compliant with regulatory requirements. They should have a clear process for sharing information and data.
Compliance and Reporting:
The public accounting firm is primarily responsible for ensuring compliance with accounting standards, tax regulations, and external reporting requirements. The CFO should work closely with the accounting firm to provide the necessary information for audits and reporting.
Financial Strategy and Planning:
The CFO plays a vital role in developing financial strategies, budgeting, forecasting, and financial planning. They should work in collaboration with the accounting firm to ensure that financial strategies are feasible and compliant.
Both the CFO and the accounting firm should be involved in identifying and managing financial risks. Your CFO can develop risk management strategies, while the accounting firm can assess the effectiveness of these strategies and ensure accurate risk disclosures in financial statements.
Budgeting and Financial Controls:
The CFO is typically responsible for budgeting and implementing financial controls within the company. The accounting firm can provide input on controls and offer guidance on best practices.
Internal Controls and Compliance:
Your CFO should establish and maintain internal controls within the organization. The public accounting firm can assist in assessing the effectiveness of these controls and ensuring they align with regulatory requirements.
Data Security and Privacy:
Both the CFO and the accounting firm should prioritize data security and privacy. They should establish protocols to protect sensitive financial information and comply with relevant data protection regulations.
Align on Goals and Strategy:
The CFO and the accounting firm should share a common understanding of the company’s goals and strategies. This alignment ensures that financial decisions are forward-thinking and consistent with the company’s long-term objectives.
Every so often, the team should review the working relationship between the CFO and the firm as well as the quality of financial reporting to help identify and address any issues promptly. Some trouble areas to avoid include:
- Conflicts of interest
- Poor communication and coordination
- Lack of clear roles and responsibilities
- Insufficient data security and privacy measures
- Ignoring regulatory changes or updates
Effective communication and coordination, adherence to compliance and reporting standards, and a focus on your company’s financial goals are key to a successful partnership while avoiding conflicts of interest and other potential issues.