MORE PRIVATE COMPANIES ADDRESSING ACCOUNTING PRACTICES

Survey Shows Nearly Half of Private Firms Revising Financial Procedures Due to New Regulations: Compensation Cited as Most Frequent Area of Change

MENLO PARK, CA -- Reform in the accounting profession has compelled nonpublic companies to take a closer look at their financial and accounting practices, and many are implementing changes voluntarily.  In a recent survey of privately held businesses, 48 percent of chief financial officers (CFOs) said they have made adjustments to their firms’ accounting processes since the introduction of new regulations.  Respondents cited payroll and benefits as the most frequent areas of change.

The survey was developed by Robert Half Management Resources, the world’s premier provider of senior-level accounting and finance professionals on a project and interim basis.  It was conducted by an independent research firm and includes responses from 1,359 CFOs from a stratified random sample of U.S. private companies with more than 20 employees.

CFOs were asked, “In which of the following areas, if any, has your company made changes to its current financial accounting and reporting processes in light of regulations such as the Sarbanes-Oxley Act of 2002?”  Among the 48 percent who cited a specific area of change, their responses* were:

Payroll/benefits   44%
Expenditure/purchasing   37%
Accounts receivable/sales   31%
Capital assets   31%
Conversion/inventory   31%
Credit management/collections   29%
Disbursements   25%
Financial close   22%
Other   3%

            (*multiple answers were allowed)

Fifty-two percent of the 1,359 CFOs polled indicated they have not made any changes in the above areas. 

In a March 2003 Robert Half Management Resources survey of private companies, 44 percent of CFOs said their firms had reviewed or made changes to current accounting procedures in light of new corporate governance standards.

“Even though private businesses are not legally required to comply with regulations such as Sarbanes-Oxley, many firms are looking at their high-exposure areas with increased scrutiny,” said Paul McDonald, executive director of Robert Half Management Resources.  “As a result, nonpublic companies are reviewing wages, salary and bonuses, as well as medical and other employee benefits such as phantom stock options, as though they were publicly traded.”

McDonald added that private firms recognize the need to make sure their accounting practices are in order.  “Companies of all sizes are taking measures to prevent costly errors or potential fraud across all financial functions within an organization.”

Robert Half Management Resources has locations in major cities throughout North America, Europe and Australia, and offers online job search services at www.rhmr.com.

 

 

 

 

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