By Staff writer


The relationship between CFOs and the board of directors is crucial to the long-term success of any company. Studies and experts point to these three factors as core to meeting the board’s expectations.  

 Internal controls are key 

 “CFOs experience higher turnover rates after their firm has received an adverse opinion by auditors because of internal control weaknesses. Similarly, CFO departure increases after the disclosure of inadequacies of firms’ internal controls,” according to a 2016 paper. The authors looked at 65 published studies looking at the relationship between CFOs and the board of directors.

They note that when weak internal controls become a problem for the firm, the CFO is often blamed. Control weaknesses also negatively impacted CFO’s compensation according to the paper. 


Offer an independent voice 

“I really regard a strong, independent CFO, in the handling of board matters, as offering a great deal of value,” says David Beatty  


Beatty, who has served as a director on the boards of 35 companies and as chairman of eight, told McKinsey:  “I want a CFO who understands the numbers, understands what’s behind them, and stands up independently. I’ve served on boards of companies with a CEO who had no trouble with me asking the CFO for more insight about this number or that, and the CFO himself would have no difficulty interrupting management meetings to clarify a point if it wasn’t quite what he’d understood during audit-committee meetings.” 

 “I want a CFO who understands the numbers, understands what’s behind them, and stands up independently.”  


Clear communication around important issues 

Beatty recommends that CFOs may want to reach out to directors independently and make sure that the information the CFO is giving them is optimal by asking. “Are the numbers just too intense? Do they want more synthesis of what’s going on? Would they like more in-depth analysis? The CFO has the numbers and the intelligence and understands the business without emotionally owning the business.” 


Clear communication between CFOs and the board is bidirectional.

 In a discussion regarding the state of the accounting profession, Vijay Misra former CFO of True Blue Investment Holdings told CFOTalks, “ In my view, having a board of directors as a good reference point for wise counsel is very important in supporting the CFO and CEO in meeting the reasonable and legitimate expectations of all stakeholders.” 


A Cimaglobal publication, which looked at managing board expectations, emphasizes balance stating, “There needs to be, however, two-way communication between the board and the management team in order to not only ensure issues are dealt with thoroughly and transparently but also to check against the board establishing a higher dominant position during management interactions.  

 “There needs to be, however, two-way communication between the board and the management team. . .” 

Managing board interactions requires skill, experience and mentorship. CFOClub Africa is able to connect CFOs from across the continent to share expertise.

By joining today, you can utilise a 10% discount on your annual club subscription. Click here to learn more about this unique network of African and global experts. 

Yolandi is the Head of CFO Club and Public Sector for the Chartered Institute for Business Accountants and the host of the CFO Club podcast – telling the stories of finance executives who made it to the top, charting their own journeys and taking the road less travelled.


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