President and CEO
Financial Executives International
Financial Executives Research Foundation
October 4, 2006
Grace Hinchman (FEI's SVP) and I had the pleasure of meeting Mark Olson, new PCAOB chair yesterday. We left very impressed with Mark's background and with his instant grasp of the issues that PCAOB is dealing with. They are in good hands (and you all know how much I liked his predecessor, Bill McDonough!).
REDUCE THE RISK OF STOCK OPTIONS BACKDATING
For companies lacking visibility into option issuance processes, options backdating can create real business risks because of SEC disclosure and IRS tax accounting requirements. Failure to comply with these rules can result in stiff penalties, adverse publicity, loss of employee morale and damage to investor confidence. To learn how to avoid such occurrences, download a free white paper and/or register to attend a webinar on Stock Options Backdating taking place Wednesday, October 11 at 2 pm ET.
n This Just In n
FEI Survey: CFO Economic Outlook Only Marginally Lower
Despite reported recession fears, CFOs' economic optimism dropped only slightly in the third quarter to 67.6, compared to 68.6 in the second quarter, according to the "CFO Outlook Survey," conducted quarterly by FEI and Baruch College's Zicklin School of Business. Company-specific optimism declined even less, to 75.4 from 76.3 last quarter.
Seventy-three percent of the CFOs surveyed expect capital spending to increase at their companies in the coming year, at a weighted average rate of nearly 8%, very close to last quarter's forecast. Technology spending forecasts were virtually unchanged at nearly 7%. Anticipated health care spending declined from 8.4% to 7.7%, and hiring fell from 4% last quarter to 3% for the third quarter.
Read the full press release here or for more from the survey, click here.
President Signs Credit Rating Agency Reform Bill
On Sept. 22, President Bush signed into law the Credit Rating Agency Reform Act of 2006. The legislation is designed to protect investors by fostering greater accountability, transparency, and competition in the credit rating industry. The new establishes clear-cut criteria for rating agencies to register with the SEC.
It also grants the SEC the authority to prohibit credit rating agency practices that amount to conflicts of interest. FEI's Committee on Corporate Finance (CCF) was an early and forceful advocate for the conflict of interest language, and is pleased that it was retained in the final bill.
n FASB Update n
Definition of Public Entity Coming in Final FSP on Obligors of Conduit Debt
At today's FASB board meeting, the FASB agreed to proceed to a ballot draft on a final FASB Staff Position (FSP) defining "public entity" to include obligors on conduit debt securities, such as municipal bond issuances. The final FSP will be based on proposed FSP FAS 126-a, "Revision of the definition of a public entity to Include an Obligor for Conduit Debt Securities." FASB staff noted nine comments were received on the proposed FSP; two of the seven objected to the FSP, on grounds it would add cost without incremental benefit, and that FASB should take up the definition of public entity in a broader project (which it is doing separately).
Additional background material from today's FASB board meeting relating to this matter and the other issues from today's board meeting discussed below can be found in today's FASB board handout.
Settlements of Award to be Removed from Definition of Short-Term Inducements in Final FSP Correcting FAS 123R
Also at today's FASB board meeting, the FASB authorized its staff to go forward with issuing a final FSP providing technical corrections to FAS 123R, Share-Based Payment. The final FSP, to be issued as FSP FAS 123R-6, will include one significant change that was not included in the earlier proposed FSP FAS 123R-f, "Technical Corrections of FAS 123R." The change vs. the proposed FSP will be that the definition of "short-term inducements" will be amended to remove the reference to "settlements of an award." There was some discussion about whether FASB should re-issue the proposed FSP for public comment due to this change, but FASB agreed while re-issuing was not required, the staff should include a discussion of this change vs. the proposed FSP in the background section of the final FSP.
