The "Hands-Off Micromanagement" style so prominent in many business owners and defined by me in my September 21, 2010 Post has a lot of implications in daily lives of CFO's and Controllers. One of the most frustrating facets has to do with petty mistrust.
I've got volumes of stories illustrating this particular trait of a CFO vs Owner relationship. Here is a compiled rendition of a rather frequently recurring Tale of Mistrust from the CFO Folklore.
AlphaOmega Inc. is a treasury-intense company and its CFO devotes big chunk of his time managing it. He personally decides on daily basis whether the company needs to borrow to cover operational deficit or invest the excess of available funds. He is singly responsible for signing financial instruments, including multimillion-dollar letters of credits and commercial loans paid directly to suppliers. He electronically hedges foreign currencies, sometimes as much as $1 million per transaction. His discounting customers' trade documents on London Forfeiting Market frequently reaches $20 million per tranche.
Carrying all these monetary responsibilities makes him especially meticulous about the separation of duties and internal controls. None of the transactions he personally conducts are recorded by him. He deliberately never cuts any checks. He has a designated treasury operator setting up all the wire transfers. The companies books and records are regularly audited by lenders. And his quarterly and annual accounting audits are always clean and produce unqualified opinions.
And yet... he has no authority to sign a $1 check or execute a $10 wire transfer release. Only the Boss can do that.
And this Boss is not available for you whenever you need him: the business frequently takes him abroad; May through September he is in his summer house; he has to spend holidays with his kids; and he has a girlfriend (you know, afternoon delight and all that).
Moreover, he hates signing checks and keeps ignoring that thick folder the AP manager put into his in-box two days ago. And every time the CFO sends a "pleeeease-release-wires" email, the Boss acts like he is asked to grant a personal favor. And it is the CFO who has to deal with the frustration of vendors and suppliers waiting for their payments.
The situation drives him crazy and causes perpetual frustration and anxiety. Swallowing his pride and ignoring the insulting pettiness of such mistrust, the CFO addressed the issue many times, sticking strictly to the damage the situation causes the business. He explained on numerous occasions that the way his internal controls are set up, it would require his entire stuff to be part of a scheme to steal even a dollar from the company. He also explained that their treasury systems allow to set up limits of execution authority and that the Boss shouldn't be bothered with $2,000 wire transfers.
All falls on deaf ears. So, the poor CFO still chases his boss somewhere in Hong Kong, begging him to release today's wires before the banks' cutoff time of 5 pm EST, which is 6 AM tomorrow over there.