The ever-changing role of the CFO

A conversation with Pamela Steer, President and CEO, CPA Canada

Gone are the days when the role of a CFO was limited to balancing the books and holding the purse strings.

In today's fast-paced and ever-evolving business landscape, management and other stakeholders rely on CFOs to be forward-thinking, value-adding business partners who can provide insights into how best to use financial and non-financial data in decision making. As the world becomes more complex and interconnected, CFOs must possess a unique set of skills that go beyond traditional finance expertise—skills like implementing digital transformation, evaluating ESG (environmental, social, governance) risks, and interpreting vast data all while maintaining a keen eye on the bottom line.

BDO's Anne-Marie Henson, Eastern Canada & SMB Leader, Markets & Industry, sat down with Pamela Steer, President and CEO of Charted Professional Accountants (CPA) Canada on a recent episode of Accounting for the Future: A BDO Canada podcast to discuss the ever-changing role of the CFO and how CPAs can adapt to the changes. Here are some highlights from their conversation:

The skillset of the modern CFO

Anne-Marie Henson (AMH): As the CEO of CPA Canada, you get to see first-hand the changing expectations of CPAs. In your opinion, what are the most important skills a CPA needs today to be an effective CFO?

Pamela Steer (PS): The world is changing quickly, and the changes continue to accelerate in pace. The CFO of today, and the CFO of tomorrow, is a very different individual than 20 years ago.

The CFO of the past was very focused on hindsight, so reviewing historical financial data and producing quarterly and annual reports. Whereas the CFO of today is focused on foresight. What is going to happen? What is the data telling us about our business and how do we use that to move forward? The modern CFO still provides that hindsight and, fortunately, we have systems and technology to enable that. But now, CFOs are expected to translate that data into actionable insights and communicate them effectively to management and the board, to inform strategic planning and decision-making.

I'm very excited about what this means for CFOs and our profession as CPAs.

AMH: How are these changes impacting the education and experience requirements of CPAs today?

PS: I'm thrilled to be at CPA Canada particularly during this fast-evolving stage of growth in our profession, and I'm delighted with the new Competency Map 2.0 that the CPA profession recently put out.

The new Competency Map not only focuses the fundamentals skills expected from a CPA, such as critical thinking, auditing, tax, and accounting skills, but now we've added advanced technology and utilization, data governance, and ESG issues. These skills have become a part of the new competency map, and the profession is working towards incorporating them into a new CPA certification in the coming years.

At the same time, the COVID-19 pandemic changed education drastically. I don't think that 100% remote education is good for anybody. It doesn't develop the interpersonal and social skills that are critical to the profession. However, having the ability to choose hybrid options—dividing some in-person class work and some online—offers flexibility for students with different lifestyles, ages, and stages. This flexibility may open up new opportunities for newcomers to the CPA program and profession. That diversity of thought and experience is very beneficial to our profession.

AMH: Going back to your point about CPAs needing to be more forward-looking, why do you think that is happening today?

PS: Businesses are gathering more data than ever before. CFOs and finance departments are accustomed to and have the skills to synthesize complex levels of data and tell the story behind that data. Accountants also have an innate skepticism that can help them to ask questions like, "I understand you think this model is telling us XYZ—but did we use the right inputs?" That skill set is something that the discipline of becoming a CPA really sets you up for.

In the world of business, CFOs and CPAs are storytellers. It's our job to take raw data and turn it into a coherent, compelling narrative that will help the board, shareholders, and other stakeholders understand what is happening in the company so they can make informed decisions. Our skill set puts us in a unique position to be able to tell that forward-looking story in a credible way.

AMH: Why are we seeing CFOs getting more involved with digital transformation projects and what can CFOs do to add value to the process?

PS: There are a couple reasons why CFOs are now involved in digital transformation efforts. Organizations have been largely implementing digital transformation to their operations and the more front-facing aspects of the business. Now that those are largely in place, organizations are realizing that their back office can't keep up and they've created a technical deficit. And as a result, cyber vulnerabilities have become a big issue for CFOs—which makes sense since criminals target financial systems to find money. So, what you are seeing now is a flood of digital bootstrapping on the finance and back-office side.

Although previously, CFOs have not led digital transformation, CPAs have that critical thinking and discipline; they will ensure that steering committees are well-staffed, as well as oversee the change management process.

AMH: ESG is another area that has become a huge focus for CPAs around the world, particularly in Canada. In your opinion, why do CFOs in Canada need to care about climate change, sustainability, and ESG?

PS: For me, ESG is just risk. It's looking at risks and opportunities in the economy. Canada is uniquely positioned internationally for several reasons. We sit next to a large neighbor that has politicized the idea of ESG, whereas we have embraced it. Canada has a lot of natural resources that bring a lot of ESG challenges, and we need to be part of the solution. Our CPAs understand international accounting standards as well as U.S. GAAP. We also have a government that is encouraging and embracing of sustainability practices. And, we have a tech sector and natural recourse sector that want to make positive change in a transition world.

Canada has a strong role to play, and we are well-respected. It's very exciting to see we have hit a tipping point with respect to not just acknowledgement of ESG issues but moving forward and incorporating that into good business practices.

AMH: I've always felt that as Canadians in general, but particularly as CPAs, we punch above our weight in terms of our influence on a global scale because we tend to be collaborative, and we can move these initiatives forward.

Do you have advice for CPAs looking to gain knowledge in digital transformation or ESG?

PS: It depends on where you are in your tenure, your role, the expectations of you, and where your interests lie. I would suggest doing some light reading, looking at your provincial body and the information they have available.

Accounting for Sustainability has amazing resources for CFOs and finance departments for integrating ESG issues into their business strategies and decision making. If you want to go beyond that there is also technical education you can get, CPA Canada has a number of professional development courses that take a deeper dive into sustainability, value creation, data management, and more.

There are a lot of resources out there and it can be daunting. Fortunately, now The IFRS Foundation's International Sustainability Standards Board (ISSB) will be developing a much-needed set of global standards for reporting on ESG matters. This is another area where Canada punches above its weight. The ISSB decided to open one of its two global offices in Montreal, which is partly thanks to the Canadian Champions for Global Sustainability Standards—of which BDO Canada is a founding member—for creating an environment that the ISSB would want to operate in.

AMH: Thank you Pamela for your valuable time and for sharing your thoughts and resources with us.

To learn more about how BDO's Accounting Advisory team can help clients manage their day-to-day finance and accounting challenges as well as their big-picture, forward-looking challenges, contact us.