The Empty Chair, the Live Ledger: Board Control Between CFOs

When a chief financial officer leaves, the first board conversation tends to be about search firms and succession. That is understandable, but it is not the whole governance question. Between the departure and the permanent appointment, the company still pays suppliers, files returns, certifies covenants and answers auditors. The board remains accountable for those activities even though the individual who usually carried them out has gone.

The vacancy window should therefore be governed as a distinct period, with its own authority schedule, reporting rhythm and evidence file. The test is not whether the board can recruit quickly. It is whether the controls belong to the company or merely to the person who has left.

A control environment that depends on one person

Most finance functions have a written delegation matrix. Fewer have tested whether that matrix works when the finance director is absent for a fortnight, let alone a quarter. In practice, payment approvals cluster around the CFO, bank mandates list them as a required signatory, covenant certificates carry their signature, and the auditor's first point of contact is their mobile number. None of this is necessarily visible in the board pack.

The vacancy window exposes that dependency. The board's first task is a short, unsentimental mapping exercise: which payments cannot be made without the departed officer's approval; which external parties expect to hear from them; which filings or certificates are due in the next ninety days; and which of those tasks have a named deputy with the competence and authority to act.

Issue an interim authority schedule in writing

Informal cover is the common failure. A finance manager keeps things ticking over while the chief executive signs what needs signing. That may be operationally adequate, but it is poor governance because it leaves no clear boundary between temporary convenience and delegated authority.

The board should approve a written interim authority schedule at its first meeting after the departure. It need not be elaborate. It should state who holds the finance portfolio in the interim, the payment thresholds they may approve alone, the transactions requiring a second signature, the matters reserved to the board or its audit committee, and the date on which the schedule will be reviewed. The schedule should also address bank mandates, online banking permissions and any standing authorities with lenders or counterparties. Where a bank requires a formal mandate change, the board should minute the instruction and track completion rather than assume the operations team has dealt with it.

A useful discipline is to separate routine authority from exceptional authority. An interim finance lead should be able to keep payroll, supplier payments and tax filings moving within agreed limits. They should not, without board approval, approve a material write-off, change an accounting policy, enter a new financing arrangement or sign a covenant certificate that depends on a judgement about future performance.

Payments need two pairs of eyes, not one

The highest-risk period is often the first month, when the interim holder is learning the ledger and the board is relieved that someone is in place. Payment controls should tighten, not loosen. The board should require dual authorisation for payments above a low threshold, independent review of expenses and director-related payments, and a weekly payment report to the chair of the audit committee or the board chair.

If the interim finance lead is also a candidate for the permanent role, the board should be especially careful. Ambition is not a disqualification, but it is a reason to ensure that decisions about remuneration, expenses and related-party payments are approved by someone else. The same applies to any departing CFO's final settlement, notice period, bonus or share-based payments. These should be handled by the remuneration committee or the board, with a clear record of who approved what and on what basis.

Covenants, auditors and the reporting calendar

Lenders and auditors do not pause because the CFO has left. The board should take custody of the external reporting calendar for the vacancy period: covenant certificates, management accounts, VAT and PAYE deadlines, statutory accounts, Companies House filings and any lender notifications triggered by a change in key personnel.

Covenant reporting deserves particular attention. A certificate signed by an interim finance lead may be accepted by the lender, but the board should satisfy itself that the signatory has the information and authority to make the statement. Where a covenant test is close to its threshold, the board should see the calculation before it is sent, not after. If the departure itself triggers a notification or a key person clause, that should be checked promptly rather than discovered at the next renewal.

The audit relationship also needs a named owner. The board should confirm who is liaising with the external auditor, who will sign the management representation letter if one is required during the window, and how the audit committee will receive any concerns raised by the auditor. A short letter to the auditor confirming the interim arrangements is often worthwhile; it prevents the firm from relying on informal assurances from someone whose authority it has not verified.

Keep an evidence file

The vacancy window is exactly the kind of period that looks untidy if it is ever examined after the event. The board should keep a simple evidence file: the resignation or departure note, the interim authority schedule, the bank mandate instructions, the payment approval log, the covenant reporting calendar, the auditor liaison note, and the minutes showing when each item was reviewed.

This file is not bureaucracy for its own sake. It demonstrates that the board did not simply wait for a recruitment process to conclude. It also gives the incoming CFO a clean handover: what was decided, what was deferred, what remains outstanding. The permanent appointment should close the window with a documented handover and a board resolution confirming that interim authorities have been revoked or replaced.

A CFO vacancy is often described as a recruitment delay. For the board, it is better understood as a temporary constitutional question: who holds the finance function's authority, within what limits, and on what evidence? Boards that answer that question in writing before the first payment run will find the rest of the vacancy far less eventful.