(SINGAPORE) The role of the chief financial officer (CFO) has expanded dramatically in recent years - but how many finance executives are properly equipped to handle their new responsibilities?

A study by Ernst & Young (EY) has found that companies want their CFOs to be more actively engaged in the strategic direction and management of business, in addition to their traditional compliance and corporate governance duties.

But the study also found that many CFOs are not well-equipped to participate in strategy development and the management of their company's business performance.

EY's study - 'What's next for the CFO? Where ambition meets reality', conducted by the Economist Intelligence Unit - found that 97 per cent of board-level executives interviewed feel the CFO role has grown broader.

They cited factors such as increasing expectations from the board, increasing corporate governance obligations, increasing risk management, increasing demands for management information and increasing demands from investors.

The survey respondents were interviewed in September and October last year and drawn equally from the US, Europe and Asia.

While a number said they feel the chief role of a CFO is that of a scorekeeper and custodian, some 35 per cent said they believe a CFO should chiefly be a business partner - that is, someone who participates in strategy development, leads mergers and acquisitions activity and provides leading indicators for business performance.

There was, however, a startling disconnect between where CFOs should be - that is, business partners - and where they are now and what they are capable of being.

One-third of survey respondents believe CFOs do not have sufficient understanding of the wider issues their businesses face.

For example, while three-quarters of respondents said they are happy with the quality of people working in the finance function, many feel these people lack personnel management skills - such as the ability to move talent through an organisation in a way that motivates and keeps that talent.

This disconnect suggests that CFOs need to equip themselves with more skills if they want to evolve from being scorekeepers to business partners.

'CFOs are finding themselves at a crossroads, where they can choose to either limit themselves to technical accounting or focus on more strategic functions,' says Norman Lonergan, EY's Global Advisory Services leader.

'If they want to concentrate on their strategic roles they need to streamline their scorekeeping and custodial roles, focus more on integrating financial and non-financial information, and build talented teams to share the workload.'

CFOs will need to restructure and simplify their more traditional finance responsibilities, expand on the role of the finance function and apply their finance skills in other business areas to influence strategy, foster skills in business partnering and create a pool of natural successors.

They will also need to get more in touch with issues they are currently not familiar with - such as dealing with major strategic issues alongside CEOs, focusing more on the future than on the past and working more closely with value-creating areas such as R&D and marketing.

This article was first published in The Business Times on May 21, 2008

Is this article useful to you?