For many companies, though, simply getting a clean opinion on Section 404 of Sarbanes-Oxley will be good enough. “Most companies,” says Wagner, “continue to focus on the finish line — the first  filing.”
Alix Nyberg is a contributing editor of CFO.
Passing the 404 Test
Transaction System Architects Inc. is one company that didn’t have a choice about upgrading its training regime. In its 2002 10-K, the $277 million company reported that KPMG had found deficiencies in internal controls, including “staffing and training of personnel” — meaning the company would likely not pass its Sarbanes-Oxley Section 404 certification without making major changes. So when CFO David Bankhead joined the company in July 2003, formalizing the training program was among his top priorities.
“If you have any internal-controls problems, you probably have a problem with training; it’s all interwoven,” says Bankhead, noting that the company had to restate earnings down for 1998 through 2002 due in part to the staff’s misunderstanding of proper revenue-recognition procedures.
Previously, the extent of the formal finance training was an annual weeklong conference plus outside seminars, according to Bankhead. Upon receiving KPMG’s opinion, however, the company set to work on adding more-targeted training opportunities throughout the year.
For one, the company had KPMG train the finance staff on the most troublesome area: revenue recognition. It also sent staffers to seminars on Securities and Exchange Commission reporting, and signed them up for Webcasts on similar issues. In addition, Don Newman, the company’s controller since last January, now includes training on technical topics in monthly staff meetings, and all finance managers are expected to help mentor their direct reports.
While the company is still working on getting its internal controls up to speed, its new training program has satisfied the auditors, according to its most recent 10-K. What’s more, “we’re starting to see some real benefits from our training program,” says Bankhead, including more enthusiastic participation at the annual meeting and better collaboration among global finance staffers.
Small and Personalized
Many companies recruit more new hires than they could ever place in executive ranks, to hedge high attrition rates and reserve the option of weeding out underachievers. W.W. Grainger Inc., a $4.7 billion equipment supplier, takes a different approach, keeping its Financial Development Program small and personalized.
“We don’t sift through and decide who we want to keep after three or four years; we try to make those decisions up front,” says Ron Jadin, vice president of finance for Grainger and a graduate of General Electric’s Financial Management Program. “We want the demand for these folks to be much greater than the supply.”
In that spirit, the Chicago-area company has devoted all of its recruiting energies to a single school, the University of Illinois, and specially trains its vice presidents in interviewing techniques before bringing top candidates into company headquarters. Job offers go out to the fortunate four or five students within a week of their interviews, and are nearly always accepted, according to Jadin