What is a Chief Financial Officer (CFO)?
A chief financial officer (CFO) is the senior executive responsible for a company’s overall financial health. That includes managing cash flows, producing reliable financial reports, planning and forecasting, shaping capital structure, and advising the CEO and board on strategic choices that have financial consequences.
Core duties and responsibilities
– Financial reporting: ensure timely, accurate financial statements that follow accounting standards (e.g., GAAP in the U.S.).
– Cash and liquidity management: oversee short‑term cash needs and working capital.
– Financial planning & analysis (FP&A): build budgets, forecasts, and scenario models.
– Capital allocation: decide how to fund operations and investments (debt vs. equity, dividend policy, buybacks).
– Risk management and internal controls: establish controls to prevent errors and fraud.
– Compliance & disclosure: meet regulatory requirements and filings (SEC rules, Sarbanes‑Oxley provisions).
– Strategic partnership: translate strategy into financial plans; evaluate major projects and M&A.
– Leadership and finance operations: run accounting, treasury, tax, and sometimes investor relations.
Definitions of key terms
– C‑suite: the group of top executives in a company (CEO, CFO, COO, CIO, etc.).
– GAAP: Generally Accepted Accounting Principles — the standard accounting framework in the U.S.
– Sarbanes‑Oxley Act: U.S. federal law that tightened corporate governance and financial reporting controls after accounting scandals.
– Capital structure: the mix of debt and equity used to finance a company.
Is a CFO an accountant?
Not exactly. Accountants typically maintain records, prepare tax returns, and produce financial statements. The CFO is a senior manager who uses those accounting outputs to make strategic decisions, set policy, and forecast the company’s financial future. Many CFOs have accounting backgrounds, but the role is broader and more strategic than bookkeeping.
How a CFO differs from the CEO
The CFO focuses on finance, capital allocation, risk and compliance; the chief executive officer (CEO) oversees overall company strategy and operations. The CFO typically reports to the CEO and is the primary finance voice in executive decision‑making.
Typical background and how to become a CFO (stepwise)
1. Education: bachelor’s degree in finance, accounting, or economics; many hold a master’s degree (MBA, Master of Finance) or advanced certifications.
2. Professional credentials (common but not required): CPA (Certified Public Accountant), CFA (Chartered Financial Analyst).
3. Early career: roles in accounting, audit, corporate finance, investment banking, or FP&A.
4. Mid career: finance leadership positions (treasurer, controller, VP of finance) with P&L exposure.
5. Senior track: proven record of managing teams, capital decisions, and strategic projects; board interaction and investor relations experience strengthen candidacy.
Salary
Compensation varies by company size, industry, and region. As one reference, the median U.S. chief financial officer salary reported in May 2025 was about $397,887 (Salary.com). Salaries often include bonuses, equity, and other incentives.
Regulation and compliance responsibilities
A company’s CFO must ensure the finance function follows applicable laws and standards. In publicly traded U.S. companies this typically includes:
– Following GAAP for financial statements.
– Ensuring required SEC
filings are accurate and timely (for example, Forms 10-K, 10-Q, and 8-K), and maintaining robust internal controls and disclosure controls that support those filings.
Common regulatory and compliance duties (continued)
– SEC reporting: For publicly traded U.S. companies, the CFO oversees preparation and certification of periodic reports filed with the Securities and Exchange Commission (SEC). Typical forms include:
– Form 10-K — annual report with audited financial statements; deadline: 60 days for large accelerated filers, 75 days for accelerated filers, 90 days for non‑accelerated filers (after fiscal year-end).
– Form 10-Q — quarterly report with unaudited interim financials; deadline: 40 days for large accelerated and accelerated filers, 45 days for non‑accelerated filers (after quarter‑end).
– Form 8-K — current report for material events (e.g., material agreements, executive departures, restatements); many items must be disclosed “promptly” or within four business days.
(Deadlines above reflect common SEC rules; specific dates can vary with regulatory changes or company status.)
– Sarbanes‑Oxley Act (SOX) compliance: The CFO is responsible for ensuring effective internal control over financial reporting (ICFR). Section 404 of SOX requires management (and, for many issuers, the external auditor) to assess and report on ICFR effectiveness. Key tasks include documenting controls, testing them, remediating deficiencies, and certifying controls in filings.
