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Return of the Bean Counters

With a welter of new reporting requirements coming, controller skills are suddenly a hot commodity.

1Dec

Three years ago, Greg Cowan was promoted from controller to CFO at professional staffing firm CDI Corp., making the leap that so many accounting professionals dream of: from keeping the books to helping set business strategy. But in November he took what looked like a step back, swapping his CFO title for a newly created role as chief accounting officer.


Cowan, a former auditor, will focus on financial and operating controls, essentially "looking at where we are today and where we've been historically." New CFO Jay Stuart, who had previously worked with the CEO and has been consulting with the firm for the past year, will oversee financial operations and focus on the future. "It's difficult to explain this role in a traditional sense," says Cowan, "but you could think of it as taking the CFO charter and putting two financial people on it."


President and CEO Roger H. Ballou, who in concert with the company's audit committee created the CAO slot in part in response to requirements associated with the Sarbanes-Oxley Act of 2002 and new stock-exchange rules, is enthusiastic about putting Cowan's controller skills to work in the new position. "This is a very powerful job that is going to help us be a better company... with a dramatically enhanced focus on control," he says. While the company has a corporate controller to handle day-to-day issues, Cowan will oversee policy development and all policy-compliance functions, including overhauling internal and external audit processes and reporting to the audit committee.


He will also be "learning from historical financial performance" in order to improve profitability, says Ballou. But best of all, he will enable the new CFO to focus on strategy without getting into trouble. "When you look at the new responsibilities that are being required here [as a result of Sarbanes-Oxley and stock exchange rules], there is a risk that if you don't specifically delineate roles, you could dilute the ability of your CFO to help you with forward-looking growth, and acquisitions," says Ballou. "I'd be shocked if other companies don't move the same way."



Controllers: Not Remote

There's no question that accounting skills are back in vogue for CFOs, given the massive amounts of work associated with the new disclosure and governance rules flooding out of the Securities and Exchange Commission and the stock exchanges. In sharp contrast to two years ago, executive recruiters say that a CPA degree is one of the top attributes on their clients' CFO wish list these days, with experience in initial public offerings and mergers and acquisitions lagging far behind.


Controllers are getting much more exposure, as keepers of the financial statements that nearly every other executive in a company must now sign. Along with CDI, several companies, including BMC Software, Euronet Worldwide, and Galaxy Nutritional Foods, have recently announced that they are shuffling current CFOs' responsibilities in order to deal more effectively with those requirements. But many experts are skeptical about how long the new emphasis on accounting skills will remain popular, and they warn that playing up those skills may backfire for CFOs when they go looking for their next job.


Put in Cowan's situation, "I would resist [the change], because there are lots of companies that still want a strategic, externally focused CFO," says Peter Crist, vice chairman of Korn/Ferry International and a director of Wintrust Financial Co. He is sympathetic to the increased accounting workload, noting that three-quarters of a recent Wintrust board meeting was taken up by the CFO's report on responses to Sarbanes-Oxley. But, "the challenge is managing it, not succumbing to being sequestered in [an accounting-oriented] role," he says.


"I think that CFOs are clearly expected to continue to assume the mantle of strategic business partner," agrees E. Peter McLean, vice chairman and head of Spencer Stuart's CFO recruitment practice. He notes that 47 percent of the current Fortune 500 CFOs have MBAs, and only 25 percent of those have CPAs. "The trend is away from CFOs being technical experts; rather, you're asked to be a good selector of people. You have to be someone who can challenge and motivate a team of experts."



Title Match

For the sake of one's résumé, it may make more sense to retain the CFO title and try to delegate some functions such as human resources or IT to others, says Walt Williams, a partner at retained executive search firm Battalia Winston International. But Williams does agree that in the current climate, number crunching has moved to the fore. "I would expect CFOs who have taken on broader duties to be refocusing on the financial side," he says. "I don't think that such a focus weakens the position if a larger percentage of his or her time is spent on these [accounting] issues."


Accounting experience may be the ticket to bigger career changes, such as an industry switch. After holding the CFO title for a total of 11 years at two companies, Thomas Livengood left funeral-home operator Carriage Services on good terms in August and became corporate controller at Reliant Resources, a retail and wholesale energy provider that has been under regulatory scrutiny for accounting restatements it made earlier this year. "I was looking for an opportunity to get back into the sector," says Livengood, who spent much of his earlier career in the energy industry.


While he reports to CFO Mark Jacobs, a former investment banker who had joined the company a month earlier, Livengood says the two have "complementary skill sets." The company redefined the controller role when Livengood joined, aggregating previously disparate accounting functions under him. And given Reliant's recent spin-off from its parent company, more than $5 billion worth of debt maturing within the next nine months, and SEC investigations to respond to, Livengood says he's got plenty to keep him busy.


Thanks to Sarbanes-Oxley, he notes, "I think all executives have been sent back to the books, even CEOs."



Tips for Staying on Top


Some useful career advice for CFOs grappling with the demands for tighter accounting.


Make sure you have outstanding outside counsel — you must have access to people who are smarter than you and are spending every waking moment watching for what's coming out of Washington and the exchanges." —Peter Crist, vice chairman, Korn/Ferry International


When facing an internal shake-up, negotiate a mutually acceptable title while you're deciding what to do. If you accept a lower title, it doesn't do your résumé a whole lot of good." —Pam Lassiter, executive consultant and principal, Lassiter Consulting


Hire a great controller." —E. Peter McLean, vice chairman and head of Spencer Stuart's CFO recruitment practice

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