New Kids on the Block: More Companies Are Hiring Chief Accounting Officers
Sammer, Joanne, Journal of Accountancy
* In the face of new regulatory demands, more companies are hiring chief accounting officers (CAOs) to handle everything from corporate accounting, financial reporting and internal controls to corporate tax and Sarbanes=Oxley compliance.
* In addition to day-to-day compliance activities, CAOs also sometimes take on the duties of a controller or CFO and get involved in mergers and acquisitions. The scope of responsibilities is often greater for CAOs at smaller companies.
* A critical task for many CAOs is translating the myriad accounting rules and regulations that affect business today. With SEC regulations that limit the type of work public accounting firms can do for their audit clients, many companies have begun to build and maintain the necessary expertise internally.
* The CAO role is giving CPAs exposure to senior management and information about the entire business. This enables them to add value to the entire organization as well as to help make sure section 404 compliance becomes part of the organization's culture.
* Many CPAs find their public accounting experience and ability to deal with clients make them ideal CAO candidates. As the demand increases, CPAs with the right qualifications will find being a CAO one of the hottest opportunities in accounting and finance today.
Every regulatory cloud has a silver lining. For CPAs working in both industry and public accounting, it is the wealth of new and expanding career opportunities following the recent flood of new securities regulations and accounting rules. The latest evidence of this trend is the creation and expansion of the role of chief accounting officer (CAO) in many public companies.
CPA Peggy Smyth, who became the first CAO of St. Paul, Minn.-based 3M Co. in 2005, believes the passage of the Sarbanes-Oxley Act is responsible for CAOs taking a more prominent role. "The law made global reporting and compliance more important and, as a result, elevated the stature of the CAO," she says. "I have been pleasantly surprised at how receptive my peers are to my new CAO role."
Many companies that do not currently have a CAO are likely to be adding one to their management roster in the future. "The CAO position represents one of the hottest opportunities in accounting and finance, in line with the huge demand for chief audit executives," says Chuck Eldridge, managing director of the financial officers practice at recruiter Korn/Ferry International in Atlanta. "I expect CAO to remain the in-demand position in finance and accounting for the next couple of years as companies look to bolster their internal technical accounting expertise."
In an informal survey Eldridge found that 122 Fortune 500 companies employ someone with the CAO title. In 60 of them, the CAO also holds the controller title, and in the remaining 62, CAO is their only title. CAOs often also hold a vice-president, senior vice-president or even executive vice-president title based on their experience and place in the organization.
THE CAO ROLE
What exactly does a CAO do? While the role and responsibilities vary from company to company, in general, a CAO is responsible for tax, financial planning, corporate accounting and reporting, compliance, accounting policies and procedures, audit preparation, Sarbanes-Oxley compliance and monitoring and maintaining internal controls over the financial reporting function. "The role really depends on what a company decides it needs," says Gina Wilson, CPA, executive vice-president and CAO of Cendant Corp. in Parsippany, N.J.
In many companies, the CAO acts almost like a consultant on accounting matters to the rest of the organization, says Eldridge. As such, he or she might provide guidance on the accounting treatment of mergers or acquisitions or financial reporting and disclosure changes following new FASB pronouncements.
Like many public companies, 3M created the CAO position early in 2005 to reflect the growing importance of finance and accounting and as part of an effort to focus the entire organization on the importance of global financial reporting, says Smyth, who also is a vice-president. …