International financial relations started forming when countries began to carry on trade with each other. The rudiments of international financial relations could be found both in Antiquity and in Byzantium. However, the international financial system completely formed only in the 19th century when all the continents (except for Australia) were involved in close economic relations and the British pound became the word currency. Such phenomenon as global financial crisis occurred in the 19th century. There were 7 major financial crises in the 19th century spreading over many countries. At that time there were no public organizations protecting professional interests of financial employees. In all fairness it has to be noticed that it wasn’t actually necessary: in the middle of the 19th century major corporations and banks of Europe and the USA were so powerful that they could protect their interests before the authorities by themselves.
The modern financial system was completely formed when the Bretton Wood Conference took place as a result of which two international financial institutions, i.e. International Monetary Fund and International Bank for Reconstruction and Development were established. Even today those organizations are the major regulators of the global economy.
The development of financial relations required a considerably bigger number of experts able to make financial arrangements between states and multinational organizations. According to the definition of International Federation of Accountants, professional accountants are chief accountants, auditors, tax advisors and financial directors. Unlike the first three professions, the profession of financial director originated not so long ago. Its origination and development was directly connected with the increase in number of currency transactions and operational management of investment policies.
Financial profession as it is today originated at the end of the 70s in the beginning of the 80s when the economy of a number of countries started actively developing and cash flow management in major companies became more complex. Earlier accounting departments were in charge of all financial issues, financing activities were mainly represented by dealing with banking institutions. With the emergence and development of various instruments of commercial projects financing, development of investing activities, emergence of derivatives and hedging financial director became one of the main top-managers of any company, always being a member of the board of directors. At that time professional associations of financial directors appeared. Though, some associations of financial employees have a longer history, the specifics feature of their activity has gone through a lot of changes. They turned into associations of financial directors only a few decades ago but already had a significant influence in the society. Retaining their traditions they secured their position and expanded their influence.
One can hardly overestimate the role of financial directors in the modern economy. As a rule, financial director is the second person after a general director of a company. Financial director bears responsibility for cash flows management, preparation of reporting and assets management based on a strategy formulated by the Board of Directors. The dynamic development of financial system resulted in high demand for a huge number of professions connected with finances, like financial analyst, auditor, tax advisor, etc. As a consequence, the number of professional associations increased all over the world.
On the one hand, the current financial profession is presented by rather closed associations of financial directors and highly qualified financial experts. On the other hand, there are a lot of large international associations of financial employees of any level of qualification. Let’s consider some specific examples.
Financial associations and associations of financial directors
International Association of Financial Executives Institutes is one of the largest global associations of financial directors. This association has its own history. Immediately after World War II the representatives of national financial organizations of 20 countries went to the USA to learn about financial management practices. This trip was caused by practical needs, i.e. European countries needed efficient management to recover their economies after the war. As a result all the countries including the USA concluded that they need to cooperate closely on a permanent basis to elaborate the best ways in addressing financial issues. International Association of Financial Executives Institutes was officially founded in 1967 and the first international congress that created the background for its establishment took place in Marbella, Spain in 1967. Today the members of the Association are national financial organizations of Europe, North and Latin American and South-East Asia. All the national European associations below consist in the IAFEI. International Association of Financial Executives Institutes is registered in Switzerland and its Secretariat is located in Philippines. The activities of the association are focused on elaboration of international financial rules and ethical standards of financial profession.
Associations of financial directors and employees first originated in the USA. Today such organizations are considered to be the most powerful in the world and greatly influence the development of the global financial system.
Financial Executives International is one of the biggest and oldest associations of financial executives in the USA and has more than 15 000 members. This association was founded in 1931, since that time it changed its name and the nature of its activity several times. The main tasks of the association are as follows: professional development of financial directors and supporting them in achieving their professional goals, cooperation with the US government in financial and economic issues, development of international relations and advising the world’s leading corporations. Financial Executives International participated in the elaboration of the Chief Financial Officer and Federal Financial Reform Act (CFO Act) adopted by the administration of President George H.W. Bush in 1990. This law introduced new requirements to improve financial management and standards of information disclosure for American private companies. FEI has a great number of territorial representations; the major ones are located in Boston, Silicon Valley, New York and Chicago. The association is headquartered in Morristown, New Jersey. FEI has had an international representation in Canada since 1973. Since 2000 not only US but also overseas financial directors can join the association.
While FEI was established to protect the interests and express professional opinions of financial directors, Association for Financial Professionals represents the interests of any expert specializing in finances. The association was founded in 1980 and today it counts 16 000 members among which there are financial directors, vice presidents of major companies, general directors, financial analytics and financial managers. Headquarters of the association are located in Bethesda, Maryland, a northwestern suburb of Washington. The association holds online conferences and uses other means of communication which allows attracting to its events more than 150 00 financial experts from all over the world. Among AFP members there are not only banking experts or corporate finances experts. The association offers its members training programs, provides them with an access to inside financial information and supports in career building. The association also implements a certification activity; it is authorized to issue certificates of The Certified Treasury Professional and The Certified Cash Manager. The work of the association is organized so that its opinion is taken into account by the government when elaborating financial policies, its representatives regularly report to the US Congress and federal agencies. AFP holds annual conferences of financial experts in the USA. During 4 days about 6.500 experts take part in it. 150 sessions on topical issues are organized on various platforms.
Financial Executives International Canada and Association for Financial Professionals Canada are the representations of the above two US financial associations. These are the first foreign representations of FEI and AFP which attracted a greater number of financial experts in the last couple of years. Affiliation with the major American associations helped the Canadian representations to successfully integrate into the global financial community.