No FSP on Pension Protection Act; FASB Suggests SEC Issue "Reminder"
The FASB board also discussed today whether to add a project to its agenda, such as an FSP, for disclosures companies should make relating to funding requirements under the Pension Protection Act of 2006 (PPA) which was recently signed into law. The board rejected adding such a project to its agenda, citing existing requirements under FAS 132R, as well as the SEC's MD&A rules. It was also noted detailed guidance on pension disclosures is provided in SEC Division of Corporation Finance's "Current Accounting & Disclosure Issues," which are updated periodically. FASB board members suggested FASB staff contact SEC staff to encourage them to issue a reminder to public companies to consider funding requirements under the PPA when they provide their liquidity and other disclosures in this year's MD&A.
FASB Drafting Proposed FSP on FAS 133 Implementation Issue for Cash Flow Hedges
Also discussed at today's FASB board meeting was a draft of a proposed FSP on a FAS 133 implementation issue regarding cash flow hedges on variable-rate assets and liabilities that are not based on a benchmark interest rate.
Joint Roundtables on Measurement Coming Winter '07
Roundtables on Measurement will be held in various cities around the world in January and February 2007, as noted during the discussion of the Conceptual Framework project during today's FASB board meeting. The FASB was also provided an analysis of comment letters received on the IASB Discussion Paper (drafted by the Canadian Accounting Standards Board (AcSB), "Measurement Bases for Financial Reporting-Measurement on Initial Recognition. The discussion of the Conceptual Framework today was purely informational; no decisions were reached. Further details are in this FEI Summary.
FAS 158 issued on Defined Benefit Pension and Other Postretirement Plans
On Sept. 29, FASB issued FAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" (FAS 158). The new standard requires employers with pension/OPEB (other post-employment benefit) plans to recognize the funded/unfunded status of benefit plans on the balance sheet, effective with the end of the fiscal year ending after Dec. 15, 2006, for entities with publicly traded equity securities, and at the end of the fiscal year ending after June 15, 2007, for all other entities. FAS 158 also requires entities to use the same measurement date for their plans as the balance sheet date, although this rule has a delayed effective date of fiscal years ending after Dec. 15, 2008. Further information is in this FEI summary, including links to FAS 158 summaries published by FEI Strategic Partners, including KPMG and PricewaterhouseCoopers.
FASB, IASB seek comment on Joint Conceptual Framework Paper
The FASB and IASB seek comment on their joint Discussion Paper on "Preliminary Views on an improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics of Decision-useful Financial Reporting Information. The comment deadline to file comments with the FASB and/or IASB is Nov. 3.
n IASB Update n
IASB, IASCF Launch New Website
On Oct. 3, the IASB and its parent organization, the International Accounting Standards Committee Foundation (IASCF), announced they had launched a new website. Further details are in this FEI summary.
IASB, ASBJ Hold Fourth Meeting on Joint Convergence
On Oct. 2, the IASB and the Accounting Standards Board of Japan (ASBJ) announced their fourth joint meeting was held on Sept. 28-29, working toward their joint convergence project.
n PCAOB Update n
SAG to Discuss PCAOB Performance, Small Business Issues
The PCAOB's Standing Advisory Group (SAG) is scheduled to meet on Oct. 5. A live webcast of the meeting will be available here. The agenda for the meeting includes proposed standard-setting activities, proposed strategic planning and metrics for measuring PCAOB's success and a panel on small company/small audit firm issues. Further details, including links to agenda papers, are available here.
PCAOB Chief Administrative Officer, Public Affairs Director Leaving
On Oct. 2, the PCAOB announced its Chief Administrative Officer, Paul Schneider, intends to leave the PCAOB at the end of October. Additionally, the PCAOB announced that Christi Harlan, Director of Public Affairs, also plans to leave the board.
PCAOB to Hold Forum on Auditing in Small Business Environment
The PCAOB will hold its next forum on auditing in the small business environment on Oct. 16 in Philadelphia. Further information on registering is in the announcement.
n SEC Update n
SEC Holds Second Roundtable on Interactive Data/XBRL
On Oct. 3, the SEC held the second in its series of roundtables on interactive data/XBRL. The agenda and list of participants is posted here and an archived webcast is also available.
