Fair Uptake on the Fair Value Option, Survey Says
CFOs and controllers are lukewarm on FAS 159, according to Grant Thornton.
About one-third or fewer companies plan to use the fair value option, FAS 159, in auditing complex financial data, according to a survey of CFOs and controllers by Grant Thornton LLP. That percentage drops to 28% when it comes to reporting the most complex and controversial products: derivatives. A bigger share (35%) of the 688 respondents intends to adopt the standard for evaluating liabilities; other financial instruments (32%); and equity-method investments (31%).
Companies want to avoid the potential for wild earnings swings so it’s not surprising that the majority aren’t using fair value, says Gary Illiano, partner-in-charge of international and domestic accounting at Grant Thornton. On the hand, says Illiano, “there are narrow circumstances when you get into complex valuations that require massive paperwork where FAS 159 makes sense.”
Financial executives were polled during the turbulent period between Sept. 9 and Sept. 19, when Lehman Brothers and Merrill Lynch collapsed and concerns of an impending global meltdown surfaced. Other findings: 64% said they agree with the Financial Accounting Standards Board’s (FASB’s) definition of “discontinued operations” to include held-for-sale acquisitions and 58% said they support the FAS 5 change for contingent liabilities. Moreover, 85% indicated an interest in supplementing financial statements with nonfinancial measures that could provide relevant intangible values.
“I take this to mean that people want to tell their stories beyond the numbers, but somehow feel that they are constrained by liability issues,” says Illiano. “They want to share value drivers and paint a picture.” Providing more thorough explanations of, say, executive compensation or corporate governance measures could show longer-term potential, to perhaps offset a decline in revenues or profit.
CFOs and controllers remain at best lukewarm on acceptance of the International Financial Reporting Standards (IFRS) and eXtensible Business Reporting Language (XBRL), according to the survey. While 55% agree that IFRS should be used instead of the Generally Accepted Accounting Principles (GAAP), 59 percent disagree with the Securities and Exchange Commission’s decision last year to allow foreign corporations listed on U.S. exchanges to file statements prepared according to IFRS without reconciliation to GAAP. Only one in five said they have experience preparing financial statements according to IFRS.
While more than half expressed familiarity with the XBRL concept, 92% said they don’t plan to use the data tagging language at this time; only 2% are using it now. On Oct. 21, XBRL U.S. introduced draft dictionaries of financial and business terms, or taxonomies, for the risk/return section of mutual fund prospectuses and the investment company portfolio information, inviting comment.
Keeping Track of Finance Executives
H. Clifford Buster III, Michael McDonnell, Joseph H. Ceryanec, Craig E. Gifford
H. Clifford Buster III is the new executive vice president and CFO at Dollar Thrifty Automotive Group Inc., the $1.8 billion car rental company based in Tulsa, Okla. Buster, 40, replaces Scott L. Thompson, 49, who was promoted to president and CEO after five months as senior executive vice president and CFO. Buster joins the company from offshore Helix Energy Solutions Group, where he was vice president of finance and treasurer since March 2006. Previously, Buster spent 10 years at Group 1 Automotive, a franchiser of car dealerships where he was vice president and treasurer in March 2006 when he left.
Michael McDonnell becomes the new executive vice president and CFO on Nov. 17 at Intelsat Ltd., the $1.7 billion provider of fixed satellite services based in Pembroke, Bermuda. McDonnell, 44, succeeds David McGlade, 47, who became interim CFO in addition to CEO after Jeffrey P. Freimark, 53, resigned on June 5 to become CEO at Miami Jewish Home and Hospital. McDonnell joins the company after four years at MCG Capital, a commercial finance company, where he served as COO since August 2006 and as executive vice president, CFO and treasurer since September 2004. Previously, McDonnell was CFO at EchoStar Communications, a satellite television operator now known as DISH Network.
Joseph H. Ceryanec takes on the role of vice president and CFO at Meredith Corp., the $1.6 billion media and marketing company based in Des Moines, Iowa. Ceryanec, 47, replaces Suku V. Radia, 56, who resigned in February to become president of Bankers Trust. Ceryanec joins the company from PAETEC, a telecommunications company, where he was Central Region president since February 2008. Prior to PAETEC's acquisition of McLeodUSA, another telecommunications company, Ceryanec was McLeodUSA’s group vice president and CFO from August 2005 to February 2008 and its controller and treasurer from September 1996 to August 2005.