Established in 1973 Financial Executives International Canada currently counts more than 1800 members. The association is headquartered in Toronto. Among members of the association there are financial directors and senior financial officers (financial controllers, treasurers, assistances to financial directors). Financial Executives International Canada helps its members in their professional development providing them with a platform for communication and discussion of topical subjects and, if necessary, legal protection, consults companies and supports certain projects. FEI Canada together with FEI in the USA represents the interests of 8000 major corporations of North America.
Members of Association for Financial Professionals Canada take advantage of all the services and capabilities of AFP. The association was founded in 1982, its headquarters are located in Toronto. Association of Canadian Experts plays the key role in the composition of the Canadian association. It consists of senior financial experts, chief executives, and representative of financial authorities and etc. This club actively participates in annual conferences organized by AFP USA. Association of Canadian Financial Officers is another important financial association of Canada, its headquarters are located in Toronto. The association has more than 4600 members. It engaged in the professional development of financial employees and holds various events to bring together the financial profession of Canada and protects the interests of its members.
There are a lot of financial associations and organizations in Europe. Moreover, there are both European and national organizations (associations of financial employees, financial managers and financial directors of Great Britain, France, Austria, Germany, Italy, Spain, etc.) in the region
European Financial Management Association founded in 1994 is one of the largest European financial associations. The association brings together financial employees and holds professional events and conferences. The purpose of the association is the distribution of information on mechanisms of making financial decisions in European corporations, financial institutions and capital markets to professionals. In accomplish this EFMA provides all its members with specialized magazine “European Financial Management”, holds annual member meetings to exchange opinions, views and to discuss recent financial studies. Among members of the association there are researchers, experts and most successful students from European and other countries interested in getting understanding of the nature of financial problems and the obtaining practical skills to solve them
The European Finance Association was created in 1974 under the auspices of the European Foundation for Management Development (EFMD) and in close cooperation with the European Institute for Advanced Studies in Management (EIASM). The aim of the Association is to provide a professional society for academics and practitioners interested in financial management, financial theory and its application. EFA is ensures the connection among all the members of the association living in Europe and other countries and regions.
The association holds annual meetings where academics and financial employees have a possibility to present the results of research work in the field of company finance, investment, financial markets, money and banking. EFA issues magazine Review of Finance and together with EIASM European Foundation for Management Development organizes professional trainings for its members.
Federation of Financial Analysts Societies is one of the oldest European organizations of financial experts founded in 1960. Today, its members are professional financial analytics, financial directors and brokers, investment advisors and etc. The number of its members exceeds 15000 people. Its primary activity is connected with assessment and development of financial and investment legislation. It has working groups responsible for the development of accounting standards.
Financial Executives Networking Group, Great Britain is one of the largest associations of financial directors in Europe. Founded in 1991 the group has been rapidly growing, and today it has more than 40 000 members. Such an increase in the number of members is connected with the fact that not only British financial directors but also financial directors from other countries can join the group; this means that it is international. However, to join the group a prospect member has to comply with quite strict requirements. i.e. to work at a position of a financial director at least 15 years. The group was founded with the aim to expand and establish contacts among experts efficiently working in the financial field. The Group holds meetings of financial directors 2 times a month in London. Its internet-forum is highly active.
Financial Executives Association, Dublin, Northern Ireland is a well-known national association of financial directors in Great Britain. This association was created in 1973 as a non-profit organization of chief financial executives. Originally the members of the association were represented by financial directors of the industrial and trade sectors, but over time it expanded due to the representation of financial directors from other sectors of the economy. The association holds meetings and events where financial directors discuss the issues of cooperation, exchange their experience.
Nationale des Directeurs Financiers et de Controle de Gestion is another European financial association. This association was founded in 1964. Today it counts more than 3000 financial directors and auditors in France. Every year DFGG holds 300 events for French financial directors like round-tables and internet conferences. Financial directors from many countries are invited to participate in such events. In addition, the association publishes a monthly magaznie, brochures and books for financial directors.
OPWZ Forum Finanzen was created in 1978 in Austria. Currently the organization has more than 160 members represented by major companies from various industries of Austria. Every year OPWZ Forum Finanzen holds not less than 12 meetings of financial employees to discuss issues any changes in tax legislation, risk management, capital management, preparation of accounting and financial statements. The forum is designed for financial managers, experts in financial and management accounting, auditors and economic experts.
Gesellschaft for Finanzwirtschaft in der Unternehmensfohrung e.V. founded in 1969 is one of the most powerful associations of financial directors in Germany. Today, the association has more than 200 members. They represent the companies of industrial and financial sectors. The association holds conferences and organizes master classes on financial managements, securities market, leasing and management accounting, etc. GEFUI cooperates with the Austrian Forum of Financial Directors. Together these two associations offer trainings for financial directors specializing in various sectors of the economy.
We have made a brief review of the history of the international financial community and associations of financial directors, managers and controllers. RCFD as any other professional organization actively integrates into the international community. Exchanging experiences financial employees comprehend the way the global economy functions today. Overseas colleagues are very interested in Russian experience due to the unique economic structure.
Development of financial relations and financial markets leads to the emergence of new financial instruments. Companies change their activity structure. Companies have a strong need not only to generate cash flows but also manage them promptly. Experts need to coordinate their interests and exchange experiences.
The profession of financial director is a challenging one; it requires high qualification, development of practical experience and expansion of theoretical background. Only professional associations of financial employees are able to elaborate common ethical standards.
RCFD closely cooperates with European and north-American financial communities, develops various types of cooperation and organizes joint conferences and events. The experience of foreign colleagues allows enhancing the level of professionalism of Russian financial employees which is the basis for potential development of Russian economy little by little turning it into a financial center of global significance.