We are also in the process of putting into place a new code of ethics that we think culturally is important for each employee to follow. That code applies not only to how we act with our customers and with each other as employees, but also to how we account for things.

Part of the reason corporate ethics sometimes get bent is that managers feel overwhelming pressure to meet Wall Street's earnings expectations. What do you think CFOs can do to insulate themselves from that pressure and create internal incentives for ethical behavior?

It's extremely important that CFOs and investor-relations departments maintain an arm's-length relationship with the Street. Analysts must understand that they have to put their own models together and do their own work in terms of looking at the company and reporting on it. Often times, companies have such symbiotic relationships with analysts and bankers that they simply exchange too much information. Going forward, we have decided not to do that. We are now being very conservative in our guidance to the Street and we are telling analysts that they need to do what is necessary themselves to give a recommendation on a stock.

Two of Critical Path's CFOs came directly from PricewaterhouseCoopers, the company's auditor. Do you think that close relationships between management and auditors make it easier for managers to stretch the numbers while auditors turn a blind eye?

I have always been a firm believer that your service providers must be kept very separate from the internal management of a company — be it audit firms, law firms, or anyone who provides a service. I also believe that it is extremely important that there is an arm's-length relationship between the audit firm and the finance department. It is just common sense and good business practice. A CFO should not come from the auditing firm, just as the general counsel should not come from your law firm. There must be a clear separation.

Do you think it would help if companies were legally prohibited from hiring CFOs who have worked for that company's audit firm?

I'm not sure legislation is the answer. But I do think that FASB, the SEC, and other groups need to look into how we can best resolve conflicts of interest that are pervasive among companies. I do believe that some clear guidelines should come down from the regulatory groups to help get rid of some of those conflicts.

How are you making sure that revenue is being booked according to GAAP, and what checks and balances have you put in place to help you do that?

I should point out that the issues that Critical Path had in the past did not emerge in the finance department but rather from the sales department. In a couple of instances there were contracts that were signed by the sales group recognizing revenues in the wrong way. It was the finance group that identified those issues and brought them to light.

Our revenue-recognition policies have been overhauled. Contracts are now signed by no one but me. Also, before any deal is inked, finance and legal must review the contract, and then I must sign every contract in the U.S. Only when we know that we are recognizing revenue in the right way — oftentimes we do bring in PwC if we need outside help — do we approve a contract.

It seems you're now going from crisis-management mode to a greater focus on generating revenues. Has that been a difficult transition for you to make?

You're right, there is a transition point when you've got to shift focus towards revenue generation. It's not a hard transition, because you're essentially using the same skills in a different way. Most of our work in finance going forward is structuring contracts in the right way so that we can bring revenue in. But it's still about managing the budget and planning processes so that we know firmly where we are in terms of expenses on a monthly and quarterly basis.

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