Hiring guide
Conflicts of interest: what to ask before hiring a fractional CFO
By CFO Index · Published
A CFO can have relevant industry experience and also have relationships that need discussion before an engagement starts. Ask about incentives, competing responsibilities and access to sensitive information using the same questions for every candidate. A disclosed relationship is not proof of misconduct, and a reassuring label such as 'independent' is not a substitute for understanding the arrangement.
Make the question specific to the proposed work
Describe the decisions the CFO will influence: selecting finance software, comparing lenders, assessing an acquisition or reviewing an existing model. Ask whether the person, their firm or the proposed delivery team has a financial or professional relationship that could affect those decisions. The question is not whether a provider knows anyone in the industry. It is whether a particular interest could compromise judgement, confidentiality or the ability to act within your agreed scope.
Use a short disclosure questionnaire
The questions below are an original procurement checklist, not legal wording or a universal professional rule. Request enough information to assess your engagement without demanding another client's confidential files or an unrestricted client list. If details cannot be shared, ask how the provider can explain the practical restriction and what work they would decline or separate.
| Area | Question | What to record |
|---|---|---|
| Referral or partner payments | Would you or your firm benefit from a product or adviser we select? | Recipient, trigger, amount or basis, and alternatives considered |
| Other mandates | Could another role conflict with the decisions in our scope? | Affected activity and confidentiality boundaries |
| Ownership or success fees | Do you hold an interest or receive payment linked to this outcome? | Incentive, decision authority and review arrangement |
| Reviewing prior work | Will you be assessing analysis that you or your team prepared? | Who can challenge the original assumptions independently |
| Changes during delivery | Who tells us when a new relationship or task changes the position? | Notification owner, review trigger and escalation route |
Understand the professional context without generalising it
ICAEW's current ethics framework requires those within its scope to identify, evaluate and address threats to fundamental principles. It describes financial self-interest and reviewing one's own prior work as examples of threats. That provides useful context for a hiring conversation, but it does not establish that every fractional CFO belongs to ICAEW or that the same rules apply across Europe and the United States. Confirm the provider's actual professional obligations and obtain appropriate advice where a specific situation requires it.
Ask how incentives affect the comparison
Hypothetical example: a CFO receives a partner payment if a client adopts reporting tool A. That does not establish that A is unsuitable. Ask for the relationship and payment basis to be explained, and compare A with credible alternatives against the same requirements, implementation effort and total cost. Consider assigning the final evaluation to someone without that incentive. These are suggested due-diligence steps, not a finding about any named provider or software product.
Do not assume disclosure alone resolves the issue
For the affected decision, record what will change: a different reviewer, restricted access, a narrower assignment or a different person responsible for the recommendation. Test whether that measure addresses the actual concern. A second person who is paid on the same outcome may not provide the challenge management expects. If the relevant parties cannot establish a workable arrangement, pause that part of the engagement and seek qualified advice rather than treating a signed acknowledgement as a universal cure.
Keep referral-payment terms explicit
ICAEW's published guidance on referral fees discusses client consent, notification and supporting records within its own regulatory context, distinguishing regulated and unregulated arrangements. Do not copy that process as if it were the law for every CFO engagement. As a practical commercial question, ask who pays whom, what triggers payment, whether it changes your fee and what disclosure will be provided when the amount becomes known. Have the relevant adviser confirm any specific consent or regulatory requirements.
Revisit the answer when the assignment changes
Keep a dated note of the matter, affected task, information provided, proposed response, authorised decision and next review point. Revisit it when the provider takes a new role, recommends a connected supplier or moves from preparing a model to reviewing it for a transaction. Limit access to the note because it can itself contain sensitive information. Use this alongside reference, capacity and scope checks; neither a directory listing nor a disclosure form proves that a provider is suitable for every mandate.