SEC Annual Forum on Small Business Capital Formation
The SEC's annual forum on small business capital formation was held on Sept. 29. This year's forum included a special panel on the use of XBRL by small businesses. Further details on the forum are available here.
Timetable for Completing Proposed Rules Implementing Gramm-Leach-Bliley
On Sept. 29, SEC Chairman Christopher Cox announced that he hopes the SEC will complete work by yearend on proposed new rules to implement the bank broker provisions of the Gramm-Leach-Bliley Act. The announcement was issued one day prior to the passage of the Financial Services Regulatory Reform Act of 2006, summarized by law firm Goodwin & Procter in a publication available here.
n COSO Update n
Guidance for Smaller Public Companies Available for Purchase
COSO's new Guidance for Smaller Public Companies, which includes 20 principles and numerous attributes, approaches and examples (published in July), is available for purchase in both print and pdf form. FEI members can purchase COSO documents at a discount, as FEI is one of the five sponsoring organizations of COSO. Further information about the new publication is available here, and be sure to use FEI member coupon code FEISB when ordering here.
n Member Initiatives n
FEI Task Force on Diversity Planned
To expand on FEI Chairman's Rich Schrader's commitment to immediate past chairs Mary Jo Green and Bob Walker, FEI CEO Colleen Cunningham and FEI board member Alexis Dow's focus on diversity, FEI is continuing to develop its initiative to incorporate more diversity into its national programs, partner with minority organizations and provide information on local contacts of minority organizations to FEI chapters.
In order to make this diversity initiative a success, we are forming a task force of interested members to discuss how best to reach these goals.
We have several members interested in this task force and are looking for more. Joe DiLorenzo and Travis McCready, both of the Boston Chapter, are already involved, and if you are interested in serving on FEI's diversity task force, please contact Serena Dávila at sdavila@FinancialExecutives.org or 202-626-7809.
n FERF Update n
Research Findings Presented to FEI Pittsburgh Chapter
On Sept. 12, FERF researchers presented the findings of its recent private company research to the FEI Pittsburgh chapter. The presentation was based on a report titled "What do Users of Private Company Financial Statements Want?", published earlier in the year, which had been prepared based on input from FEI's Committee on Private Companies.
The presentation summarized a series of interviews with preparers of financial statements and commercial and investment bankers. Themes included: financial information needs of internal management, bankers, and investors; use of GAAP; debt covenants and internal controls. Throughout the presentation, members from private companies noted the similarities between the study's findings and their own experiences, validating the relevancy and usefulness of the research to the broader membership.
FERF is also working with two other FEI chapters to present results of the study. The complete Power Point presentation can be downloaded here. To read the report, visit the FERF bookstore.
Upcoming Research: Pension Protection Act, Comment Letters, Sourcing
Based on input from FEI members and technical committees, FERF is currently developing the following projects:
Pension Protection Act of 2006: Implications for Financial Executives
In the October issue of Financial Executive magazine, FERF provided a summary of the key components of the Pension Protection Act, including:
- Minimum funding standards for single-employer defined-benefit plans
- Changes to measurement of plan obligations
- Additional premiums for companies with under-funded plans
- Higher caps on employer contributions
Upcoming research will synthesize points from ongoing interviews with pension experts to determine strategic issues such as pension funding and preparation on how to prepare for 2008. A possible publication derived from this research is a financial executive checklist summarizing key act provisions. To provide suggestions on what research you would like to see on this topic, send an e-mail to cgraziano@FinancialExecutives.org.
Comment Letters: A Review of Trends in Financial Reporting
FERF is developing a database of comment letters that are publicly available on the Securities and Exchange Commission website. The database would form the basis of a report that would summarize the financial reporting trends and assist public company members in the preparation of financial statements. The report would not cite individual company names, but would provide a recap of reporting topics and trends based on the review. A released is scheduled for mid-December in time for the start of reporting season. If the data can be compiled and summarized on a timely basis, this methodology would be used for future research on other public filings. To provide suggestions on what research you would like to see on this topic, send an e-mail to cgraziano@FinancialExecutives.org.
