Ah, the delicious irony of it all.
In the early Nineties, with the arrival of powerful financial and enterprise software, CFOs began shucking their roles as numbers cop. During that period, enlightened boards of directors began insisting that finance chiefs focus less on closing the books, less on accounts receivable, less on the general ledger. Instead, they wanted finance chiefs to start zeroing in on top-line initiatives, strategic acquisitions (are there any other kind?), and nebulous brand exercises.
But the passage of the Sarbanes-Oxley Act of 2002 has landed many CFOs in the Way Back machine. Suddenly, certifying the validity of a company’s financial statements and internal controls — once done almost by rote — has become a very big deal. Sound internal controls, previously relegated to the back-office, have moved front-and-center.
For controllers, arguably the hardest working employees in the corporate world, looking after internal controls is old hat. That may explain why, as a group, these top accounting managers barely flinched when Sarbanes-Oxley was passed. In fact, many controllers welcomed the new mandates, noting that the rules actually validated their daily routines. “I wasn’t shocked by the provisions,” notes Jody Bradford, vice president and controller for Penton Media Inc. “It was probably time for Sarbanes-Oxley.”
Many controllers agree, insisting that the process tweaks and documentation efforts sparked by Sarbox don’t mean that controllers have been lax about conducting financial reviews or discussing appropriate disclosure. Instead, says Mark Hood, senior vice president of finance and administration at Panera Bread Co., “Sarbanes-Oxley just formalizes that process around quarterly and annual review schedules.”
And with that formalization, comes awareness. Many controllers contend that, with the passage of Sarbanes-Oxley, the rest of the corporate world is finally catching up to their rigorous oversight. Financial discipline, they say, is in again.
Kevin Sonsky, controller of corporate accounting for software maker Citrix Systems Inc., claims that non-financial managers are now much more aware of accounting issues. As a result, he says, “controllers are getting more buy-in” when they make tough decisions that affect operations.
That buy-in is helping controllers spread the gospel of financial discipline to other business units.
The bulk of the Sarbox work at cereal maker Kellogg Co., for instance, is in documenting existing accounting and reporting processes. Jeffrey Boromisa, senior vice president and controller at the Kellogg Co. says he is shifting around employees and working with outside auditor PricewaterhouseCoopers to make sure documentation is consistent across Kellogg’s six global regions.
Boromisa says that outsourcing the documentation process was not an option because he wanted ownership of the process — a process that Kellogg considers a critical part of their $8 billion-in-revenues business. Kellogg’s operations and finance department is closely integrated, says Boromisa — so much so that the unit managers don’t think of finance as a separate function, but rather an extension of operations.
At Panera, Hood says one of the major changes is simply circulating the 10-Qs and 10-Ks among all senior management, and setting up a formal feedback mechanism in the form of a questionnaire.