CFO Turbulence: More SOX Fallout

Saw this post yesterday at Guerilla Marketing for Consultants and it caught my eye. I'd mentioned The Changing Roles of CFOs back in March of 2006, but when I saw this story again, I couldn't help but think of the startling parallel with defections in public accounting firms, as well.

CFOs Are Restless

CFOs are jumping ship in record numbers. According to a study by Liberium Research, in 2006, more than 2,300 CFOs of public, North American companies bailed out. That's a 23 percent rise from 2005.

The churn at the top is accompanied by a drop in average CFO tenure to roughly 30 months, which is a 50 percent decline from five years ago.

Consultants who can help their clients ease the CFO transition process, whether the CFO is coming or going, will likely find a receptive audience. And keep close tabs on your CFO relationships. Your former client may be facing new challenges in a new position.

This isn't fresh data, having been reported in 2006 and picked up liberally at the time on sites like CFO.com. When I poked around just now, I found this article on TreasuryandRisk.com who further reported that in the first quarter of 2007, defections slowed down, however:

Despite the slowdown, notes Liberum, the overall level of turnover among CFOs remains high.

While the disenchantment in the years following passage of Sarbanes-Oxley and other government regulatory burdens is well known, Liberum also attributes the continuing high numbers in turnover to growing competition, both domestically and internationally, and increasing complexity of business.

“We attribute much of the rise in CFO turnover to the burdensome aspects of Sarbanes-Oxley,” says Richard Jancovitz, senior vice president and director of research at Liberum Research. “The regulatory aspects of the job made it more difficult for them to take a strategic approach and emphasized the bean counter aspect of the role, especially at some of the midsize and smaller companies. But now I believe that the pendulum is swinging back so that CFOs are able once again to take a more strategic approach.”

Still, an entrepreneurial strain among CFOs has been driving some to hedge funds and private equity groups, where there is almost no regulation and lots of opportunities to turn strategies into profits.

Hmmmm, sounds like a big ol' case of boredom to me. Seems a desire for "interesting work" isn't just for Gen X and Gen Y, is it?

It amazes me how some CPA firms hail SOX as the best thing that ever happened to the profession. And others, including my colleagues at VeraSage Institute, are confident it is a death knell. Where do you stand?

Comments

[Daniel Mcgonagle]

Thanks for the info. Although I am not a practicing CPA nor do I have the education necessary to understand its rudiments, I want to learn more. So, thanks for the insider info.

[George Weinbaum]

SOX has been good for the Big Four. It has not been good for investors. Most SOX compliance money is wasted from the investor's perspective.