Financial management is an integral knowledge in business and is now increasingly seen as a key driver in promoting sustainable business practices and financial growth of organisations. Whilst boards are becoming more diverse in terms of backgrounds, expertise and qualifications, there is a degree of financial literacy expected of directors in order for them to exercise their fiduciary duty in their financial oversight roles.
Since accounting and finance drive a significant portion of the strategic decisions that boards make, directors need, and are expected to have, a strong grip on finance and accounting to be effective. Therefore, key financial reporting and analysis competencies and skills to those who are not from a financial space is crucial to efficiently and effectively oversee the business activities and make the best decisions.
Essentially, board directors are expected to be able to interpret financial reports, identify any potential red flags within the financial reports, understand and apply valuation techniques and to connect the dots on financial aspects within the business environment by understanding the imperative areas of financial risks. On the strategic front, it is vital to understand financial reports and data analysis in support of a good decision-making process that will ultimately contribute to more meaningful boardroom discussions – resulting in data-supported judgements in financial-related and strategic matters.
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