CFO Departures Are…Odd
It’s interesting that Tesla’s CFO had an abrupt departure from the company just before the quarterly earnings were announced.
More than any other function within a company, the Accounting and Finance group has accountability to the board of directors. The CFO is hired by the CEO and reports to him, but he works for the board of directors as well. As such, the accountants have a fiduciary responsibility to adhere to generally accepted accounting principles whether the CEO agrees with them or not.
More than any other function within a company, the Accounting and Finance group has accountability to the board of directors. The CFO is hired by the CEO and reports to him, but he works for the board of directors as well. As such, the accountants have a fiduciary responsibility to adhere to generally accepted accounting principles whether the CEO agrees with them or not.
First and foremost, the CFO owes the board of directors financial statements that accurately reflect the company’s performance. He risks not only his job but potentially his freedom should he get caught misleading the board or investors on the true profitability, or lack thereof.
CFOs don’t generally get a lot of spotlight. It’s not like they are inventing new technologies or bringing a grand strategic vision. They ensure that the financial statements are accurate.
So, when a CFO abruptly leaves, alarm bells can go off. Outside of a simple personality conflict, any disagreement usually arises out of how to report earnings, cash flow, or the health of the balance sheet. And there’s a lot of opportunity for disagreement. The way that a company handles inventory, warranty claims, and capital expenditures can make a massive difference in how earnings look.
Company leadership and the accounting department can often disagree on how to handle some of these items. Typically, the accounting group will win these fights because no one wants to take the chance of getting frog-marched out the lobby by the feds. But if you get a real stubborn CEO who likes to live dangerously and has something to hide… If a CFO disagrees with his CEO and the CEO is unwilling to budge, there is really only one recourse. You leave.
Tesla CFO Resigns; Analysts Worry Company Soon out of Cash
CFOs don’t generally get a lot of spotlight. It’s not like they are inventing new technologies or bringing a grand strategic vision. They ensure that the financial statements are accurate.
So, when a CFO abruptly leaves, alarm bells can go off. Outside of a simple personality conflict, any disagreement usually arises out of how to report earnings, cash flow, or the health of the balance sheet. And there’s a lot of opportunity for disagreement. The way that a company handles inventory, warranty claims, and capital expenditures can make a massive difference in how earnings look.
Company leadership and the accounting department can often disagree on how to handle some of these items. Typically, the accounting group will win these fights because no one wants to take the chance of getting frog-marched out the lobby by the feds. But if you get a real stubborn CEO who likes to live dangerously and has something to hide… If a CFO disagrees with his CEO and the CEO is unwilling to budge, there is really only one recourse. You leave.
Tesla CFO Resigns; Analysts Worry Company Soon out of Cash
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