FERF staff would like to interview financial executives who would be willing to discuss how they source their financial operations. Situations could include:
- Companies that outsource all or part of their financial operations;
- Companies that offshore all or part;
- Companies that considered outsourcing but decided against it;
- Companies that in-source financial operations with shared services;
- Companies that use staff augmentation services for special projects.
If you and your company are interested in being interviewed, please e-mail bsinnett@FinancialExecutives.org.
Nov. 15 Conference - Academe Meets Practice
Free registration for FEI Members. 5.5 CPE credits
Register and get more information here.
This conference is intended to foster interaction between corporate executives and business school professors, convey a better understanding and finer appreciation of real-world challenges faced by financial executives and enable academics to design better business school programs through development of practical research that can be implemented by practitioners. Attendance is complimentary for all FEI members. For more information or to register for the event, click here.
n Resources n
Banc Paribas CFO Talks About Strategy
In an interview with Investment Dealers Digest, Philippe Bordenave, CFO of Banc Paribas, spoke about the French bank's ongoing efforts to build its retail banking franchise in the western U.S.
To read the interview, click here.
Resource Maximization: Doing More With Less - CPE Credit Available
Boston - October 18; Washington D.C. - October 26
Greg Fairchild, Darden School of Business (University of Virginia)
This course is for financial executives of middle-market companies who want to ensure they are advancing the strategic direction of their firms, while recognizing that critical resources - time, human and physical resources, and capital - may be in short supply. This course is designed to instruct participants to appreciation the importance of flexibility in setting strategy in a turbulent business climate, and to offer direction for leveraging resources to bootstrap the strategies they develop.
- The role of the leader: Developing strategies for entrepreneurial transformation and growth
- Analysis into action: Strategic analysis with limited resources
- Selling it: Communicating strategy to internal and external constituents
- Transformation: Shaping your organization to implement strategy and respond to change
- Evolution: How to make strategic commitments for today while staying flexible for the future
- Securing support: How to sell your strategies to potential sources of capital
Course List Price per class: $895; Special Limited Time Discounted Offer: $495. You can receive a special discount on this course by entering the code "FEI" at registration. Offer expires soon. For more information or to register, go to www.inc.com/execed or email email@example.com.
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n Webcasts n
Oct. 10 at 2 pm ET, 11 am PT
Enterprise Risk Management: Complacency Is No Longer an Option
Sponsored by KPMG
Free for FEI members and non-members. 1 CPE credit. Register here.
Business imperatives, regulatory requirements and rating agency monitoring are prompting a strategic focus on Enterprise Risk Management (ERM). In response, many corporate board members are expecting their management teams to implement an effective ERM program. In an environment where risks are proliferating, shareholders are demanding growth and corporations are expanding rapidly into new markets, many corporate leaders are seeking guidance in developing a practical approach to ERM.
This webcast features John Farrell, KPMG's National ERM Partner, and will address the following topics:
- What is ERM?
- Why is risk management important?
- How should ERM be constructed and implemented?
- Is protecting the value proposition of your organization related to ERM?
- How can an ERM program provide a framework to facilitate future decision-making that is better aligned with your corporate policy of risk?
Nov. 7 at 2 pm ET, 11 am PT
Moving Beyond Sarbanes-Oxley
Sponsored by Paisley Consulting
Free for FEI members and non-members; 1 CPE Credit available
Join Paisley Consulting to discuss extending your SOX implementation to address broader governance, risk and compliance initiatives such as operational risk, integrated audit and compliance beyond financial controls.
During this one-hour webcast you will learn:
- How to bridge the gap between compliance, risk management and audit
- How to implement best practices for a top-down, risk-based approach and integrated audit.
