Chief Finance and Accounting Officer (CFAO)
Key advice update No. 1, 2013
Introduction
Strong governance is crucial to the financial management of Victoria’s public sector agencies (agencies).
Compliance with the Financial Management Compliance Framework and the associated Standing Directions of
the Minister for Finance (Directions) is fundamental in achieving sound financial management within
departments and agencies.
The Directions prescribe sound practice and high-level requirements for financial management that allow
agencies to develop fit-for-purpose systems, procedures and practices that are tailored to their circumstances.
Purpose of this document
The purpose of this key advice update is to assist agencies in interpreting the requirements of Direction 3.1.2
Chief Finance and Accounting Officer (CFAO).
Questions relating to the title of the CFAO and suitability of contracting out the role of the CFAO have recently
been raised by agencies. DTF’s advice and response to these questions is below.
The role of the CFAO
The Financial Management Act 1994 (the Act) Section 43 requires the appointment of a CFAO to be responsible
to the Chief Executive Officer/Accountable Officer for ensuring that proper accounting records/systems and other
records are maintained in accordance with the regulations and directions.
In addition, the CFAO provides advice to the Board on:
 the financial statements of an agency;
 compliance with relevant taxation legislation;
 internal controls systems (to avoid fraud and misappropriation);
 the audit process (including liaising with external auditors);
 action taken on audit reports; and
 managing financial risks.
The CFAO is also responsible for:
 managing public finances for which the agency is accountable;
 keeping proper accounts;
 prudent and economical administration;
 efficient and effective use of resources; and
 ensuring that audit recommendations are actioned.1
The Responsible Body must ensure financial management leadership is secured from a suitably experienced and
qualified CFAO (Direction 3.1.2).
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State Services Authority: http://www.ssa.vic.gov.au/governance/entity-obligations-a-key-relationships/role-of-the-chieffinance-a-accounting-officer.html
Chief Finance and Accounting Officer – title of the position
Section 43 of the Act refers to the title of the role of the CFAO as the ‘Chief Finance and Accounting Officer’.
However, it is not necessary for the holder of this position to always be referred to as the ‘Chief Finance and
Accounting Officer’. Examples of alternative titles include ‘Chief Finance Officer (CFO)’ or ‘General Manager,
Finance’.
Alternative titles are appropriate, as long as the relevant person exercises the functions and has the
responsibilities assigned to the role as described in the Act.
Can a contractor undertake the role of CFAO?
The Act and Standing Directions do not expressly prohibit the role of the CFAO from being undertaken by a
person who is not a direct employee (i.e. a contractor).
However, consideration must be given to the following Direction requirements:
 Standing Direction 2.4 (Procedure (i)) which provides that an authorisation cannot be given to a contractor.
Agencies must therefore ensure that a contracted CFAO does not hold any financial authorisations.
 Standing Direction 3.1.5 which requires that when contracting an outsourced financial service, the
performance against the contract, service level agreement or equivalent, must be regularly monitored and
reviewed, including a review (at least annually) by the Accountable Officer, or delegate such as the CFAO.
Accordingly, agencies when contracting out the role of CFAO should ensure that the CFAO does not have the
capability to self-review. A review of a contracted CFAO’s performance should be undertaken by the
Accountable Officer.
In summary, when engaging the services of a contracted CFAO appropriate controls must be put in place to
ensure that accountability for decision-making and governance remains ultimately with the Responsible Body (i.e.
the Board).
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the State of Victoria as author. The licence does not apply to any images, photographs or branding.
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