VideoWith the responsibilities being shouldered by CFOs of late, you'd think they all grew up in Smallville.
These days, it's no longer enough for CFOs to raise money, shape strategic planning, and oversee management initiatives. Indeed, with the recent spate of corporate accounting scandals, boards of directors have put finance chiefs on notice. The message coming from boards is an attention-grabber, too: accounting surprises will not be tolerated.
The marching order to lash the numbers down has finance chiefs assuming a familiar role -- that of numbers cop. Finance chiefs say the role is a whole lot tougher than it used to be, however. The recently enacted Sarbanes-Oxley Act has heaped a raft of new reporting requirements on corporate finance departments.
And while controllers and chief accounting officers can handle some of this regulatory scutt work, finance chiefs must now personally certify 10-Ks and 10-Qs (another by-product of Congressional tinkering). As one finance chief privately points out, when your house is on the line, compliance is no longer something that is easily delegated.
In the face of the added chores and liabilities, some CFOs say they're having to re-adjust their job descriptions. At BMC Software, company management asked finance chief John Cox to relinquish his role as the software maker's chief strategic financial planner. The reason for the handoff? So Cox could focus on the welter of new laws and reporting requirements wrought by Sarbanes-Oxley.
The role restructuring at BMC is not an isolated incident. Earlier this year, embattled Dynegy Inc. actually split its CFO post into three tranches. Former finance chief Louis Dorey is now part of a three-officer team that directs the struggling energy company's financial, accounting and strategic planning duties. While Dynegy declined to comment to CFO.com on the parsing out of the financial duties, a press release noted the move was intended to help the company address its mounting problems with the three Cs (cash, credit and compliance).
The Dynegy move, along with the recent scandals emanating from corporate finance departments (Enron, WorldCom, and Adelphia, to name a few), has some observers wondering if finance chiefs could do with a little help.
Can this be? In this new era of onerous disclosure, niggling cost containment, and risky top-line initiatives, is it possible that the CFO's job has simply grown too big for one person?
Up at Night
That's a question that Kevin Parker is wrestling with. The CFO of software-maker Peoplesoft Inc., Parker says he's generally working longer hours these days -- and part of that extended day includes spending more time with lawyers and shareholders who are still coming to grips with Sarbanes-Oxley.
Will the hours dedicated to compliance issues come out of his time spent to run the business or help with customers? Parker's not sure. But he does concede "there's some consequence to the [the additional work] because the day was full to begin with."
And it's not like Parker has a choice, not like he can give a quick once-over to Peoplesoft's 10-Qs. After all, Sarbanes-Oxley requires that CFOs and CEOs certify their companies' financial statements. Fudging the numbers could bring criminal penalties. The law also ratchets up a CFO's personal liability. That adds even more weight to the often-arcane accounting decisions a finance chief makes on a regular basis.
Interestingly, Parker admits that issues of corporate governance and compliance have weighed heavily on his mind during his off-hours as well. "It can't help but seep into your nights and weekends," he says, noting that he feels almost personally accountable for the actions of his 8,500 employees globally. "That's pretty daunting."
Parker pauses. "Maybe that's the intent of Sarbanes -- to keep people up at night. If it is, I think it's working."
Two for the Road
All this attention to financial disclosure will probably help shareholders. But it's not likely to help a CFO's position within a company. Although some critics say the increased focus on compliance will ultimately improve a finance chief's chances of moving up the corporate ladder, the changes at BMC Software tell a different tale.
Two years ago, the company went through a management shakeup, with a new CEO brought on board. In January of this year, CFO Cox turned over his financial strategist role to Jeff Hawn, the company's vice president of operations.
Admittedly, the role change in the finance department was not solely a response to the new regulatory requirements coming out of Washington. The fact is, BMC faced several big business challenges. For starters, the company needed to cut its costs. In addition, management wanted to select better productivity metrics, expand margins, and generally remake the business through mergers, acquisitions, and internal moves.
As Hawn points out, "That's equivalent to changing the tires of the car while the car is going down the road at 55 miles an hour." As a result, CFO Cox was asked to keep the vehicle going straight, making sure BMC was in compliance with regulatory requirements for financial disclosure and global tax issues. (Cox, who still has some input into the company's strategic financial planning, was unavailable for comment because of BMC's upcoming earnings announcement).
Reader Comments» Post a comment