Talking the Talk, But Not Walking the Walk

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Thanks as always for providing a bird's-eye view of financial stories critical to top management. December 2007's issue offered CFO's trademark blend of focus, optimism, and insight. What CFO's heart isn't warmed by reminders of the virtues of cash ("Keep It Simple," From the Editor); what CFO won't relate to admonitions on the cost of restatements ("Restating Your Case," Topline)?

Still, I am disappointed. The cost (and benefits) of governance and news on agency developments is a common thread CFO has covered well. "Playing by Fewer Rules" (Topline) reports that the Securities and Exchange Commission is preparing to improve financial reporting, and the Financial Accounting Standards Board is observing, but the story doesn't live up to its full potential.

Is FASB fading into oblivion? Should it? FASB identifies the most fundamental accounting practices — the definition of equity and its treatment (or mistreatment) in the income statement — as a key source of earnings management. After a 22-year (yes, 22, that's no typo!) research project, FASB released a report this past November to address the problem. The result? Endorsement of a full employment act for accountants plus a carve-out to exempt stock and option compensation. Three FASB directors may soon retire. Maybe it is time for a harder-hitting story on the agencies that write the rules? I hope I'm wrong, but it sure seems FASB talks the talk, but can't walk the walk. Will the SEC do it any better?

Michael A. Gumport
Founding Partner
MG Holdings/SIP
Via E-mail

EDITOR'S RESPONSE: See "Long Live the King?" in this month's issue.

CFOs and the Environment

A longtime challenge for corporate environmental departments has been the ability to measure their work in monetary terms ("Earth in the Balance Sheet," December 2007). The increased demand for sustainability reporting and the increased role of the CFO are positive steps in incorporating environmental management in the day-to-day activities of a company. The CFO's involvement will lead to better and standard metrics for sustainability reports. This will lead to better compliance with environmental regulations and improvement of a company's financial performance, as well as an improvement of a company's environmental impact. Case in point is the plastic-packaging manufacturer mentioned in the article. By examining the environmental issues of its processes, this manufacturer improved its efficiency and lowered its costs while improving its environmental performance.

Edward McGrath
Environmental Consultant
Via E-mail

Taking Notice of 401(k)s

Thanks for the great information on 401(k) plans ("The New Mix," December 2007). These issues are becoming more important as lawsuits progress and Congress takes notice.

Chip Hardy
Via E-mail

Turbulence Ahead

Your recent interview with Delta Air Lines president and CFO Edward Bastian ("On the Record," November 2007) stated his deceptive inference that, when it comes to funding for the Federal Aviation Administration, Delta passengers would somehow get a break if Congress reduced the airlines' tax burden by shifting huge costs onto the mostly small aircraft operators in general aviation.

Unfortunately, this allegation is not backed up by historic practice. In truth, studies from the Government Accountability Office have shown that when airline taxes lapse, ticket fares remain the same or increase. In other words, tax benefits for the airlines are typically used to pad the carriers' bottom line — not give passengers a break.

On behalf of the National Business Aviation Association and its 8,000 member companies — many of whose employees are frequent fliers of Delta Air Lines — we object to the repeated attempts by Mr. Bastian and other Delta executives to enlist frustrated airline passengers in the airlines' continuing campaign to shift massive air-traffic-control-system funding costs onto the thousands of mostly small to midsize businesses nationwide that depend on general aviation to succeed.

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