FINANCIAL REPORTING & IR

CFOs have increasingly moved beyond their traditional role as financial stewards and become capability builders across the organization – often acting as copilots to the CEO and taking a lead role in steering the organization. They are still responsible for the finances of the organization, but they've also become the point person for tackling many of the issues facing businesses today. They are building workforce capabilities, reimaging and rebuilding the supply chain, steering the ESG reporting and compliance of the company and ensuring the ongoing digital resilience and sustainability of the organization.

Building the right workforce capabilities

Traditionally, the CFO's role with respect to a company's workforce has been to oversee benefit programs, compensation and associated costs. However, it has been a natural evolution for the CFO to move beyond the financial aspects of the role to influence talent and capability building across the organization.

Although Canada has not experienced the same ‘great resignation’ as some other countries, the dynamics of recruitment and retention have changed dramatically. Driven by digital transformation and the automation of many repetitive and routine tasks, organizations are looking to hire more highly skilled people with specific expertise. More and more, the finance group is looking for analytical and data science skills.

The intense demand for these highly sought-after skills means employees who possess them can choose to work with organizations that align with their values, offer flexible working arrangements and prioritize ongoing learning and skills development. Additionally, many employees are seeking the opportunity to work from home while also searching for companies with good ESG practices.

Increasing automation will drive the need for more training and development. While automation will replace certain traditional roles in the workplace, it will also require some workers to upgrade their skills to use automation as a tool and take on more analytical tasks.

Building or evolving a firm’s culture is not easy and is substantially more difficult in a virtual work environment. CFOs leading such change typically enlist organizational design professionals, in addition to people and change teams, to help define what the future of work will look like for their organization and assist in building the culture and infrastructure to support this vision.

Reimaging the supply chain

The war in Ukraine has exacerbated COVID-driven disruptions of the global supply chain. As a result, many industries were forced to rethink their supply chain, reconsider manufacturing in emerging markets or other low-cost jurisdictions and consider the need for manufacturing redundancies.

The CFO will need to be actively involved in redesigning the firm's supply chain, considering costs and tax implications of operating in new or multiple jurisdictions and ensuring the organization’s ability to forecast supply chain disruptions and develop response scenarios.

Increasing the focus on ESG

While some businesses are making great progress on their ESG strategies, many are struggling with where to start. However, companies that move slowly on ESG practices do so at their own peril.

Customers, employees and investors are already demanding better ESG practices and reliable ESG reporting. They are voting with their feet and their dollars when it comes to which companies they want to deal with.

Often the CFO will guide and manage the company's ESG initiatives, partly because the finance function is best equipped to support ESG reporting, given that it has the systems, controls and competencies necessary for compiling and managing data from across the company.

Beyond digital transformation: resilience and sustainability

Most CFOs were already driving the digital transformation of their organizations when the pandemic greatly accelerated these efforts, and many are now focused on digital resilience and sustainability.

They are building the infrastructure required to move customer service online, digitizing internal workflows and processes, and strengthening technologies to accommodate remote work.

In some cases, CFOs are also serving as the executive primarily responsible for cybersecurity. In every case, they make sure that cybersecurity is given a high level of attention in all their areas of oversight.

Growth is still front and centre

While grappling with these increasingly complex issues, a core role of the CFO remains to make certain the company can raise adequate capital for growth. In the current business climate – with the potential for a recession on the horizon – CFOs are ensuring continuing access to liquidity, in the event that traditional sources of capital become difficult to access. As well, they are considering alternatives such as mergers or joint ventures.

Of course, raising capital is easier when the company's house is in order. Today that means addressing workforce concerns, supply chain, ESG and digital resilience and sustainability. The CFO's role may be growing, but in the end, addressing these new areas of concern is part of ensuring that CFOs can perform their traditional role more effectively.

Keith Leung, CPA, CA is a Senior Manager, Accounting Advisory Services, and Rob Brouwer, FCPA, CPA is Canadian Managing Partner, Clients and Markets, for KPMG LLP in Canada.