In the past, the boundaries of finance have been limited and well-defined. The department processes daily transactions, closes the books, tends to the balance sheet, and generates financial and other reports. The CFO is supposed to be able to account for every cent, keep expenses at or below budget, and comply with generally accepted accounting standards in presenting company results.
But new demands are now being placed on finance. The call upon the finance department to support the company’s profitability, strategic direction (via financial advice), transparency, and risk management has intensified in recent years. Forces that have added to pressures on finance include:
- the international drive for more transparent accounting
- the huge challenge of complying with a deluge of new accounting and reporting requirements
- heightened investor activism for good corporate governance and risk management
- increased liability to the board and the senior officers of the firm
- and cost and confusion over IT expenditures
The commonplace assumption is that the CFO role is evolving to become the strategic partner of the CEO. In so doing, the CFO and his or her team are supposed to ensure financial effectiveness and thus contribute to business growth. Finance effectiveness is a catch-all phrase that implies the continued and consistent ability of the finance function to support the board in delivering shareholder value. It does this by helping the firm implement strategies designed to promote growth and efficiency. Finance is also expected to operate at world-class standards, in terms of timeliness, cost and quality, in such areas as transaction processing and reporting, decision support and performance management, planning, budgeting and forecasting, and risk management and control.
PricewaterhouseCoopers uses various tools and enablers including finance diagnostics, benchmarks, key performance indicators and activity based costing solutions to identify gaps in performance and to assist clients in improving the effectiveness and efficiency of their finance operations.
Other finance function issues which we address include: managing working capital and cash flow, capital structures, identifying cost saving opportunities such as shared services and process efficiencies.
