CFO Model December 2007

1. CFO ModelDecember 2007 Bill Matthews A/Executive Director Government Accounting and Policy Office of the Comptroller General

2. Contextand Background Budget 2004 • “Re-establish the Office of the Comptroller General of Canada to rigorously oversee all government spending. • Appoint professionally accredited comptrollers to sign off on all new spending initiatives in every government department. • “The appointment of departmental comptrollers will be subject to approval of the Comptroller General” and, “Departmental Comptrollers will also have a functional reporting relationship to the Comptroller General”; • Professional certification standards for departmental comptrollers will be established before the end of the year and these standards are to be met by departmental senior financial officers within three years.” • The Government is moving forward to audit all annual financial statements of departments and agencies within five years.”

3. Context and Background Senior Financial Officers (SFOs) in medium to large departments • The role of the SFO has taken many different forms – “general administrator“, “chief accountant” or “CFO”. • Uneven focus on financial management. Potential conflict of interest • Uneven qualifications and professional background in financial management and reporting • Uneven organizational positioning and authority vis-à-vis Program delivery organization • Lack of preparedness to deliver annual departmental audited financial statements • Lack of back up capacity and succession • Over extended and stretched Senior Full-time Financial Officers (SFFOs) in medium to large departments and SFOs in Small departments and Agencies • Uneven qualifications and professional background in financial management and reporting • Uneven level of readiness for “executive table” • Lack of back-up capacity and succession

4. The Vision Limited delegation of authorities to departments by TBS Greater delegation of authorities to departments by TBS From To Focusing on short and medium term needs of the organization Focusing on short and longer term needs of the organization from a strategic perspective. To From Performing a Corporate Services / Administration role and the breadth of related activities (e.g. Finance, HR, IM/IT Administration, etc,) Focusing on full spectrum of financial management, and the associated depth of knowledge and understanding, as a full-time “seasoned” business and financial executive From To

5. The Vision • Multi-tier, risk based approach for all organizations under functional direction of Office of Comptroller General • Criteria for segmentation: • Size of managed cash-flows (revenue, expenses and capital expenditures) • Accounting value of assets and liabilities under management • Complexities of operations (e.g. geographic distribution, decentralized management, stability of organization/operations) • Inherent risks ( e.g. extensive use G&C) • 3-Tier model: Tier 1 20-25 largest and most complex organizations – Initial target — 80-90% of expenditures Tier 2 15 -20 medium size departments Tier 3 all others

6. The Vision Responsibilities of departmental CFOs • Full spectrum of financial management (short-term and long-term) • Planning, budgeting and forecasting • Accounting and reporting, internal and external ( financial and performance) • Financial Management policies and internal controls • Financial analysis, monitoring and challenge • Departmental financial systems • Investments • Analysis of business case of opportunities • Sign-offs and recommendation for approval by Deputy Head • Subsequent on-going monitoring of implementation • Budget integrity • Value for money monitoring (e.g. via program evaluations)

7. Related Initiatives • Other related initiatives increase the “business case” • External audit committees; • Accounting officer model; • Audited departmental financial statements; • Internal control certification; • Quarterly financial statements? • Accrual Based Appropriations?; • Views of OAG and Public Accounts Committee

8. Keys to Success • Unequivocal support from deputy head • appropriately classified - peer around the department's senior management table. • appropriately qualified - experience, knowledge, personal attributes • resource the organization through appropriate classifications • CFO needs to be a member of all key departmental governance mechanisms. • departmental stewardship functions should be consolidated within the CFO's organization.

9. Potential Obstacles • Finding qualified candidates; • Now; and • Developing Future CFO’s • Credibility – get the basics correct; • Overburdening the function; • Reporting relationships; • “Phone Finance”; and • Communication barriers

10. Impact on the CFO • Must ensure fundamentals of FM are in place • Raised the bar – Combination of strategic business and financial advice for decision-making • Increased demands and expectations from senior management • Renewed commitment to enhance training and development of employees • Change management leadership • Concerted efforts to align and work in partnership with OCG and finance community

11. Impact on the Finance Community • Finance Community will be expected to support the CFOs/DMs by: • Acting as objective, strategic advisors – business and finance • Playing challenge function within department • Not to stop things but to make them work • Integrating financial and non-financial information • Providing fearless advice to senior management • Developing new skills and adaptation to new culture • Continuous learning

12. Conclusions • More than just a title; • Can be a driver for positive culture change; • Feasibility challenges given resource shortages; • Policy not in place but expectations of parliamentarians are clear.