Corporate governance - Turn and face the change.

(From Financial Director)

Byline: Robert Bruce, leading commentator on accountancy issues.

When management fashions change, you can be certain of one thing. There will be a downside as well as an upside to the change. And so it is for finance directors.

In recent years, the role of FD has undergone a radical change. Instead of the old-style FD, whose main task was to ensure the finance function was solidly and impeccably run, today's FD is a strategy supremo.

Rather than being characterised as the person whose head is always buried in spreadsheets, we now view the FD as the person whose head is always in the clouds. The problem is that although the role is changing, the pitfalls are being underestimated. The arguments for the wider role of the FD are long won. Obviously, the FD has an overview of the corporate organisation to which no one at board level is privy. Obviously, the figures drive the possibilities for future growth and change within that company. And, obviously, in an increasingly regulated world, the FD's role is to provide assurance for the board.

It is in this latter part of the expanded role where the troubles may come to light. If you talk to outsiders they often cite examples of just how this works. Adam Bates, global head of KPMG Forensic Services, is just such a person. He was talking recently of an example which is startlingly simple, but required the older set of FD skills rather than the newer set to solve.

He spoke of a diligent FTSE-100 FD who made it his business to look at the cash position of the business's subsidiaries in a regular, organised way. It struck him as odd that one business always seemed to have consistently more cash than the others. So he asked for that most old-fashioned check of all: a bank reconciliation. It didn't turn up. He kept asking. It still didn't turn up. So off he went visiting. And, sure enough, the reports from the business had been consistently falsified, the subsidiary's losses were huge and it had been falsely reporting its cash balances to head office.