New Terrain

Post-Enron reforms have made dramatic alterations to the landscape of corporate governance. Boards, their committees, and internal auditors now have greater responsibilities and powers. How will these reforms change the CFO's job?

Too soon to tell/not sure. 37.5%

Ultimately, efforts to improve corporate governance will:

Enhance the CFO position. 70.8%

Weaken the CFO position. 6.5%

Have little effect on the CFO position. 22.7%

When it comes to corporate governance, the CFO should:

Take the lead in ensuring that the letter of the law is met. 38.9%

Push the organization to make changes above and beyond those required. 39.5%

Play a supporting role in making sure that the letter of the law is met. 16.3%

Focus on financial reporting and leave structural issues of corporate governance to others. 5.2%

How have more-stringent requirements regarding how corporate boards operate changed your attitude toward serving on other companies’ boards?

I’m less likely to serve due to liability issues. 29.6%

I’m less likely to serve due to time considerations. 21.7%

I’m more likely and/or interested. 12.5%

No change to my attitude. 36.2%

How has the post-Enron focus on coporate governance affected your interactions with your company’s board?

I spend more time with the audit and/or compensation committee(s), but my interaction with the full board is essentially unchanged. 43.4%

My interactions with the full board and its committees are essentially unchanged. 36.5%

I interact with the full board more often and more substantively. 18.8%

How has the post-Enron focus on corporate governance affected your interactions with your company’s board?

I spend more time with the audit and/or compensation committee(s), but my interaction with the full board is essentially unchanged. 43.4%

My interactions with the full board and its committees are essentially unchanged. 36.6%

I interact withthe full board more often and more substantively. 18.8%

My interactions with the board and committees have decreased. 1.3%

Having the audit committee take responsibility for hiring an external auditing firm will:

Have little impact on audit quality or corporate governance. 55.0%

Prove to be a more sensible alignment of responsibilities/reporting relationships. 35.0%

Create potentially harmful lines of communication/responsibility. 10.0%

Compared with 12-18 months ago, the expertise currently found on your company’s audit committee is:

Substantially improved. 12.3%

Somewhat improved. 38.6%

Unchanged. 48.4%

Somewhat weaker. 0.3%

Substantially weaker. 0.3%

Hot Seats

CFOs look warily at serving on other companies’ boards. One indicator of finance chiefs’ mixed feelings concerning the progress of corporate-governance reform: trepidation about filling the role of financial expert on other companies’ boards.

With new regulations requiring at least one member of a board’s audit committee to have newly defined finance expertise, “there’s been unprecedented recruiting of CFOs,” says Beverly Behan, principal at Mercer Delta Consulting LLC and a specialist in the area of corporate boards and corporate governance. But CFO’s survey found that just over half the respondents are less likely to serve now—either because of liability issues or because of the increased time constraints of serving. Indeed, only 12.5 percent said they are more likely to join a board, even though the need for their services is soaring.

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