CFO Europe welcomes your letters. Send them to: The Editor, CFO Europe, 26 Red Lion Square, London WC1R 4HQ, UK.
Email us at email@example.com, or contact a specific author by clicking on his or her byline. You can also post a comment directly on CFO.com by clicking on the appropriate link at the end of any article.
Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.
Setting up and testing controls is a major part of any CFO’s job (“5 Years and Accounting,” July/August 2007). That’s why finance chiefs have internal audit departments, controllers, accounting managers and, hopefully, the necessary experience to determine when improvements must be made. Instead, they prefer to hand over information to an external audit team and let them determine if there is an error that might be material to the financial statements “taken as a whole.”
What about the misstatements that are material to the management’s decisions? What about the CFO’s responsibility to management to provide current and accurate information? It’s not just the auditors or the public who rely on the information that the CEO is supposed to provide. Sarbanes-Oxley just makes it a legal requirement for accounting departments to do their job rather than allow audit teams to allow misstatements due to immateriality [involving] the financial statements taken as a whole — a situation that is abused by audit teams.
When CFOs start to recognise their responsibility for verifying their companies’ financial information for accuracy and compliance, maybe I’ll stop whining.
I was disappointed to note some CFOs’ criticisms of the onerous provisions of Sarbox and the steep costs. What about the long-term good that a well-designed and controlled environment can do for an enterprise?
Using Metrics Effectively
“Measuring Up” (June 2007) cites a Deloitte survey in which managers indicated that they would benefit from higher-quality information regarding employee commitment. I disagree. Employee commitment is the result of effective employees, not the cause. Managers need to measure those qualities in their top-performing employees that predict employee commitment — then hire more who meet the benchmark. Understanding the measurable thinking, and the behavioural and occupational qualities common to successful, mission-critical employees — that is using metrics effectively.
President, Lone Star Group
No More Stupid Accounting Tricks
The dirty little CFO secret about earnings projections is that’s just what it is: a secret. In truth, we often don’t have the foggiest idea how to make those projections (“The Long View,” May 2007).
As the finance chief of a public company in the late 1990s, I struggled with (and against) the sales team trying to figure out what our customers would do next. We had just suffered a significant drop in share price because our best customer had moved an order back a week, so that the inventory wouldn’t appear on its books at the end of that quarter.
I thank my lucky stars that I’m now in a closely held firm where I can say, “We don’t know, but this is our plan.” And I don’t have to do stupid accounting tricks looking for that last penny to beat an estimate an analyst who has never run a company has decided we have to beat.
CFO, Therapy Review Systems
In “Money Mechanics” (July/August 2007), the percentage of companies that improved Days Working Capital (DWC) in both 2005 and 2006 was reported incorrectly. In fact, 53% of companies that improved DWC in 2005 continued to improve in 2006.