Craig E. Gifford resigned on Oct. 27 as executive vice president, chief accounting officer and controller at Guaranty Financial Group Inc., the $1.2 billion holding company for Guaranty Bank based in Austin, Texas, to assume the same position at a larger financial institution. Gifford, 39, joined the company in 2003 as controller and became executive vice president and chief accounting officer in 2007. Ronald D. Murff, 54, will serve as the company’s interim principal accounting officer in addition to senior executive vice president and CFO.
Domenic N. Golato takes on the role of interim CFO at Foamex International Inc., the $1.2 billion polyurethane foam manufacturer based in Media, Pa. Golato, 53, succeeds Robert M. Larney, 56, who resigned as executive vice president and CFO on Oct. 7 to pursue an opportunity in another industry. Most recently, Golato was CFO at WPT, a developer of software and hardware for power quality products. From 2000 to 2004, Golato was senior vice president and CFO at IGI Industries, now IGI, maker of cosmetics and skin care products.
Kevin P. Bagby will resign as vice president of finance, CFO, treasurer and secretary on Nov. 3 at FreightCar America Inc., the $817 million manufacturer of railroad freight cars based in Chicago, Ill., to accept a position at another company. Bagby, 56, has held his current position since joining the company in November 2004. Previously, he served nine years as vice president and CFO at Stoneridge, a maker of electrical and electronic components, modules, and systems for cars, medium- and heavy-duty trucks and agricultural equipment. A search for Bagby’s successor is under way.
Dennis V. Arriola becomes the new senior vice president and CFO on Nov. 10 at SunPower Corp., the $774.8 million manufacturer of solar cells and panels based in San Jose, Calif. Arriola, 47, replaces Emmanuel T. Hernandez, 52, who will retire. Arriola joins the company after 14 years at Sempra Energy, a San Diego-based natural gas distributor. Most recently Arriola was senior vice president and CFO at San Diego Gas & Electric and Southern California Gas Co., Sempra Energy’s California regulated utilities, since 2006.
Michael E. Dulberg moves up to executive vice president and CFO at Corus Bankshares Inc., the $736.6 million bank holding company headquartered in Chicago, Ill. Dulberg, 43, succeeds Tim H. Taylor, also 43, who resigned on Oct 6. after 12 years in that position, citing personal reasons. Dulberg joined the company in 2000 as first vice president and chief accounting officer, and became senior vice president and chief accounting officer in 2004. Previously, Dulberg worked for six years at Kraft Foods, where he held a number of positions in corporate and operations finance as well as internal audit.
Sidney E. Anderson will be the new CFO on Nov. 7 at Hawker Beechcraft Corp., $586.5 million manufacturer of business, special-mission and trainer aircraft based in Wichita, Kansas. Anderson replaces James K. Sanders, who plans to move to a new position within the company. Anderson spent nine years at United Technologies, where most recently he was vice president of finance and treasury at its Hamilton Sundstrand division.
John O. Strek takes on the role of acting CFO at Journal Register Co., the $463.2 million media company based in Yardley, Pa. Strek, 47, succeeds Julie A. Beck, 45, who is resigning as executive vice president and CFO on Oct. 31 to pursue another opportunity. Strek is a managing director with Donway, Del Genio, Gries & Co. LLC, a financial and restructuring advisory firm. Before joining that firm in 2000, Strek was a partner in Ernst & Young’s corporate finance group focusing on financial restructuring and mergers and acquisitions.
New Application Combines SAP with Cisco Platform
Data Privacy offers enterprise-wide, real-time data protection.
SAP AG and Cisco Systems Inc. have teamed up to allow businesses to reach across the enterprise in real time to develop, implement and monitor their data privacy policies.
The integrated application, Data Privacy, extends beyond a company’s usual siloed approach by providing a central, enterprise-wide repository of global and local data controls that can be set up and enforced at the network level, says Michael Rasmussen, president of Corporate Integrity LLC, a governance, risk and compliance (GRC) strategy advisory firm.
SAP’s GRC Process Control application models data risks and regulatory compliance goals and policies, while controls are implemented in real time using Cisco’s Application-Oriented Networking (AON) platform. Controls can be manual or automatic and are enforced for all data, whether in use by applications or transmitted through the network.
Users also can troubleshoot data privacy violations in real time. AON uses Data Privacy to automatically alert compliance managers that a data breach has occurred. Compliance managers can access an incident report sent to their SAP GRC Process Control inbox or use Cisco Unified Communications technology to collaborate with IT and risk management staff via Cisco IP phones and WebEx online meeting, Web conferencing and video conferencing applications.