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Do you have your financial diagnostic checklist?

September 25th, 2008 Comments off

As I start getting situated into a new CFO position, the first thing I do is run through a preliminary diagnostic of the processes in place, the quality of the information, and the depth of information that management has at their disposal for key decision making. As I’ve mentioned in my posts on internal audits and other control-related commentaries, I want to know what my immediate areas of risk are to the firm and address them immediately. While I have a much more comprehensive list, some of the areas listed below are those I start addressing in the early stages.

-Review of the most recent audit report for insight on potential issues.
-Skills assessment of the existing staff and their commitment levels.
-Review of current systems and the ability to extract accurate reporting.
-Review of all working capital elements and exposure to potential write-offs not recognized.
-Determine the health of current bookings and pending shipment pipeline.
-Assess any current or pending litigation issues.
-Assess the current banking relationships and determine potential issues.
-Assess the dynamic among the Executive team as well as the Board.
-Determine if overall compensation levels are in line or if there is risk to a broad-based increase.
-Review current insurance levels and confirm coverage levels are appropriate.

After reviewing the list above the first question is “Why wouldn’t these items be questioned or reviewed during the hiring process?”. In fact, they should be, but as we all know for the interview process, there’s the process of kicking the tires when you’re on the lot and actually getting a feel for the performance of your new purchase after you’ve had it for a week or two. This is not necessarily a negative situation, but sometimes the Company wants you as bad as you might want the position and you might only get that 80% view. Regardless, if you enjoy what you do and you appreciate a challenge, make the most of it and ensure that the efforts you commit are those you can be proud of and strive for nothing less than success.

Thanks for reading . . . .