This document provides guidance on hiring a financial team for a startup company. It recommends initially setting up books with a part-time controller or bookkeeper. As revenues start and additional funding is raised, the company should consider hiring a part-time CFO for strategic guidance. Once generating consistent revenues, hiring a full-time CFO to manage financial risks and controls is advised. The roles of controller, treasurer, and auditors are also outlined. Financial reporting should follow accounting standards and basic controls should be established to prevent fraud.

1. Hiring a Financial Team
This presentation is made possible by the support of the American People through the United States Agency
for International Development (USAID). The contents of this presentation are the sole responsibility of Rick
Rasmussen and do not necessarily reflect the views of USAID or the United States Government.

2. Financial Team
• Strategy:
– Chief Financial Officer
– Bankers, advisors, etc.
• Implementation:
– Controller
– Financial Staff (A/R, A/P, Payroll, Treasurer…)
• Oversight:
– Board – the audit committee
– Internal and external auditors

3. For a startup
•
No need to hire a CFO until ready
– CFO performs a strategic role
– Structures and guides the financial aspects of the company
•
Before expenses and revenues
– Set up books and statement of accounts
• Quickbooks or other programs are good options
– Set up can be done by part-time controller (Certified Public Accountant)
– Carefully track expenses and monitor cash outlays
•
When you starting to raise money
– Consult a part-time CFO in addition to your attorney
•
Once revenues start and raising second round
– Consider bringing on a CFO
– Consult with your board

4. Timing
Bootstrap
Revenues/seed
CPA and
Attorney
Review
Full-time
You or
Bookeeper
part-time
or Controller
bookkeeper
CPA
setup
Series A/B
Controller
and
Part-Time
CFO
Hire
CFO
exit

5. CFO duties
• Manages the financial risks of the company
• Sets strategic tone for funding and spending
• Puts proper controls in place
–
–
–
–
Budget management
Cost / benefit analysis
Forecasting needs
Securing new funding
• Strategic partner and advisor to the CEO

6. Controller
• Responsible for supervising the quality of accounting and
financial reporting
• Oversees the accounting operation
–
–
–
–
Accounts Payable
Accounts Receivable
Reporting
Insurance matters
• Monitors internal controls
• Countersigns on expenses and commitments
• Works with external auditors

7. Treasurer
• You should be so lucky as to need a treasurer
• Oversees investment activity on behalf of the company
–
–
–
–
–
–
–
Cash management
Liquidity risk management
Issuing debt
Foreign exchange and interest rate risk hedging
Securitization
Pension investment management
Capital structure including share issuance and repurchase

8. Audits
• An objective independent examination of the financial
statements
– Increases the value and credibility of the financial statements produced
by management
– Reduces investor risk and therefore cost of capital
• Typically performed by accounting firms
– Quarterly or Annually
– Audited vs. unaudited financial statements
– Can become expensive for a pre-public firm
• An audit opinion is issued
– Intended to provide reasonable assurance, but not absolute assurance,
that the financial statements are presented fairly

9. Accounting Standards
• Accounting standards set the rules for reporting and reporting
formats
• US:
– Generally Accepted Accounting Principles (GAAP)
– Governed by Financial Accounting Standards Board (FASB) and SEC
• Europe, Canada, some others:
– International Financial Reporting Standards (IFRS)
– Governed by International Accounting Standards Board (IASB)
• Other countries, esp Asia and CIS
– Combination of rules. Buyer beware

10. Financial Controls
• Fraud can happen at all levels. Start with some simple rules
• Require two signatures for checks over a certain amount (e.g.
$5,000)
• Put a modest spending limit (e.g. $2,000) on all corporate credit
cards except for one that is designated for larger purchases
• If possible, separate out the accounts receivable function from
the person who actually deposits the checks
• Pay for an annual review of your books by a CPA or get a full
audit if required by investors