Where CFOS stand: today's key issues for financial executives. (President's Page).

In the wake of the financial scandals that took up much of the headlines over the last 18 months or so, corporate reforms are beginning to take effect. Certain provisions of the Sarbanes-Oxley Act are already in place, as we await the final rules for attesting to internal controls. Corporate governance will remain in the public spotlight as audit committees are overhauled, the new Public Company Accounting Oversight Board is mobilized and compensation structures are scrutinized. All this as the FASB and IASB move toward convergence.

What are CFOs thinking about amid these new pressures and challenges? They remain focused on their businesses and the value they bring to their stakeholders. And they are looking to FEI to continue to promote professional ethics, good corporate governance and regulation that achieves defined objectives without creating unnecessary burdens for business.

CFOs continue to view their role as vital to their enterprises. In an FEI poll of 255 CFOs taken in January, 83 percent agreed at least somewhat that their value as a CFO has increased since last year's scandals, and more than two-thirds disagreed with the statement that their effectiveness had been damaged.

Sixty-eight percent responded positively to the statement that reforms that have been implemented (or are pending) were needed and have helped to restore investor confidence. At the individual level, however, their views on reforms are ambivalent: no clear majority view emerged as to whether the CFO's job now includes unnecessary compliance work or whether recent reforms diluted CFOs' ability to be strategic.

Stress on Enforcement

On public policy issues, a large majority (85 percent) agreed at least somewhat that the SEC should emphasize enforcement over further reform. While more than half agreed that the elimination of personal income tax on dividends would stimulate economic growth, only a small minority felt such a change would cause their companies to initiate or increase dividends.

The state of accounting remains a major concern for CFOs. Seventy-eight percent agreed there's a lack of vision and leadership regarding how to improve the usability and functionality of financial statements, and 72 percent agreed that financial reporting is still a major issue, despite all the new rules and standards. Convergence toward international standards and a move toward principles-based accounting were seen by a large majority as having a positive impact on the capital markets and financial reporting, respectively. On expensing of stock options, nearly 60 percent agreed at least somewhat that employee participation in option plans would be reduced by expensing, while 57 percent disagreed that expensing options would reduce compensation abuses and earnings management pressures.

As a result of the new reforms, the relationship between CFOs and their auditors will need to change. When asked whether their companies planned to reduce the amount of non-audit services required from independent auditors, the responses were more mixed. Nearly 62 percent disagreed that the audit firms had put forth a clear plan to restore confidence in their processes.

Financial Expert Role Supported

On the governance front, nearly 83 percent thought the requirement to have at least one "financial expert" on every audit committee would improve these committees' effectiveness, although just less than half thought their own audit panel's effectiveness had been improved by the new rules.

In response to an open-ended question about the issues FEI should address going forward, the most common answers related to promoting professional ethics and restoring investor confidence. These issues remain at the top of our agenda. We are proud that FEI's 12-Point recommendations had an impact on the Sarbanes-Oxley Act, and that our code of ethics for financial executives offers a model for compliance with Section 406.

We continue to help members and non-members alike adapt the code for their organizations. Our effort to develop and promulgate working definitions of "financial expert" for the new audit committee requirements has also helped raise the profile of financial executives in the discussion of corporate governance reforms.

Clearly, financial executives have a major stake in shaping and implementing future trends in business practice, making this a very exciting time to be affiliated with FEI. I very much look forward to working with all of our members from private, public and non-profit organizations to advocate their views and to ensure FEI remains the professional organization of choice for financial executives throughout the world.