- How to build upon your existing SOX best practices
Nov. 8 at 11 am ET, 8 am PT
Shared Services - A Case Study in Realizing the Elusive Goal of Process Excellence
Sponsored by 170 Systems
Free for FEI members and non-members; No CPE Credit available
Steve Jolly, Vice President, Genpact (formerly known as GE Capital International Services), will present a case study of outsourcing the Procure-to-Pay Operations of a $20B manufacturing company consistently ranked by business magazines around the world as the US, Asia, Europe and the world's most admired company. Steve will discuss the motivation for the initiative, and the step-by-step transition from decentralized P2P across a dozen business units to Shared Services, to Offshoring, to Outsourcing, to leveraging key technologies to globally connect shared service centers to the operations they support. Steve will conclude with key implications and recommendations.
n Conferences n
Oct. 26-27, FEI's Private Company Forum
Sheraton Boston, Boston MA
This valuable day-and-a-half executive seminar is sponsored by PriceWaterhouseCoopers Private Company Services and addresses issues specific to you, the private company executive. Come and learn from the experts regarding:
- Unscrambling International Insurance
- Alternative Funding and Investment Strategies
- Negotiating and Influencing for Success
- State and Local Taxes - Managing the Ever-Changing Environment
- Systems Controls: Best Practices for Private Companies
- Private Companies: In Pursuit of Sustainable Growth
- Revealing China's Mysteries
- FASB and Policy Initiatives Affecting Private Companies
Don't miss former Celtics player and Head Coach M.L. Carr address Private Company Forum attendees over lunch! TIME IS RUNNING OUT! Download your registration form here.
Forbes Risk Management Forum: "Risky Business"
New York City
Qualified FEI members can receive complimentary registration.
Deadline to apply for complimentary participation is Oct. 6.
What keeps you up at night? With the upsurge of IT risk, terrorist threats and large-scale natural disasters, risk management demands the careful attention of every corporate leader. Join Forbes editors and industry experts as we examine timely case studies and cutting-edge best practices. Measure, manage and create value from risk. Panels include managing regulatory risk, IT security risk, pandemics, energy price risk, managing global risk, weather risk, and more.
After the forum, you will have the opportunity to continue the day's discussion with your peers aboard the Forbes Yacht, The Highlander, for a dinner cruise of New York Harbor.
Participation includes all special events, meals, functions and conference documentation, including the dinner cruise of New York Harbor. Seating for event and dinner is limited and given on a first-come, first-served basis.
For more information, please contact Jennifer Meeks, Executive Relations Coordinator, 212-367-2504 or visit www.forbesriskforum.com.
Oct. 27, 17th Annual Conference on Financial Reporting
San Francisco Marriott Hotel
8 CPEs available - FEI members receive a $50.00 discount by inserting "FEI" under the Special Guest Code
Attracting over 300 attendees each year, this conference brings together accounting standard-setters, enforcement officials, corporate financial executives and professional and academic accountants to discuss current issues in financial accounting and corporate reporting.
The goal of the conference is to:
- Equip preparers and users of corporate financial statements with the latest developments in financial accounting standards and recommendations for improving financial reporting;
- Promote the advancement of quality financial reporting useful to investors in making investment decisions.
- Facilitate dialogue between academicians, accountants, regulators, national/international standard-setters and the business community at large.
Hear from the experts:
- Thomas Linsmeier, FASB Board Member - Opening Address.
- John Bogle, Founder, The Vanguard Group - Luncheon Speaker
- IASB and FASB Technical Agenda
- SEC and PCAOB Discuss Current Issues
- Sarbanes-Oxley - "Journey to Compliance"
- Complexities in Financial Reporting - "Facing the Challenges"
Speakers and panelists include: Board members representing FASB, IASB, AICPA, and PCAOB; key officials from the SEC, AcSEC, EITF, IMA, and representatives from Cisco Systems, Deloitte & Touche, FEI, Hewlett Packard, Intel, KPMG, Levi Strauss, Microsoft, and PWC.
