Fiduciaries Face Rising Insurance Costs

It’s becoming very expensive to serve as a fiduciary in this brave new world of Sarbanes-Oxley.Insurance premiums for certain lines of fiduciary liability coverage have surged as much as 500 percent, according to the most recent RIMS Benchmark Survey.Fiduciary liability insurance includes coverag...

By Stephen Taub • Aug. 5, 2003

PCAOB Can’t Bark, Suggests Crafty Way to Bite

Under the Sarbanes-Oxley Act, the Public Company Accounting Oversight Board (PCAOB) cannot publicly reveal problems it uncovers at an accounting firm if the firm fixes the problems within 12 months. To say the least, this is not a popular feature among investors who want to know about sloppy audi...

By Stephen Taub and Craig Schneider • Aug. 4, 2003

Who Rules Accounting?

Dennis Beresford is having flashbacks these days, and they are anything but pleasant. Congress is once again trying to derail the Financial Accounting Standards Board’s efforts to require companies to expense stock options. And for the former FASB chairman, the lawmakers’ moves are a painful remi...

By Craig Schneider • Aug. 1, 2003

SEC Study Endorses Principles-Based Accounting

The Securities and Exchange Commission has prepared a staff study that supports the adoption of a principles-based accounting system. This approach relies more on broadly applied principles and less on specific, detailed rules.The SEC staff study, prepared by the Office of the Chief Accountant an...

By Stephen Taub • July 29, 2003

FCC Rule on Media Ownership Blocked by House

Coming to C-SPAN this summer: a new version of reality TV. Last week lawmakers approved a bill — in the face of a veto threat from the Bush Administration — that would block a new Federal Communications Commission rule allowing broadcast companies to own television stations that reach a greater p...

By Craig Schneider • July 28, 2003

Proxy Battle Shaping Up — at the SEC

Last week, staff members of the Securities and Exchange Commission issued a report recommending that the agency change its proxy process to aid shareholders with nominating and electing board directors.The report recommends that the commission require companies to make greater disclosure of the n...

By Craig Schneider and Alix Stuart • July 21, 2003

Little Spending on Security, Survey Says

It’s been less than two years since terrorists launched a series of devastating attacks on U.S. soil. But it looks like 9/11 is already a distant memory for many corporate executives.According to a new study released by The Conference Board, most companies are only spending modest sums on securit...

By Stephen Taub • July 14, 2003

House Panel Approves Bill to Boost SEC

A bill to strengthen the Securities and Exchange Commission’s enforcement powers is one step closer to becoming law. But some critics say the proposal will trample on the power of state regulators.On Thursday, the House Financial Services Capital Markets Subcommittee approved H.R. 2179, the Secur...

By Stephen Taub and Craig Schneider • July 14, 2003

Tax Cut Benefits: Fuzzy

The Bush Administration is hoping that the third- largest tax cut in U.S. history, signed into law in May, will charm the economy out of its current funk. The Jobs and Growth Tax Relief Reconciliation Act of 2003 will slice taxes by $330 billion and provide $20 billion in aid to states.While many...

By Marie Leone and Kris Frieswick • July 7, 2003

Insurers to Blame for Insurance Hikes, Survey Suggests

Memo to CFOs on Independence Day: Think about self-insuring more risk—and giving your insurers the boot.Property-casualty insurers haven’t shown a whole lot of client-centeredness in recent years, that’s for sure. Take the issue of the premium hikes many corporations have been enduring.But financ...

By David Katz • July 3, 2003

What Price Security?

When it comes to thwarting terrorism, only a handful of companies have had to worry about controversial big-ticket items like intrusion-detection equipment for chemical plants or antimissile defenses for airliners, which some lawmakers want to mandate. For the rest of Corporate America, aggressiv...

By Roy Harris • July 1, 2003

Age Discrimination Snags Lurking in Pension Rules

When the Treasury Department and the Internal Revenue Service released proposed regulations last year that would make it easier to convert to cash-balance plans, pension plan sponsors breathed a sigh of relief — until they read the fine print. The new rules, it turns out, could actually make it h...

