Economic pressures and changes caused by SOX have strained the relationship between CFOs and their companies’ audit committees. One way to break the tension – according to a Korn/Ferry International paper highlighted in CFO magazine – is to invite other high level members of the finance organization to audit committee meetings. These staffers might include divisional accounting officers, controllers, treasurers, and chief compliance executives.
- Verifies for the audit committee that what the CFO is saying is true
- Allows finance chiefs to “showcase” the talent they’ve gathered around them
- Enables CFOs to satisfy the audit committee’s need for information without being the only person in the line of fire
- Provides an opportunity for a CFO’s staff to learn how to address difficult with the audit committee – thus enhancing their value within the organization or in the broader job market
CFO’s – Be Inclusive, Yet Confident
The internal control experts at Vibato certainly agree that it can be useful to give audit committee members access to high-level finance staff other than the CFO or even third-party consultants working on finance-related projects. But the reality for smaller public companies in particular is that CFOs who proactively bring in their staff risk being perceived as not fully informed. To combat this, CFOs must be extremely strategic about how they work their staff into an audit committee meeting agenda. Take the pulse of your audit committee before making the suggestion. And work to ensure the staffers you bring along are extremely prepared, not only in their knowledge of the subject matter being discussed but also in their presentation skills and their ability to perform under pressure.
Audit Committee Members – Be Realistic
Audit committee members who request finance staff participation also need to tread lightly. Be realistic about the quality of the information you’ll get if the staff members are answering questions in front of their boss. If staff presentations are incorporated and going well, it might be useful to schedule in a 10 minute debriefing period, during which the CFO is asked to leave the room, to gather deeper insights from finance staffers. Finally, it's always a good idea to review attestation reports, to see if they support the conclusions presented by the CFO or if they bring to light any problems you need to hear more about.