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Finance 101
Chief financial officers grade the finance knowledge of their chief executives.
CFO Staff, CFO Magazine

CFO magazine asked chief financial officers about the "finance IQ" of their bosses. Our survey received a total of 314 respondents: 93 from public companies, 179 from private companies, and 42 unspecified. Note that totals may not add up to 100% due to rounding.

How involved is your CEO in significant corporate financial decisions?
All Public Private
Deeply involved wants to understand all the details 44% 48% 44%
Moderately involved understands all implications, if not details 47% 47% 45%
Less involved generally content to delegate financial decisions 8% 4% 11%
Not sure 0% 1% 0%

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Has the involvement of your CEO increased since the enactment of Sarbanes-Oxley (Sarbox)?
All Public Private
Yes 22% 46% 10%
No 70% 50% 82%
Not sure 8% 4% 9%

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How much time do you spend post-Sarbox explaining finance issues to business executives?
Much less 0% 0% 0%
Somewhat less 0% 0% 0%
Same 47% 24% 59%
Somewhat more 43% 61% 36%
Much more 10% 15% 5%

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In general, how well does your CEO understand finance issues?
All Public Private
Extremely well 27% 34% 25%
Very well 40% 46% 36%
Moderatly well 27% 18% 30%
Not too well 5% 2% 6%
Poorly 2% 0% 3%
Not sure 0% 0% 0%

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Has your CEO's understanding of finance improved since the enactment of Sarbox?
All Public Private
Yes 20% 33% 12%
No 61% 47% 70%
Not sure 19% 21% 18%

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How would you rate your CEO's grasp of balance sheets?
All Public Private
Poor 4% 1% 4%
Not very good 10% 3% 12%
Moderate 28% 25% 31%
Good 38% 44% 35%
Outstanding 21% 27% 19%

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How would you rate your CEO's grasp of cash-flow statements?
All Public Private
Poor 5% 1% 5%
Not very good 17% 12% 20%
Moderate 26% 24% 27%
Good 32% 37% 30%
Outstanding 20% 26% 17%

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How would you rate your CEO's grasp of revenue recognition?
All Public Private
Poor 6% 1% 8%
Not very good 9% 3% 12%
Moderate 24% 18% 28%
Good 39% 54% 32%
Outstanding 22% 24% 21%

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How would you rate your CEO's grasp of off-balance-sheet finance?
All Public Private
Poor 18% 6% 21%
Not very good 27% 24% 30%
Moderate 24% 29% 24%
Good 21% 29% 18%
Outstanding 10% 13% 8%

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How would you rate your CEO's grasp of SEC disclosure requirements
All Public Private
Poor 25% 6% 36%
Not very good 23% 14% 28%
Moderate 23% 33% 21%
Good 21% 33% 10%
Outstanding 8% 15% 5%

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How would you rate your CEO's grasp of internal controls?
All Public Private
Poor 7% 1% 10%
Not very good 20% 12% 25%
Moderate 33% 30% 35%
Good 28% 40% 20%
Outstanding 13% 16% 10%

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Before Sarbox, would it have been possible for your CEO to remain unaware of a major financial fraud?
All Public Private
Yes 29% 31% 29%
No 55% 49% 54%
Not sure 16% 20% 18%

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Would it be possible today?
All Public Private
Yes 18% 14% 23%
No 64% 71% 55%
Not sure 17% 14% 21%

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How likely is it that ex-CEO Bernard Ebbers was unaware of WorldCom's fraud?
All Public Private
Very unlikely 60% 62% 63%
Somewhat unlikely 21% 21% 19%
Neither likely nor unlikely 6% 6% 5%
Somewhat likely 5% 4% 5%
Very likely 8% 7% 8%

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What is your company's approximate annual revenue?
All Public Private
<$100 million 50% 21% 65%
$100 million-$249 million 14% 13% 15%
$250 million-$499 million 10% 11% 9%
$500 million-$999 million 7% 11% 5%
$1 billion-$4.9 billion 10% 23% 3%
$5 billion-$10 billion 2% 71% 1%
>$10 billion 6% 14% 2%

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What is your company's industry?
All Public Private
Retail/Wholesale 10% 7% 13%
Mining/Construction 4% 3% 4%
Manufacturing 24% 28% 25%
Transportation/Energy 3% 4% 2%
Communications/Media 4% 4 3%
Technology 10% 17% 6%
Banking, Insurance, Financial Services 11% 11% 11%
Services/Consulting 7% 8% 9%
Health Care/Pharmaceuticals 6% 3% 6%
Other 22% 14% 21%

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