KUALA LUMPUR: Given their unique skills backed by financial acumen, experienced chief financial officers (CFOs) are ideal candidates to become board directors, says Deputy Minister Finance 1, Datuk Donald Lim.
Datuk Donald Lim
“Another means through which CFOs can contribute to improved corporate governance, quality financial disclosure and heightened market health is through serving actively on boards as vigilant independent directors.
“Today, boards suffer a surfeit of quality problems and a solution would be in improving the calibre of people in charge or the so-called tone at the top,” he said at the Regional CFO Summit 2010 here yesterday.
Thus, he said the government was now studying the need for directors to be equipped with an accounting background.
Lim said in Malaysia much has been said about enhancing the calibre and
enlarging the pool of independent directors to improve board performance and eradicating existing weaknesses in corporate governance.
“The lack of an adequate talent base may also see independent directors being drawn repeatedly from the same limited pool, thus creating inter-connected boards.
“Once appointed to the board, many may fail to devote enough time to becoming familiar with the idiosyncrasies of the sector in which their companies operate and may even claim they have no time for training,” he highlighted.
To solve this, Lim said initiatives are afoot to overcome the shortage of competent and qualified corporate directors in Malaysia.
He said the Association of Chartered Certified Accountants and Minority Shareholders Watchdog Group recently signed a memorandum of understanding to enable the selection of qualified accountants which would include CFOs as independent directors.
“For this process to work effectively there should be clear guidelines for candidates to be admitted to the proposed pool of directors,” he added.
Lim said a thorough and open vetting process at the selection stage itself was also fundamental for the initiative to take off.
Likewise, he said putting the right person in the CFO position was also critical to high-quality corporate performance.
Citing a survey by IBM, he said over 1,900 CFOs and senior finance executives from around the world found playing their part in the wider corporate strategy was now top priority for CFOs who no longer rank cost reduction at the top of their agenda.
“If adding value, good governance and compliance, risk management, and innovation are among the new job specifications for CFOs, it is clear that the CFOs are no longer just the traditional finance guy,” Lim added. — Bernama