Not long ago, the degree of choice for an aspiring CFO was the master of business administration, with 61 percent of finance chiefs holding the degree, according to the Finance Leaders Association. But these days, with financial reporting under the microscope thanks to the Sarbanes-Oxley Act of 2002, executive recruiters favor another set of letters: CPA.
Just ask CFO Larry Reinhold. When he began restructuring the finance department at Wilson Greatbatch Technologies Inc., a $216 million maker of components used primarily in medical devices, he insisted that candidates for every position — including corporate controller, director of internal audit, and assistant corporate controller — be certified public accountants with several years of experience at a Big Four firm. “I believe that a deep understanding of the accounting model is essential for most CFOs in today’s environment,” says Reinhold, who admits that his own 19-year career at Price Waterhouse and then PricewaterhouseCoopers LLP has biased him toward candidates with similar experience. “Much of the traditional bookkeeping work is automated now. That’s why an analytical mind-set is critical — if what has come out of the system doesn’t look right or smell right, you can figure out what went wrong.”
This vision of the ideal finance executive is a far cry from the “strategic” CFO of the 1990s, for whom accounting skills played a distant second to deal-making savvy. For the time being, the visionary financial engineer has gone the way of Andrew Fastow. “These things go in cycles,” says John C. Wilson, founder of J.C. Wilson Associates, an executive-recruiting firm in San Francisco. “Now CPAs are preferred in some organizations. If you have just an MBA, you may be perceived as [deficient] in areas like [Financial Accounting Standards Board] rules and reporting and regulatory requirements.”
Nancy Keene, a director at retained executive-search firm Stanton Chase International in Dallas who helped Reinhold with one of his searches, says he is not her only client who is looking for CPAs. “There is definitely a trend away from the CFO who comes out of the investment-banking, deal-making business,” she says, adding that she has seen job-hunting CFOs lose out on positions because they lacked the CPA designation.
But if you can’t claim those three little letters after your name, don’t despair, says Ellen B. Richstone, president and CEO of Entrepreneurial Resources Group LLC, a Boston professional-services firm. Richstone, the former finance chief of Brooks Automation Inc., argues that while many companies look for CPAs, there are other ways to assess accounting expertise. “You can measure [it] by talking to the internal auditors at [candidates'] previous companies or by talking with outside auditors who have worked with them,” she says. Wilson says he asks candidates how many accounting courses they have taken, and probes for examples of how they have handled past accounting problems. He also notes that “high-level thinkers” are still in demand, especially at larger firms, where the CFO is usually supported by a strong corporate controller.
The renewed focus on accounting skills is part of a larger move back to basics for many companies, says Richstone. “There’s a much greater focus on delivering value to shareholders,” she says. “Companies are looking for the more-traditional CFO who is very strong in accounting and cash management. They want someone who is less visionary, more tactical.”
In the 1990s, the ranks of the accounting profession were thinning, as many business-oriented college graduates pursued careers in the booming consulting and investment-banking industries. Enrollment in graduate and undergraduate accounting programs dipped 22 percent between 1995 and 1998, according to the American Institute of Certified Public Accountants.
Today, enrollment numbers are moving in the other direction, as finance students begin to take notice of companies’ demand for accounting expertise. The number of college accounting majors has increased by 4 percentage points since 2000, according to the AICPA, and enrollment is rising in accounting programs at business schools. David Wright, director of the Master of Accounting program at the University of Michigan Business School, is surprised by the “reasonably dramatic” increase in interest. “I thought after Enron and WorldCom, people would want to stay a million miles away from accounting, and it’s really been just the opposite,” he says, crediting the scandals and the ensuing passage of the Sarbanes-Oxley Act of 2002 with turning a spotlight on the once-overlooked profession. Enrollment in Michigan’s program will be at an all-time high when September’s class enters with 70 students, up from 24 in 1998, the program’s inaugural year. Wright claims that graduates from the program are “virtually guaranteed” multiple job offers — a major reason for accounting’s current appeal.