Creating the COFA - who should it be, and will they want to do it?

Following the SRA handbook going live in October 2011, the deadline for filing your nominations for your COFA with the SRA is looming large.

I'm sure you have all decided who you want to nominate/appoint as your COFA, but how much research and thought has gone into that decision? There seem to be a number of schools of thought on this and, the SRA website being its confusing self with OFR advice, no one is quite sure which school is the right one for them.

The first school is that the COFA should be at FD/FC/CFO level, because they carry the gravitas to be able to point out to the inevitably reluctant partners that, under the new OFRs, we need to self report to the SRA. But does a manager at this level have sufficient daily dealings with the accounting function, and therefore daily working knowledge of the SARs, to be able to fulfil the role correctly?

The second school is the flipside to the first: should the COFA be at cashiering or accounts supervisor level? All these employees should be well acquainted with the day-to-day running of the accounting function, and so have a good working knowledge of the SARs. The drawback is that they don't necessarily have the gravitas be able to point out to the partners that any issues must be reported.

Finally there are some that think - and I am sure this is what the SRA is driving towards - that the COFA should be a finance partner. As owners of the business, they should be aware of any shortcomings in accounting processes and procedures.

I think a firm's approach will vary depending on the size of the practice, and where the head office is based in the case of multi-office/international firms. Some international firms are looking at making their global head of finance the COFA, because of their position in the firm’s structure. But this once more raises the question of their closeness to the UK accounts and their knowledge and understanding of the SARs. We are only nominating our candidates for the role, but the SRA is authorising them - and will they authorise someone who does not have the proximity to the UK accounting function?

My last thought on this is this: will there be any volunteers if there turns out to be any kind of personal liability to the COFA for any failures to keep proper records or to make a report to the SRA? And will firms be making sure the individuals concerned are covered under the partnership professional indemnity insurance?

Who will be your COFA and why? Tell us in the comments section below.