Benchmarking Credit Risk: Cash Is the Key

Editor’s Note: For a look at how three dozen industries are faring on key metrics associated with timely payment of invoices, check out the 2009 Credit Risk Benchmarking Report.On the heels of a two-year economic downturn, most midcap companies are throwing off enough cash from their sales to be ...

By David Katz • Dec. 9, 2009

A Contained Depression

If you’re breathing a little easier because the Great Recession seems to be ending, consider this: the U.S. economy may remain in a “contained depression” for months or years to come. That warning comes from economist David Levy, chairman of the Jerome Levy Forecasting Center, an economic researc...

By Vincent Ryan and Kate O'Sullivan • Dec. 4, 2009

Its Future in Limbo, the PCAOB Asks for More Money

The week before Supreme Court justices will hear reasons why the Public Company Accounting Oversight Board should be dissolved, the auditor watchdog appears undeterred and has asked for a 16% boost to its 2010 budget.Members of the board attribute the request for an additional $25.7 million — for...

By Sarah Johnson • Dec. 3, 2009

Does Sarbox Reduce Restatements?

A recent study could give some fodder to opponents of the movement toward exempting small publicly traded companies from the auditor-attestation requirement of the Sarbanes-Oxley Act. And it could deflate the hopes of small-company CFOs who are praying for the exemption.The study, from research f...

By Sarah Johnson • Dec. 2, 2009

No Worries

Having failed to anticipate a series of recent catastrophes, from the housing crash to the liquidity crisis, it comes as no surprise that fully 96% of senior executives said in a recent Ernst & Young survey that their companies’ risk-management processes leave room for improvement.Many will a...

By Josh Hyatt • Dec. 1, 2009

Congress Waters Down FASB-Oversight Plan

Lawmakers have backed away from a proposal that would have weakened the Securities and Exchange Commission’s oversight of accounting standard-setters.Reps. Ed Perlmutter (D-Colo.) and Frank Lucas (R-Okla.) introduced a bill earlier this year that would have created a new body to oversee the Finan...

By Sarah Johnson • Nov. 23, 2009

Keep Bank Regulators Away from FASB: SEC Commissioner

SEC commissioner Elisse Walter is fighting a proposal that would weaken the regulator’s authority over accounting standards-setters. In a hearing Tuesday before a House committee, Walter called the concept of allowing bank regulators to have a significant say in accounting rules “a grave mistake....

By Sarah Johnson • Nov. 17, 2009

Derivatives: over the Counter, out of Sight

In 1958 American onion farmers, blaming speculators for the volatility of their crops’ prices, lobbied a congressman from Michigan named Gerald Ford to ban trading in onion futures. Supported by the president-to-be, they got their way. Onion futures have been prohibited ever since.Futures are agr...

By Economist Staff • Nov. 13, 2009

No More Lenience on Pay Disclosure: SEC

After three years of reviewing companies’ pay disclosures, the Securities and Exchange Commission appears to be running out of patience.Since late 2006, when the SEC revamped its guidelines for disclosing information on the compensation of top executives, the regulator has been sending out commen...

By Sarah Johnson • Nov. 11, 2009

Madoff Auditor Pleads Guilty but Makes Bail

David Friehling, who audited — or more precisely, perhaps, did not audit — Bernard Madoff’s books for 18 years, reversed course and pleaded guilty Tuesday to nine criminal counts of securities fraud, investment adviser fraud, and filing false reports with the Securities and Exchange Commission.Th...

By David McCann • Nov. 3, 2009

Buy It for Me

Human resources, technology, tax, and even accounting — companies have grown comfortable with buying these services rather than tackling the tasks themselves. Are they also becoming more comfortable with buying the very act of buying?It’s not a philosophical question. According to The Black Book ...

By Alix Stuart • Nov. 1, 2009

An Agency Ready to Roar?

When Mary Schapiro took over the chairmanship of the Securities and Exchange Commission, she enjoined the staff to “act like our hair is on fire” in curing the agency of various ills such as the botched investigation of Bernard Madoff’s Ponzi scheme. But in the past nine months, a daunting slate ...

