We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedGovernance

Ex-CFO numbers on audit committees doubles in 10 years

New E&Y survey suggests 71% of UK audit chairs are former CFOs

Article comments

The number of audit committee chairs in the UK, who have previously held CFO roles, has more than doubled in the last decade, according to a new Ernst & Young survey.

The survey – CFO and Beyond –  found that 71 percent of audit committee chairs in the UK have previously held the top finance job at a company, up from 35 percent 10 years ago, as a result of the demands of a far more complex risk and regulatory environment.

The E&Y report finds that the position as chair of the audit committee is more challenging, because of the time pressures and professional risks associated with the role. CFOs also agreed with their suitability as audit committee chairs, with 80 percent of UK CFOs suggesting this as the most realistic non-executive destination, followed by the risk committee (77 percent of respondents agreeing), remuneration committee (72 percent), non-executive chairman (67 percent) and finally membership of the nomination committee (56 percent).

For purposes of research, E&Y polled 800 CFOs globally and studied the career paths of group CFOs at 347 of the world's largest companies. However the report notes that many CFOs will decide that the risk to their own personal reputation is too great to take an external role, particularly as an audit committee chair – with subsequent financial difficulties or accounting irregularities potentially damaging the CFO’s reputation and career prospects.

Hywel Ball, UK & Ireland assurance managing partner at E&Y, said, "Accounting standards are moving at an incredibly rapid rate, investor activism is on the rise and companies face an extremely complex risk and regulatory environment. All of these trends increase pressure on audit committee members and make it more difficult for those with a non-finance background to perform the role."

Response to the findings from the CFO community was mixed. Michael Sen, CFO for the Healthcare division at Siemens, said, "As a divisional CFO in a large company, you may not have to deal with the issues that take place at head office, such as funding, no matter whether debt or equity, because that is the responsibility of the group CFO."

"By taking on a board directorship at a smaller company or sitting on the audit committee, you gain exposure to those decisions and that can be useful experience for a future role in a group CFO position," he added.

Steve Hare, head of the portfolio support group at Apax Partners, said, "If you have an audit committee chair that does not have the right knowledge and background, then there is a danger that they will not do enough to provide the right checks and balances, and a risk that the CFO will simply run rings around them."

"On the other hand, if you have an audit committee chair with current knowledge, then they clearly have insights into where the key judgments are likely to be made and where adjustments are required. A good audit committee chair is someone who the CFO can consult and seek advice on complex issues," Hare added.

However, David Grigson, chairman of Trinity Mirror and former CFO of Reuters and Emap said, "I would be wary of taking a board position purely because somebody was thinking, ‘I’ve got a vacancy on my audit committee, I need a finance director.’ Basically, they’re saying that they’re going to undervalue my broader contribution and if that’s the case then it’s probably not aboard I want to be on."


Recommended Articles


Ex-CFO numbers on audit committees doubles in 10 years

What’s going to kill your company?

What’s going to kill your company?

The role of the CFO and the board in strategic risk governancemore ..

Tesco’s new finance chief starts two months early amid accounting crisis

Marks and Spencer releases Alan Stewart early by to help deal with £250 million hole in Tesco’s accountsmore ..

Microsoft removes Bing image widget after Getty lawsuit

The company is being sued by Getty Images for copyright infringementmore ..

Apple loses bid for sales ban in Samsung patent case

Apple failed to show that it suffered enough harm as a result of Samsung's infringementmore ..

What makes a good board report?

Examining how CFOs can improve the way they report back to the boardmore ..

Examining the issue of corporate litigation funding

Litigation funding is a very useful tool for CFOs but not a panacea for all legal mattersmore ..

Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

In Depth
Can finance rise to the challenge of major transformation?

Can finance rise to the challenge of major transformation?

Outdated finance processes, systems and competencies leave too many questions unanswered more ..

In Depth
Interim CFO or consultant? The pros and cons

Interim CFO or consultant? The pros and cons

Ed Harding offers an insight into the life of an interim CFO and the advantages in driving transformation more ..


* *