The landscape is shifting. Even as bad-boy CFOs go to trial and to jail, most senior finance executives, according to our latest survey (see "New Terrain,"), believe that CFOs will emerge as a stronger presence in their companies than before.
At first blush, this seems unlikely; after all, the Sarbanes-Oxley Act shifts some of their responsibilities to the audit committee. But quite apart from the requirement that CFOs formally attest to financial reports, which conveys authority as well as risk, the new governance requirements push the CFO into the role of Master Communicator. In practice, CFOs are now spending far more time with audit committees, answering more questions and educating them more fully on business strategies and risks.
Reaction to the new reality is mixed. Some finance executives continue to doubt whether the results will be worth the time and effort. Others believe that Sarbox wisely formalizes best practices in board relations, and welcome the initiatives despite the added labor involved.
One aspect of the new terrain is clear: those who try to pull a Fastow will be punished. Not only is the federal government becoming more aggressive about sentencing white-collar criminals, but the states have become more dogged in pursuit of corporate wrongdoers (see "Cheese It, the States!"). Even the state courts are getting into the act (see "Judgment Calls"). Where once good governance was an option, today it is just sound risk management.