By Kris Frieswick • June 30, 2003

Learn Ethics in Your Spare Time

The indictment of domestic doyenne and media mogul Martha Stewart” seems to have revitalized boardroom and water cooler debates about insider trading. In fact, there’s anecdotal evidence that board members, executives, and workers have been craving a clear definition of insider trading, as well a...

By Marie Leone • June 23, 2003

DOA: Derivatives Oversight Agency

The shakeup at Freddie Mac” last week underscored a problem that many observers say should have been resolved in 1994: derivatives remain a risky — and unregulated — financial instrument.Certainly, over the past ten years, the U.S. financial landscape has been littered with the broken remains of ...

By Marie Leone • June 16, 2003

File Under ‘Nightmare’

Not long ago, the topics of data retention and records management elicited yawns from senior executives. After all, the storing of old documents and E-mails hardly seemed like a strategic imperative. But if those executives are yawning now, it’s not from boredom but from being up all night worryi...

By Bob Violino • June 16, 2003

Stock Option Standoff

It may be time for FASB to write its own Declaration of Independence — from Congress.Last week, Financial Accounting Standards Board Chairman Robert Herz urged legislators to stop interfering in its independent standard-setting process. That urging came at a House subcommittee hearing on the expe...

By Craig Schneider • June 9, 2003

CFOs: Risk Magnets

A few weeks before every quarterly close, John Adamovich receives 225 representation letters from 75 reporting locations in 30 countries. The letters come to Adamovich, the CFO of Pall Corp., from three sources: in-country general managers and controllers, operations committee members that have o...

By Marie Leone • June 4, 2003

The Price of Terrorism: No Insurance

Remember the fuss the insurance industry made about the need for a federal backup for terrorism risk insurance?It turns out that the Terrorism Risk Insurance Act that insurers managed to wrangle from the government last year hasn’t been much help in making coverage more available or reasonably pr...

By David Katz • June 2, 2003

Congress, FASB in Stock Option Flap

They’re at it again.A bill that would temporarily prohibit regulators from recognizing standards requiring companies to expense employee stock options gets an airing this week — much to the chagrin of members of the Financial Accounting Standards Board.On Tuesday morning, the House Financial Serv...

By Craig Schneider • June 2, 2003

Natural Performers

When it comes to currency risk, companies are going natural. No, that doesn’t mean they’re exposing themselves completely to risk. They are forsaking derivatives for natural hedges — matching revenues and costs for the same currency or offsetting losses in one currency with gains in another.There...

By Ronald Fink • June 1, 2003

Trash-Talk

“There can be no question that we are at war,” Home Depot CFO and executive vice president Carol Tomé told a recent conference of finance executives. The combat, of course, is with Lowe’s — the fastest-growing company in the home-improvement industry, which Home Depot dominates. And Tomé startled...

By Roy Harris • June 1, 2003

Fear Factor

Rick Navarre wanted the audit committee at Peabody Energy to know exactly how he is managing risk at the company. As Peabody’s CFO, Navarre developed a comprehensive methodology for analyzing and quantifying risk, in large part to educate the audit committee about all the risks confronting the $2...

By Russ Banham • June 1, 2003

Exchanges: We Can Meet Our Own Standards

Officials at the major U.S. stock exchanges reported to the SEC last week that corporate governance practices at the bourses themselves were either on a par — or would soon be on a par — with the governance standards required of companies listed on the exchanges.Richard Grasso, New York Stock Exc...

By Craig Schneider • May 19, 2003

FASB Holds Fast on Options

It’s likely going to take a lot more than a roundtable discussion of lawmakers, executives and accounting rulemakers, to reverse an interim decision that requires companies to treat stock options as an expense.Certainly, the Financial Accounting Standards Board showed no signs of making a regulat...

By Craig Schneider • May 12, 2003

Sarbox or Sarboon?

While the Sarbanes-Oxley Act of 2002 has increased the workload — and hazards — for CFOs, the legislation could also be something of a boon to finance chiefs. How’s that?For openers, the added compliance risks that CFOs are now shouldering could make them a more valuable commodity in the job mark...

By Marie Leone • May 9, 2003