For more information or to be added to the mailing list, please call Dayna Haugh, (510) 642-6334 or e-mail: firstname.lastname@example.org.
4th Annual Association of Latino Professionals in Finance and Accounting (ALPFA) Conference
Bank of America Auditorium, 100 Federal Street, Boston
The conference will be from 4:30 pm until 6 pm, and a reception will follow from 6 pm - 9 pm at the BC Club. The fee for non members is $85, which includes a one-year membership to ALPFA.
The Changing Role of Today's CFO - New Rules and Strategies
Free to FEI members
Financial Executives International and Associazione Nazionale Direttori Amminstrativi e Finanziari (our Italian counterparts) have joined together to sponsor a bilateral conference on financial reporting. The program begins the evening of November 8 with a cocktail reception at the Borsa Italiana, the Italian Stock Exchange, followed by a full day at the Palazzo Mezzanotte Congress and Training Centre - located within the Borsa Italiana.
- Basel II Update - Accessing the Debt & Equity Markets
- Adapting to 262 Law: The Italian Sarbanes-Oxley
- New Trends in Outsourcing
- Internal Controls Framework Status and Perspective
- IFRS - GAAP Convergence: Myth or Reality for SME's?
For more agenda information, click here.
Current Financial Reporting Issues Conference (CFRI)
Marriott Marquis, New York, NY
Join us for the premier financial reporting event of the year with Fortune 1000 CFOs and Controllers from around the country. Plan to examine current reporting issues, with an eye towards simplifying and shaping the future of financial reporting.
- Accounting and Reporting Updates by the FASB, SEC and the IASB
- Controllers' Roundtable
- What's new with Section 404 Compliance
- The impact of FASB's new interpretation on accounting for uncertainty in income taxes
- Neil Cavuto, Vice President, Anchor and Managing Editor, FOX News' Your World with Neil Cavuto
- Robert Herz, Chairman, FASB
- Conrad Hewitt, Chief Accountant, SEC
- Mark W. Olson, Chairman, PCAOB
Rules of the Road - The Board's Expanding Expectations of the CFO
The Ritz-Carlton Golf Resort, Naples, FL
Sponsored by FEI and the National Association of Corporate Directors (NACD)
New governance regulations have resulted in a closer relationship between chief financial officers and audit committee members of the board. With this new dynamic comes inherent tension. Learn how other companies are overcoming these challenges and building strong board/CFO relations to enhance risk management. This highly interactive format fosters maximum exchange between attendees and a faculty of seasoned board members, audit committee chairs and CFOs.
14th International XBRL Conference & Exhibition
SEC chairman Christopher Cox will deliver a keynote address, and other keynote speakers will address the challenges and opportunities in adoption of XBRL to enhance the financial reporting processes worldwide. Attendees can learn more about available and upcoming XBRL technology, hear about XBRL's business and technology plans, discover new business opportunities and network with peers from around the world. Come and hear:
- Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB)
- Samuel Mok, CFO of the U.S. Department of Labor
- Robert H. Herz, Chairman of FASB
Attendees can also receive hands-on training and see live demonstrations of XBRL's newest technology by attending tutorials led by industry experts.
n Job Listing n
Job #11683 - CFO
This is a great opportunity to join the leadership team of one of the nation's top 25 best managed accounting and consulting firms in the Mid-Atlantic United States. As the Chief Financial Officer, you will report directly to the Managing Partner and be an integral part of our Executive Committee, partner with each of our Business Group Leaders in a strategic financial advisory capacity, and work closely with the firm's Controller to lead our internal accounting operations. Successful candidates will have exceptional ability to build strong relationships and provide key financial analyses & strategic guidance, professional services and/or public accounting experience, 10+ years of experience; CPA and/or MBA preferred.
For further details about this job opportunity and to view more jobs, visit the FEI Job Center
n New Member Welcome n
Congratulations to all the new elections in the last 30 days. See a complete list.
n Resources at www.FinancialExecutives.org n
Copyright © 2006 by Financial Executives International (FEI).
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