Finance's Role In The Organization

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FINANCE’S ROLE IN THE
ORGANISATION
FINANCE DIRECTION INITIATIVE

BUSINESS WITH CONFIDENCE

icaew.com/financedirection

FINANCE DIRECTION INITIATIVE
Finance’s role in the organisation considers the challenges of designing successful organisations. The document consists of two articles previously published in
Finance and Management, the ICAEW’s Finance and Management Faculty
Magazine. It forms part of our exploration of the role of the finance function, the first theme for the faculty’s thought leadership programme. The other two themes are managing the future and non-financial measures.
ICAEW is an independent professional body, working in the public interest as required in its Royal Charter. As a world-class professional accountancy body,
ICAEW provides leadership and practical support to over 136,000 members around the world, working with governments, regulators and business to maintain the highest standards. The ICAEW is a founding member of the Global Accounting
Alliance with over 775,000 members worldwide.
The ICAEW’s Finance and Management Faculty provides its members with up-to-date business ideas; the latest management tools; unbiased and independent information and helps them to become an effective part of the management team.
We welcome comments on this work and the other themes in this programme.
Please email rick.payne@icaew.com.

November 2009
Reprinted February 2011
© 2009 ICAEW
All rights reserved.
Dissemination of the contents of this publication is encouraged. Please give full acknowledgement of the source when reproducing extracts in other published works. No responsibility for any person acting or refraining to act as a result of any material in this document can be accepted by the author or ICAEW.
ISBN 978-1-84152-855-7

FINANCE’S ROLE IN THE ORGANISATION
PART 1
How does the finance function best fit within the design of an organisation?
Here Rick Payne looks at current practice and highlights the way thinking in this area is developing.
The role of finance functions, their contribution to organisational performance and how such contribution can be enhanced need close scrutiny. This has always been the case but is made more urgent now because finance functions are implicated in both the successes and failures highlighted by the current financial crises. Their role will be examined along with wider questioning of the effectiveness of the ‘Anglo-Saxon’ form of capitalism.
You, our readers, are well placed to contribute to this scrutiny and inform the faculty’s thought leadership programme on the role of the finance function. This is the first of two articles which highlight some of our thinking to date and the challenges and questions this raises. We would welcome your input on any of these points – and in raising those we may have missed (please see contact details on page 7).
In this month’s article we highlight some questions on the role of the finance function and emphasise the importance of organisational design. The second article will consider the need to consciously and proactively build functional structures and the challenges involved – and here, your insights and examples would be particularly valued.
SHOULD WE BE PROMOTING INCREASED INFLUENCE FOR THE FINANCE FUNCTION?
The ‘Anglo-Saxon’ form of capitalism which promotes free markets and light-touch regulation has been associated with the increasingly widespread acceptance of the need for an influential chief financial officer (CFO) supported by a strong finance function focused on business partnering. This is because of:
• the growing perception that measurement and financial information are imperative in running an organisation and monitoring its success in highly competitive environments – witness the focus on shareholder value and on monitoring cash and costs;
• the globalisation of capital flows with investors, lenders and regulators expecting to deal with a professional CFO and finance team,
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