The Responsibility of the Cfo free essay sample

The CFO has many major responsibilities which include, but are not limited to, the following; forecasting cash flow and budgeting, hiring and managing a staff of managers, tax planning, due diligence, and financial risk management. The CFO responsibility of forecasting cash flow and budgeting is a model that predicts how the cash of the organization will move in the future. In other terms, it assists with the prediction of how the cash will move and change from one period to the next. The CFO is responsible for forecasting the cash flow which will direct the organization on the true financial strength of the company. By forecasting the cash flow and the organization needs, the CFO is able to prepare the business for the different economic stages while exploring the company’s profitability. The CFO performance of the cash flow forecasting is vital and important to the organization because it values the assets and determines the appropriate budget. We will write a custom essay sample on The Responsibility of the Cfo or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The CFO understands that it is important to have enough cash flow for the organization to operate properly, so the CFO must forecast the correct cash requirement. In my opinion, this may be the most important responsibility the CFO performs because it ensures the organization will continue to run effectively because it has the appropriate cash flow. Another responsibility of the CFO is the ability to hire and manage a staff of managers. The CFO is first responsible for finding the right staff of managers to manage. It must be a staff experienced in the financial area, as well as the operations of the business. After the CFO hires this staff of experienced managers, they must be able to communicate and manage the staff effectively. The CFO understands by properly managing the staff and building relationships the company could retain skillful managers. This is an important and vital responsibility because it helps the company retain good quality employees and save the company money on hiring and training of new employees. Another responsibility of the CFO it the organizations tax planning which the CFO will evaluate the business to find the appropriate tax structure and the best tax savings. The tax planning will allow the CFO to effectively form a plan that would maximize the organizations after-tax cash flows while minimize the tax liability. The CFO should understand that the company would like to pay less taxes and it is the CFO’s responsibility to find deductions that are legal and corporate loopholes to assist with this goal. The CFO will understand the changing tax codes and laws in order to reduce the organizations taxable income. The tax planning responsibility is important because it allows the company to explore areas where they could save on before and after tax savings. The CFO will accomplish this goal by evaluating financial and tax considerations to determine the best method in order to achieve the tax goals. The responsibility of performing Due Diligence is another area the CFO will control. Due Diligence is the process of investigating a person, business opportunity, or an investment. The CFO will perform due diligence in a merger and acquisition situation to verify the information received from the other party. The CFO will confirm that the receiving organization is receiving the exact information stated and all information regarding the other party’s past, current status, and future are in fact correct. When performing due diligence, the CFO is concerned with the financial information of the other party, simply the financial verification. Due Diligence is important and vital to the CFO because it allows the organization to enter into an agreement without surprises and unwanted issues. The last responsibility of the CFO is financial risk management, which covers several risks and is where the CFO is responsible for managing compliance and internal controls. The CFO is responsible in making sure the organization avoids asset risk and avoid any risk from growth. The CFO will use hedging instruments to assist the organization in its coverage against risk such as credit and market risk. This is an important and vital responsibility of the CFO because it allows the CFO to determine risky areas and design a strategy to protect the organization against these risks. The CFO has many major responsibilities including the following discussed above; forecasting cash flow and budgeting, hiring and managing a staff of managers, tax planning, due diligence, and financial risk management. The responsibilities of the CFO are not limited to just financial reporting and bookkeeping. The CFO is now assisting the CEO and others in the daily operations and the decision making responsibility. Every organization is different which will also provide a different responsibility for the CFO. For example, the CFO in a small company may be responsible for the payroll, while the CFO in the large company may not. One thing remains the same in both large and small organizations; the CFO is responsible for the cash flowing in and out of the company.