VideoThat downstream paper trail should not add a sizeable amount of risk to the controller's job, however. According to attorney Amy Goodman of Gibson Dunn Crutcher LLP, CEOs and CFOs (the executives who must certify the accuracy of financial statements under Sarbox) are still ultimately responsible for numbers released by a company.
But sub-certifications could be called into play in questions of proof during litigation or government investigations. What's more, the Securities and Exchange Commission (SEC) has targeted controllers in the past in connection with accounting and financial fraud cases.
Faster Better?
The Commission's emphasis on faster corporate reporting will also put controllers at risk. In the wake of the passage of Sarbanes-Oxley, the SEC is speeding up the reporting cycle for corporations. Material events — like the loss of a major customer or a significant environment liability — will soon have to be reported within two days. That could create snags for global controllers who are charged with gathering details from operating units strewn across several time zones, says Rick Fumo, senior vice president at Parson Consulting.
Furthermore, Fumo says he can't be sure whether reporting numbers faster is good for business. But he is sure that implementing the speed requirements will likely be one of the most painful Sarbox exercises controllers have to manage.
David Klementz, CFO at Progress Rail Corp, predicts that pumping out financial statements as fast as possible will be the biggest Sarbox-related shift for his department. He says that the accelerated filings will require some extra legwork from the finance department until the schedule becomes routine. For example, Klementz expects to spend extra time choosing key ratios to better describe the business, squelching errors and increasing accuracy, and resolving new compliance issues.
Much of the gathering of the information to support those ratios will be done by the company's controller. It's a crucial task — and one that's being repeated at scores of U.S. companies. Says Penton's Bradford: "We've got our marching orders from the CFO — and the attention of the CEO — since Sarbanes-Oxley went into effect."
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