– External audit liaison: The CFO manages the relationship with independent auditors (the external audit firm) and the audit committee of the board. This includes coordinating audit scope, timelines, materiality thresholds, and responses to audit findings.
– Accounting standards and policy: The CFO ensures financial statements follow applicable accounting standards (U.S. GAAP or IFRS), interprets new accounting pronouncements, and approves accounting policies. They decide on judgments and estimates that affect financial results (e.g., revenue recognition, impairment tests, lease accounting).
– Tax and regulatory compliance: Overseeing tax planning, compliance with domestic and international tax laws, transfer pricing documentation, and filings with tax authorities. The CFO must manage tax audits, reserves for uncertain tax positions, and tax disclosures.
– Anti‑fraud, anti‑corruption, and AML: Ensuring controls and policies to prevent, detect, and respond to fraud, bribery (e.g., Foreign Corrupt Practices Act in the U.S.), and money‑laundering activities. This includes establishing whistleblower processes and conducting investigations when necessary.
– Financial risk and treasury controls: The CFO implements controls over treasury operations: cash management, debt covenants, hedging programs, and authorization limits. Compliance includes adherence to covenants and disclosure of material liquidity risks.
– Data privacy and cybersecurity in finance: Protecting financial data and systems is increasingly part of regulatory compliance (e.g., breach disclosure rules). The CFO coordinates with the CIO/CISO to ensure financial systems, backups, and access controls meet regulatory and audit requirements.
Practical checklist for a CFO facing reporting season
1. Calendar and deadlines
– Confirm quarter/ year‑end close timetable.
– Mark SEC filing deadlines (10‑K, 10‑Q, 8‑K) and audit committee meetings.
2. Financial close procedures
– Complete account reconciliations.
– Run variance analyses (actual vs. budget and prior period).
– Obtain and document management estimates and judgments.
3. Controls and testing
– Execute SOX controls testing and remediate open issues.
– Track control owner sign‑offs and evidence retention.
4. Audit coordination
– Deliver requested schedules to external auditors on agreed dates.
– Review auditor adjustments and unrecorded differences.
5. Disclosures and footnotes
– Verify completeness of MD&A (Management’s Discussion & Analysis) and key risk disclosures.
– Confirm related‑party transactions and executive compensation tables.
6. Board and investor communications
– Prepare audit committee packet and CFO presentation.
– Coordinate investor relations scripts and Q&A for earnings calls.
Worked example — 10‑Q timeline (numeric)
– Assumptions: Company is an accelerated filer; quarter ends March 31. The 10‑Q must be filed within 40 days after quarter‑end.
– Calculation: March 31 + 40 days = May 10 (if no weekends/holidays alter electronic filing availability).
– Action items: Close books by May 3 to allow one week for review, audit queries, and audit committee review, leaving a 3‑day buffer before filing.
Common pitfalls and how to avoid them
– Late deliverables from business units: Implement hard internal cutoffs and escalation rules.
– Weak documentation of estimates: Keep signed memos for significant judgments (e.g., goodwill impairment) and versioned calculations.
– Incomplete control evidence: Use a centralized repository for control evidence and require control owners to upload artifacts before close.
– Poor auditor communication: Run periodic status calls; provide a rolling list of outstanding items and target completion dates.
Assumptions and limits
– Rules and deadlines cited reflect common U.S. practice under SEC regulations and SOX; international rules differ (e.g., IFRS jurisdictions, local securities regulators).
– This summary is educational and not legal advice. Companies should consult counsel and regulatory guidance for obligations specific to their status and jurisdiction.
Further reading (selected authoritative sources)
– U.S. Securities and Exchange Commission (SEC) — Forms and filing requirements: https://www.sec.gov/forms
– Sarbanes‑Oxley Act overview (U.S. Congress/SEC resources): https://www.sec.gov/spotlight/sarbanes-oxley.htm
– Public Company Accounting Oversight Board (PCAOB) — auditing standards and inspections: https://pcaobus.org/
– Financial Accounting Standards Board (FASB) — U.S. GAAP codification and standards: https://www.fasb.org/
Educational disclaimer
This content is for educational purposes only. It does not constitute legal, accounting, or investment advice. For specific compliance obligations, consult qualified counsel, auditors, or regulators.