Chief Financial Officers (CFOs) are facing unprecedented challenges due to evolving regulatory requirements, global accounting standards, and rapid technological advancements. Highlighting these dynamics, Sethurathnam Ravi, Founder of Ravi Rajan and Co. LLP, Chairman of TFCIL, and Former Chairman of BSE, emphasized the pivotal yet demanding role of CFOs in the modern business landscape.
Challenges in the CFO Role
Speaking at the BW CFO World Future of Finance Summit and Awards 2024, Ravi outlined the factors transforming the CFO’s responsibilities. “The CFO role has become increasingly challenging due to regulatory compliances, expanded disclosure requirements, evolving accounting standards, the changing business environment, the shift to IT infrastructure, and the rising threat of cybercrimes,” Ravi explained.
He pointed out that regulatory changes across various sectors are being driven by the move towards global standards. Reflecting on past corporate failures, Ravi said, “From 2005 to now, the number of frauds in companies has prompted regulators to introduce stricter regulations to protect public funds.”
Importance of Regulatory Changes
Ravi stressed the necessity of regulatory reforms, citing the protection of shareholder interests and public funds as critical factors. “The business landscape has changed significantly. CFOs now have to navigate a maze of sector-specific regulations. This shift is essential to maintain transparency and align with global standards,” he said.
Drawing attention to past corporate failures, Ravi noted that misgovernance, fraudulent reporting, and unethical practices often led to the collapse of companies. He added, “Some failures stem from business challenges, but many are linked to the greed of promoters compromising company integrity to build personal wealth. This necessitated stricter regulatory measures.”
The Generational Shift
Ravi also discussed how CFOs have adapted to generational changes in business leadership. “Promoters and CFOs have borne the brunt of past failures, which tarnished their reputations and brand value. However, successful CFOs play a key role in guiding businesses through generational transitions. They uphold the founding values and help transform companies to align with new leadership perspectives,” he stated.
Technological Transformation in Finance
The integration of cutting-edge technologies like artificial intelligence (AI), data analytics, and IT infrastructure is revolutionizing business models, Ravi observed. He underscored the transformative impact of technology on operations, stating, “Today, businesses can monitor plants and operations remotely, thanks to advancements in IT infrastructure and security systems.”
Ravi concluded by emphasizing the importance of adaptability and proactive governance in navigating the complexities of modern finance, urging CFOs to embrace innovation while upholding ethical standards.
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