Chief financial officer facts for kids

A Chief Financial Officer (CFO) is a very important leader in a company or organization. Think of them as the main money manager! Their job is to make big decisions about the company's money. This includes planning how money is spent, managing financial risks (like making sure the company doesn't lose too much money), keeping careful records, and reporting on the company's financial health. They often also help analyze important data.

The CFO is in charge of the entire finance team. They are also the main person who speaks for the company about its money matters. Usually, the CFO reports to the chief executive officer (CEO), who is the top boss, and the board of directors, a group that guides the company. Sometimes, the CFO even has a seat on the board. They work closely with the chief operating officer (COO), who handles daily business, to manage budgets, figure out costs and benefits, predict future money needs, and find new ways to get funding. Some CFOs are called CFOO, which means Chief Financial and Operating Officer. In many countries, finance directors (FDs) work under the CFO and are often the next step before becoming a CFO.

What a CFO Needs to Know

CFOs and FDs often have special degrees in accounting. These can include certifications like CPA, CA, CMA, or CIMA. These certifications are important because CFOs are responsible for things like taxes and official financial reports.

In bigger companies, CFOs might also have advanced degrees, such as a Master of Business Administration (MBA) or a Master of Science in Finance. They might also have a Chartered Financial Analyst (CFA) certification. These extra qualifications help them understand overall business plans, lead teams, and know how financial markets work.

CFOs in Government

The federal government of the United States has started using CFOs, much like businesses do. This helps government agencies manage their money better.

In 1990, a law called the Chief Financial Officers Act created a CFO position in many federal agencies. The main goal was to improve how the government handles its money and to set clear standards for financial performance. The Office of Management and Budget (OMB) is the main group responsible for making sure government finances are managed well.

There's also a group called the CFO Council. This council includes CFOs from different federal agencies. They work together to improve how the U.S. government manages its money. They also help coordinate financial activities among the different agencies.

One important rule for federal agencies is called OMB Circular A-123. This rule explains how agencies should manage their internal financial controls. This means having good systems in place to make sure money is handled correctly and safely. This rule was updated after a law for public companies called the Sarbanes–Oxley Act of 2002.

The Government Accountability Office (GAO) checks the government's financial reports. For many years, the GAO couldn't fully approve the government's overall financial statements. This was because of problems with financial systems and record-keeping. However, more recently, the CFO Council announced that major federal agencies were completing their financial reports much faster.

See also

• Auditor general
• Comptroller
• Treasurer
• Virtual CFO
• Financial manager