A survey undertaken by RealFD last week found a possible answer to that question. We asked: “Does the opinion of an FD matter at board level to our RealFD network, and 64 per cent said ‘no’.
But why is this the case FDs have an eye on the financials, the ‘pulse’ of an organisation. And without their input, the organisation enters into boardroom discussions without essential information.
The recent case in Tesco’s accounting begs to be considered. During the week the news broke, the CFO was absent from the head of its finance department. As Richard Young writes today on RealFD, what Tesco described as CFOLawrie Mcilwee’s “transitional activities” since his resignation in April, was in fact time spent at home.
False conclusions should not be drawn from this – i.e. fraud occurred because Mcilwee was not active in board-level decisions – the lack of an FD, however, may have created the lack of structure which allowed 250m to go falsely reported.
Young concludes: “Any FD needs to be a powerful and respected figure in any boardroom. If he or she is listened to, trusted and persuasive, problems are far less likely to happen.
“An FD needs to be free to challenge, not just enable, their colleagues, whether it’s at Tesco or the smallest SME.”