Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kiwi companies keep closer eye on their CFO’s

Kiwi companies keep closer eye on their CFO’s

KPMG International survey

New Zealand companies are leading the world when it comes to monitoring the performance of their Chief Financial Officer (CFO), according to KPMG International’s 2014 Global Audit Committee Survey.

The survey, which explores the challenges being faced by audit committees in organisations in 17 countries around the world, also gives specific insights for New Zealand.

Seventy-three percent (73%) of New Zealand companies reported that the performance of their CFO was “rigorously evaluated against clear performance objectives”. This was well above the global average of 59%.

Souella Cumming, the head of KPMG’s Audit Committee Institute (ACI), says it is encouraging to see New Zealand companies are increasingly valuing the CFO role.

“The CFO is becoming as critical to an organisation’s performance as the CEO,” says Souella Cumming.

“In many of the companies we work with at KPMG, we’re seeing a definite re-positioning of the CFO role. They are evolving into much more of a strategic business partner within the organisation.”

When it comes to succession planning for the CFO, however, New Zealand was doing just as poorly as the rest of the world. The survey revealed that 62% of global companies do not have a formal succession plan in place for the CFO – and warned this was a “major risk” for any company.

Bigger workload, wider responsibility

The 2014 Survey also found that the workload of audit committees continues to grow bigger and wider. It was expanding beyond the core responsibility of financial risks into other areas such as IT, cyber-security, and global systemic risks. Forty-three percent (43%) of respondents said it was becoming “increasingly difficult” to oversee these wider responsibilities.

Graeme Edwards, Head of Audit at KPMG New Zealand, says management and Boards should be careful not to overload their audit committee members.

“Audit committee agendas are not getting any lighter,” says Graeme Edwards.

“These survey findings should serve as a catalyst for boards and management teams to assess the adequacy of their governance processes in critical areas. It’s a good time to step back and assess whether the audit committee’s risk oversight responsibilities are appropriate.”

Strategies to better manage the workload might include reallocating responsibilities among the full Board and board committees; or creating new committees to focus on specific areas of risk.

Government regulation biggest challenge

The 2014 Survey also asked respondents which risks, aside from financial reporting risk, pose the greatest challenges to their company. Government regulation/impact of public policy initiatives was ranked as the biggest challenge, at 48% globally (and 53% among New Zealand companies).

Souella Cumming says this is not surprising, given the increasing pressures of public policy around issues such as health and safety.

“Health and safety is currently top of mind, particularly in the wake of the Pike River disaster. The Government has signalled changes to legislation that will place more onerous responsibilities on directors, with significant consequences for non-compliance.”

Growing role for internal audit

In other Survey findings, more than 80% of Audit Committee members wanted to see their company’s internal audit team take on broader responsibilities. They wanted to extend internal audit’s role beyond the traditional financial reporting and controls, to encompass other key risks facing the business.

Souella Cumming says Australasian companies are well-placed to take this ‘enterprise-wide’ approach to risk management, as they are already ahead of the game.

“While it’s still a fairly recent development in the USA, New Zealand and Australia started to adopt enterprise risk management back in the early 90s. We were the first countries in the world to develop a risk management standard…it only became an international ISO standard 4-5 years ago. We did lead the world in that context.”

Another trend in recent years is for companies to outsource (or co-source) their internal audit function. KPMG New Zealand currently partners with a number of organisations, both public and private, to provide these services.

Ends


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news