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Finance Chiefs Moving to Improve Effectiveness

Finance Chiefs Moving to Improve Financial Effectiveness

Chief financial officers throughout the Asia-Pacific region, including New Zealand, are concerned about their companies being responsive to market demands and are striving to improve financial governance and effectiveness, according to a PricewaterhouseCoopers/CFO Asia survey.

A total of 400 CFOs and senior financial executives from 13 countries across the Asia-Pacific region were interviewed for the Enhancing Value in Asia Survey. There were 26 respondents from New Zealand.

From a New Zealand perspective, the findings were “a mixed bag”, according to PricewaterhouseCoopers Performance Improvement partner Colin McCloy. “There were some major areas for improvement in respect of decision support for management, reporting structures, and budgeting and forecasting, ” he said.

The changing role of finance

Increasingly finance functions are required to support a company’s growth by providing decision support to management. The Survey highlights the fact that just under half (47%) of finance functions spend at least half their time on decision support for management. In New Zealand that figure is slightly lower at 41%.

In the traditional area of transaction processing, New Zealand is at the front of a trend which demonstrates the changing role of the CFO. While six out of ten CFOs in Malaysia, China and Singapore say their finance departments spend at least 50% of their time processing transactions, in New Zealand this proportion was far lower – less than three out of ten are spending the bulk of their time transaction processing.

Colin McCloy said this showed the role of the CFO in New Zealand continued to evolve. “It’s not just about monthly results anymore – it’s about revisiting the whole issue of finance’s role in supporting company growth,” he said.

Reporting structure

The survey results indicate that 38% of CFOs report only to the CEO, and that approximately 40% of CFOs have subsidiary finance managers who do not report to them but to their business unit’s line managers. Colin McCloy says “this structure may hamper accurate and independent reporting of results.” CFOs should have their own independent reporting lines into audit committees or boards”, he said.

Planning, budgeting and forecasting

The majority of CFOs surveyed in the Asia-Pacific region are reasonably satisfied with transaction processing and reporting, but agree that improvement is needed in the areas of planning, budgeting and forecasting. New Zealand is no exception.

The majority of companies in the region (57%) take longer than two months to complete their annual budget exercise – India (33%), Taiwan (35%), Thailand (38%) and Australia (41%) are the exceptions. A total of 73% of New Zealand respondents said that they cannot complete their budget exercise within two months.

Colin McCloy said this was a concern. “We are a long way behind with our budgeting processes compared with most other countries in the survey.”

-ends-

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NOTES FOR EDITORS

Download of Survey Report

To download a soft copy of the survey report, please visit the following website: www.pwc.com/nz/CFOsurvey

2. Survey Methodology and Respondents Profile

Enhancing Value in Asia: Exploring the Relationship between Finance, Governance and Growth is a regional study by PricewaterhouseCoopers and CFO Publishing Corporation. 400 CFOs and senior financial executives from 13 countries and territories across the Asia-Pacific region: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand, were interviewed. This survey was conducted using direct questionnaires and supplemented with in-depth one-to-one interviews with executives spanning a range of industries, company types and locations from June through August, 2005.

3. About PricewaterhouseCoopers:

PricewaterhouseCoopers (www.pwc.com) is the world’s largest professional services organisation. Drawing on the knowledge and skills of more than 125,000 people in 142 countries, we build relationships by providing services based on quality and integrity.

(“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.)

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