VideoTGIM
Weekdays as corporate monikers aren't just for chain restaurants like TGI Friday's or Ruby Tuesday anymore. PwC Consulting, which is expected to spin off from parent PricewaterhouseCoopers LLP this month, recently announced it will be named "Monday."
The move has garnered its share of criticism from those who associate Monday with the dread of returning to work. Lucy Kellaway of the Financial Times called it "beyond parody" in a June 17 column.
PwC, however, isn't wavering. "It's about making a fresh start," says spokesperson Sehra Eusufzai.
The new firm should at least be applauded for attempting to reset the name game, says Jay Jurisich of branding consultancy A Hundred Monkeys. "It takes a lot of guts for PwC to turn against the tide of phony names." He says made-up names, like Accenture, are "generally selected to appease people."
For its part, Accenture is just happy to have no association with Arthur Andersen anymore. It does, however, have an association with Monday. The rival IT consulting firm quickly registered www.moday.com in hopes of skimming some business from those who mistype the name. They're expecting plenty of hits on Monday morning. -- Joseph McCafferty
Financial Reporting
Sign of the Times?
Investors aren't the only ones swearing after news of WorldCom's woes. In June, furious at the widening corporate accountability scandal, the Securities and Exchange Commission ordered CFOs and CEOs at 945 companies to file sworn statements--starting this month--attesting to the truth of their most recent annual and quarterly reports.
So far, the order applies only to this year. But, says Douglas M. Hagerman of law firm Foley & Lardner, "a requirement to certify SEC filings under oath is a serious wake-up call to CEOs and CFOs everywhere."
The order, with its implied threat of perjury penalties, came just two weeks after the SEC proposed a broader but less onerous rule that all CEOs and CFOs sign each 10-Q and 10-K, certifying--but not swearing--that the report is correct and complete.
That rule--which is still on the table--poses less of a personal threat to CFOs, who are already required by the SEC to sign quarterly and annual reports. The SEC notes that the rule "creates a new legal obligation for [CFOs and CEOs], but does not change the standard of legal liability."
The question now is, will the SEC revert to the proposed certification rule next year? If so, just what would change for finance chiefs?
For starters, the SEC clearly hopes your boss will develop a keen appetite for finance minutiae. "The CEO is going to be in the CFO's office a lot more," speculates Hagerman.
"The SEC is trying to nail down the fact that signing a financial statement is a very intentional, solemn act," adds Stanley Sporkin, a retired judge and former head of the SEC's Division of Enforcement. The proposed certification rule, says Hagerman, would codify the Ninth Circuit Court's ruling in Howard v. Everex Systems Inc., which holds company officers responsible for the contents of documents they sign.
Clearly, the SEC is fed up with protestations of ignorance from officers like former Enron CEOs Jeffrey Skilling and Kenneth Lay. Forcing officers to sign their company's financial documents, says Sporkin, "is like pushing a dog's nose in his urine."
Perhaps. But will investors soothed by sworn oaths accept the simpler certification after the SEC's order expires? One SEC staffer, speaking anonymously, says of the certification rule, "I think it is window dressing. I don't know what it adds beyond [CEOs and CFOs] having to sign the 10-K." After Enron and WorldCom, investors, sick of seeing company officers taking oaths in front of Congress, might insist that they take them regularly in their offices instead. --Tim Reason
WorldCom
Accounting's Perfect Storm
WorldCom's revelation in June that it improperly allocated $3.9 billion in expenses during the past five quarters, or longer, set a low-water mark in the current tide of accounting scandals. Most likely it's not the lowest. And identifying the next scandal may simply be a process of wading through the risk factors.
Robert Simons, a professor at Harvard Business School, suggests that a confluence of events has created a climate in which accounting fraud isn't just possible, it's likely. This, he says, is accounting's perfect storm: the conjunction of unprecedented growth with inordinate incentive compensation, executive inexperience, and an extremely aggressive management culture. "Taken individually, some of these may be good news. But when they all come together, it's a disaster waiting to happen," says Simons, who has developed a Risk Exposure Calculator to gauge the degree of each factor.
There's no denying that many of these risk factors exist today. The intense growth of the late 1990s, coupled with investors' keen focus on profits, has placed a strain on many corporate officers. "As management comes under increasing pressure, a mentality develops of 'make the numbers at almost any cost,'" says Simons. At companies that didn't make the numbers, even by as little as a penny, the stock price tanked and put CEOs' and CFOs' jobs at risk, he adds.
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