Monish Chatrath, Managing Partner, MGC-KNAV Global Risk Advisory LLP on how CFOs can go beyond their traditional boundaries and help ensure corporate governance standards in their organisations.
Q: The Companies Amendment Bill was passed by Parliament last month. How do you see this impacting corporate governance standard in India?
Monish Chatrath: A new environment is emerging — one which is completely unprecedented and the other in which today’s CFOs and tomorrow’s have a lot to gain; and possibly to lose as well as far as corporate governance is concerned.
Q: What will be the impact of the Bill on the role of CFOs, if any?
MC: A CFO, today, is dealing with multiplicity in terms of diversity of stakeholders. No longer is the CFO of today expected to deal with CEO and lead the finance function, which is his core area of specialisation, but they need to go beyond the boundaries of their traditional office. So, what does a CFO really need to do today? He needs to interact with CEO or managing director, audit committee, regulators, shareholders, analysts and all the departmental heads in his organisation, besides interacting with the members of his finance team. In this context, a CFO has to wear different hats – some at same point of time and some at different points of time. For this, a CFO has to be versatile and has to be grounded with the fundamentals.
Q: How can CFOs help ensure good corporate governance standards in their companies?
MC: There is a saying that behind every man’s success there is a lady. I firmly believe that behind an organisation’s success there is a CFO. A CFO’s role is absolutely fundamental and imperative in terms of being a change catalyst, steward and a role model as far as institutionalisation of good governance standards is concerned. Not only is a CFO of today and tomorrow expected to be a custodian of finance functions, but he is also expected to lead the charge on enterprise-wise micro-management and other aspects associated with stakeholder management. The CFO of today and tomorrow should be aware of what is happening and its impact on the health and wellbeing of the organisation.
Q: How has a CFO’s role become so central to an organisation? Please explain.
MC: A CFO’s role today, unfortunately, does not entail only trophies. There are scars attached to a CFO’s role. He is expected to be a tough custodian of change. He/she is expected to lead by example, get the organisation out of rough waters whenever a situation arises. These are the things easily said than done. To be able to do this, a CFO needs to be a lady of substance and a man of character. Most importantly, a CFO must go back to basics in terms of the fundamentals of ethics and good governance, if he/she has to make a real success of the role that he/she is playing in the organisation.