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

 

Taxing Multinationals: EU Ruling Sours Apple

Shares of Apple slid, down 0.9 percent as of 3.08pm in New York, after the European Commission ruled that Ireland granted the company undue tax benefits of up to 13 billion euros (US$14.5 billion)—"illegal aid” under EU rules that the commission says Ireland now must recover from Apple. More>>

ALSO:

NZX Review: Best Practice Code Recommends Code Of Ethics

NZX, the sharemarket operator, is seeking feedback on proposed changes to its corporate governance best practice code including a published code of ethics, rules about share trading and continuous disclosure, and more transparency over board appointments and chief executive pay. More>>

ALSO:

Auditors:

Signs Of Life? SETI On Russian Space(?) Signal

A star system 94 light-years away is in the spotlight as a possible candidate for intelligent inhabitants, thanks to the discovery of a radio signal by a group of Russian astronomers... Could it be a transmission from a technically proficient society? At this point, we can only consider what is known so far. More>>

Post-Post: Brian Roche To Step Down As NZ Post CEO

Brian Roche will step down as chief executive of New Zealand Post in April 2017, having led the state-owned postal service's drive to adjust to shrinking mail volumes with a combination of cost cuts, asset sales, modernisation and expansion of new businesses. More>>

ALSO:

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news