"I'd be cautious if a CFO candidate came from a main-line business that engaged in complicated financials," warns Drury. "Company officers and board members are more likely to debate how vulnerable the company becomes by hiring that kind of candidate."

Crib Sheet Required?
Robert Denney agrees. "Off-balance-sheet transactions would definitely send up a red flag for me," says Denny, a long-time corporate board member and principal of marketing consultancy Robert Denney Associates. He says asking management the "nasty questions" is part of the board's due diligence responsibility.

Many of those questions, he says, are aimed at top finance executives. Denney thinks senior finance managers should know more about a company than the company CEO. "The corporate finance team should know where every dollar of income comes from," he states, "and where every dollar of expense goes."

Moreover, Denney insists CFOs better have an economic rationale for removing assets from the balance sheet.

In fact, one audit firm practice leader told CFO.com privately that he is more concerned analysts have put together a list of companies with off-balance transactions than a list of CFOs with Big Five pedigrees. The purported list — essentially, a collection of companies with complicated financial statements — is said to include basic metrics that analysts can check off when analyzing publicly traded businesses.

Asks the practice leader, "Does the investment community really need a crib sheet to remind them that they must look into the fundamentals of corporate finance?"

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