ACCOUNTING FOR CHANGE
Survey Looks at How Private Companies are Reacting to New Corporate Governance Standards
MENLO PARK, CA -- New accounting regulations have placed a spotlight on public companies, but how is the rest of corporate America reacting? In a just-released survey of privately held businesses, 58 percent of chief financial officers (CFOs) said they are implementing new practices in response to these regulations. Steps they reported taking include changing their firms' accounting procedures and enhancing their organizations' internal audit function.
The survey was developed by Robert Half Management Resources, the world's premier provider of senior-level accounting and finance professionals on a project basis. It was conducted by an independent research firm and includes responses from 1,400 CFOs from a stratified random sample of U.S. private companies with more than 20 employees.
CFOs were asked, "In light of new corporate governance standards, what steps has your company taken or does it plan to take to ensure greater control of accounting processes?" Among the 58 percent who cited a specific action, their responses* were:
|Review or change current accounting procedures||44%|
|Create or expand internal audit function||36%|
|Hire an independent firm for consulting work||23%|
|Restructure executive compensation plans||8%|
|Some other step||2%|
(*multiple answers were allowed)
Thirty-seven percent of the 1,400 CFOs polled indicated they are not taking any of the above steps, and 5 percent do not know what steps, if any, they would take.
"Although recent changes to accounting regulations have been directed toward public companies, privately held firms are also closely scrutinizing financial processes in the wake of corporate scandals," said Paul McDonald, executive director of Robert Half Management Resources. "Private businesses need to be aware of areas in which vulnerabilities may exist within their organizations."
McDonald recommends that all companies have in place a system of internal checks and balances that integrates core business functions within a strong corporate governance framework. "Conducting an internal audit and developing sound internal controls helps to ensure the accuracy of accounting records and provide early detection of potential errors or fraud."
McDonald added that the Sarbanes-Oxley Act could have a ripple effect on private businesses. "Private firms planning to go public, obtain major financing, enter into long-term agreements with public corporations or be acquired by a public entity will need to address accounting and financial disclosure requirements mandated by the Act."
Robert Half Management Resources has locations in major cities throughout North America, Europe and Australia, and offers online job search services at www.roberthalfmr.com.
Quick Link: http://www.roberthalfmr.com/PressRoom?id=330