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Are you going to be hiring a CFO?

CEO's who want to demonstrate more control over the incoming CFO should keep these 7 items in mind

1) Start with a Basic Understanding of the Company's Chart of Accounts

Your company chart of accounts is the basis of recording, filing, and measuring the effect of financial transactions on your business. The CEO should have a high level comprehension of the company chart of accounts.  High level means knowing what accounts constitute the basis of preparing and presenting your basic financial statements.

2) Have a System Flowchart and Description

This document with descriptive text provides a snapshot of the flow of financial transactions from origination to processing using the company's accounting/ERP software.  Any custom processes and reports and their underlying assumptions should be an addendum to the system flowchart.

3) Accounting Policies and Procedures

This key piece of documentation contains the guidelines under which the company's  how financial transactions are initiated, reviewed, prepared and processed. Could the incoming CFO have material issues with your written accounting policies and procedures?

4) Your Financial Briefing Book

The "Briefing Book" is a binder that contains financials, schedules, and special notes associated with the production of financial statements.  Included is a summary of the procedures that lead to the production of your financial statements.  Notes include any deadlines that require the CFO's attention. Key to the briefing book's contents is a monthly “Finance and Accounting” calendar. The Finance and Accounting calendar provides a snapshot of when during a month, key financial activities are being performed.

5) CPA Reviewed/Audited Financials

The independent attestation of the company's financial results including internal control reviews is a key document to which the CEO should have immediate access.  This document is a "signal" to the CFO that the company's financials are reviewed and audited based on the professional standards promulgated by the American Institute of Certified Public Accountants.

6) Policies governing Paper versus Electronically stored documents

Electronic filing of what used to be stored in file cabinets, storage boxes, and binders has become the new standard for today's office and mobile work force. Electronic storage versus hard copy storage must be governed by written record retention and retrieval policies. Refer to FAR Part 4 for guidance.

7)  Outside Independent Consultant familiar with your Financial System

Your automated financial system (accounting/ERP software) has built-in sophistication and may be customized to your operations.  The CFO should be aware that there is an outside firm or individual that understands the implementation and procedures of the software within your organization.  We have seen instances where the incoming CFO shows inflexibility or lacks the ability to adapt to the current systems in place.   By that, the CFO has a "rip and replace" attitude towards the company's ERP without providing sound documented reasons for making a change.

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