By Alix Stuart • Nov. 1, 2009

Derivatives Regulation: Pretty Nitty-gritty

If you thought derivatives were hideously complex, try following the battle to regulate them. The Obama administration’s reform blueprint, which was released in August, foreshadowed a huge shake-up to the over-the-counter (OTC) derivatives market. All “standardized” OTC derivatives would be clear...

By Economist Staff • Oct. 15, 2009

Bank of America Waives Attorney-Client Privilege

When executives read about how Bank of America is waiving its right to attorney-client privilege to cooperate with government investigations into its merger with Merrill Lynch, they will feel as though they are having a flashback to 1999. That was the year that then–Deputy Attorney General Eric H...

By Marie Leone • Oct. 13, 2009

SEC: In-House 404 Costs Top Audit Fees

In a study that took nearly two years to complete, the Securities and Exchange Commission concluded what CFOs at small, publicly traded companies have suspected for years: they’ll have to pay a disproportionately higher amount to comply with the internal-controls portions of the Sarbanes-Oxley Ac...

By Sarah Johnson • Oct. 6, 2009

Credit Check

Editor’s Note: For a look at how three dozen industries are faring on key metrics associated with timely payment of invoices, check out the 2009 Credit Risk Benchmarking Report.“Credit is pretty simple,” says Barbara Smith, CFO of Gerdau Ameristeel. “If you have a set of good policies, and have a...

By Scott Leibs • Oct. 1, 2009

Space Case

Long rows of darkened offices and cleared-out cubicles are not only bad for morale, they’re bad for the bottom line. Today, many companies find themselves with as much as 50% of their office space going to waste, according to Kevin Farrell, CEO of corporate-real-estate advisory firm Northmarq. Ev...

By Alix Stuart • Oct. 1, 2009

Climate Change and the UN: Nice Words

Just over 70 days to go and there is miserably little progress yet. The outlook for the global summit on climate change to be held in Copenhagen in December is uncertain. The current version of the draft outcome document for the meeting is hundreds of pages long, with thousands of passages in bra...

By Economist Staff • Sept. 23, 2009

Can Your Company Handle an Onrush of Risk?

How far can risk management be taken? For example, should a company with a superstar risk manager have been able to predict, two years ago, a recession so deep that it was marked by the implosion of Wall Street investment banks, massive layoffs, and plummeting consumer demand?Risk managers on a p...

By David McCann • Sept. 23, 2009

Turbulence: A Time to Fly Higher?

One week after Fed chairman Ben Bernanke declared the recession to be over — from a technical standpoint, anyway — Darrell Rigby cautioned that the associated turbulence could last five or six years.“Cautioned,” however, may not be the right word. Speaking to a crowd of nearly 300 senior finance ...

By Scott Leibs • Sept. 22, 2009

Green Backing

Neither rich countries nor poor ones can tackle climate change alone. The rich bear most of the responsibility for the greenhouse gases in the atmosphere. But if they make cuts while the poor go on a carbon-heavy growth binge, the climate will suffer anyway. Rich-to-poor aid has thus been a big p...

By Economist Staff • Sept. 18, 2009

Guidance Has Its Rewards

While the Dow’s dismal performance in the first part of 2009 may have tempted many CFOs to go incommunicado, those who fought that impulse were rewarded: a new study from investor-relations firm Sharon Merrill Associates and research firm eventVestor finds that companies that provide earnings gui...

By Kate O'Sullivan • Sept. 1, 2009

Dirty Secrets

Today the financial world is up in arms over “toxic assets,” the bad loans and securities that have wreaked so much havoc on bank balance sheets. But few investors understand the true magnitude of the threat that toxic liabilities — environmental liabilities, that is — pose to the financial healt...

By Tim Reason and Marie Leone • Sept. 1, 2009

Giving Credit Risk Its Due

Customers are the lifeblood of any business. You wine and dine them, promise to be their partners, and shape your strategy around what they want. But these days, customers may be more like vampires if their own cash-flow woes hamper their ability to pay your bills.With more and more small compani...

By Alix Stuart • Aug. 14, 2009

A Renewed Push to Hook Companies for Counterparties’ Actions

Regulators and lawmakers are trying to widen the net of securities-fraud liability. If they’re successful, more companies could be ensnared in private litigation because of their business partnerships with fraudulent companies.In an amicus brief filed in an appeals court last week, the Securities...

By Sarah Johnson • Aug. 11, 2009