Über die Autorin bzw. den Autor

Frank J. Fabozzi, PhD, CFA, CPA, is Professor in the Practice of Finance in the School of Management at Yale University. He is a Fellow of the International Center for Finance at Yale University and serves on the Advisory Council for the Department of Operations Research and Financial Engineering at Princeton University. He has authored and edited numerous books in finance.

Pamela Peterson Drake, PhD, CFA, is the J. Gray Ferguson Professor of Finance and Department Head of Finance and Business Law at James Madison University, Harrisonburg, Virginia. She is author or coauthor of numerous books and articles.

Ralph S. Polimeni, PhD, CPA, is the Vice Provost for Accreditation and Assessment and holds the Chaykin Endowed Chair in Accounting at Hofstra University, Long Island, New York. He has authored numerous articles and books on accounting.

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Praise for The Complete CFO Handbook
From Accounting to Accountability

"The office of the CFO in corporations today must blend strategy, investor relations, corporate finance, control, budgeting, risk management, and a host of other key areas of expertise and knowledge. Business education, however, tends to be compartmentalized along functional lines and courses and texts specialize in subsets of these subject areas. Fabozzi, Drake, and Polimeni bridge that yawning gap by providing a comprehensive set of materials that can serve as a nice platform to develop managers tasked with the sourcing and managing of funds within organizations. The Complete CFO Handbook is well written and makes extensive use of examples to illustrate key concepts."
Jacob Thomas
Williams Brothers Professor of Accounting and Finance
Yale School of Management

The role of the CFO in business has expanded significantly in recent years as companies become more accountable to their stakeholders and regulators and as the sophistication of technology, risk management, financial analysis, and financial records processing has increased.

Filled with numerous examples, The Complete CFO Handbook lives up to its name and provides complete coverage of:

• The CFO's role in company communications with company stakeholders

• The tools and processes by which a CFO may manage risk, including taxes, theenterprise risk management process, and strategies for transferring risk

• Performance evaluation and the fundamentals of the capital budgeting process

• Traditional cost accounting topics of product costing and strategic cost management

Every CFO's desktop tool, The Complete CFO Handbook expertly provides financial executives with an extensive review of cost accounting as well as the background and tools for managing a company's financial functions.

Aus dem Klappentext

Praise for The Complete CFO Handbook
From Accounting to Accountability

"The office of the CFO in corporations today must blend strategy, investor relations, corporate finance, control, budgeting, risk management, and a host of other key areas of expertise and knowledge. Business education, however, tends to be compartmentalized along functional lines and courses and texts specialize in subsets of these subject areas. Fabozzi, Drake, and Polimeni bridge that yawning gap by providing a comprehensive set of materials that can serve as a nice platform to develop managers tasked with the sourcing and managing of funds within organizations. The Complete CFO Handbook is well written and makes extensive use of examples to illustrate key concepts."
—Jacob Thomas
Williams Brothers Professor of Accounting and Finance
Yale School of Management

The role of the CFO in business has expanded significantly in recent years as companies become more accountable to their stakeholders and regulators and as the sophistication of technology, risk management, financial analysis, and financial records processing has increased.

Filled with numerous examples, The Complete CFO Handbook lives up to its name and provides complete coverage of:

• The CFO's role in company communications with company stakeholders

• The tools and processes by which a CFO may manage risk, including taxes, theenterprise risk management process, and strategies for transferring risk

• Performance evaluation and the fundamentals of the capital budgeting process

• Traditional cost accounting topics of product costing and strategic cost management

Every CFO's desktop tool, The Complete CFO Handbook expertly provides financial executives with an extensive review of cost accounting as well as the background and tools for managing a company's financial functions.

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The Complete CFO Handbook

John Wiley & Sons

Chapter One

JOB DESCRIPTION: Oversee financial accounting systems, reporting, and disclosures; assure compliance of financial reporting with generally accepted accounting principles and securities law accounting requirements; assure compliance with local government, federal government, and international tax laws, regulations, and rules; expert in disclosure compliance with federal and state securities laws; establish, monitor, and evaluate internal controls; work with the CEO in the development of the strategic goals and plans, execute the strategic plans, and evaluate performance relative to the strategic goals; participate in long-term and short-term budgeting; exceptional communication and team leadership skills; able to raise capital and manage the firms' capital structure to maximize the value of the company and minimize the company's cost of capital; develop, monitor, and evaluate a program of risk management; communicate with the company's Board of Directors, shareholders, creditors, and credit rating agencies; no sensitivity to the effects of kryptonite.

Many years ago, the role of the chief financial officer (CFO) was to keep the financial records, and had accounting, internal control, budgeting, and treasury responsibilities. But the role has changed over the years to be much more comprehensive and to include decision-making that extends beyond the accounting and treasury functions. The CFO of today is responsible for measuring and monitoring performance, but the CFO is also now involved in managing risk and creating value for owners.

What has caused this change? There is not just one cause; but rather several forces that have resulted in the expanded role of the CFO. In the 1990s, we saw the role expanded from financial accounting and accounting systems to include financial analysis and an active role in strategic planning. This expanding role is apparent in the Chief Financial Officers Act of 1990, which specifically addressed the changing role of the CFO in federal government entities. In the 1980s and 1990s, with the continued globalization and technological innovations, the CFO in some companies became a starring role as a deal-maker who sought out growth opportunities for the company.

The role of the CFO widened further because of the financial scandals of the 1990s and early 2000s that included Enron, WorldCom, and, unfortunately, many more companies. The resultant changes in laws and regulations focused attention on the CFO and broadened the responsibilities of this position. This resulted in a renewed emphasis on the CFO's role in accounting and financial reporting, but also added responsibilities for restoring confidence in the integrity of the company's financial accounting, internal control systems, and risk management.

Throughout this book, we discuss the responsibilities of the CFO in an organization. We recognize that in large companies the responsibilities of the CFO may be shared with the controller, a vice-president of finance, the corporate treasurer, a chief risk officer, or some other, similarly titled individual. However, in referring to the CFO, we are referring to responsibilities of the financial officer with the ultimate responsibility for the financial decision making of a company, responsibilities that may be shared or split among persons in the organization.

SOX ACT OF 2002 AND THE CFO

The Sarbanes-Oxley Act of 2002 (SOX Act) is the most wide-sweeping legislation to affect the securities industry since the Securities Act of 1933 and the Securities Exchange Act of 1934. The SOX Act was passed as a reaction to the failures of corporate governance that were pronounced in scandals such as Enron. The SOX Act affects many participants in our financial markets: investors, security analysts, corporate management, and accountants. The Act includes provisions to increase internal monitoring, regulate the gatekeepers (e.g., chief executive officer, CFO, and the board of directors), penalize insider misconduct, and increase transparency.

We summarize the key provisions of this Act in Table 1.1. The SOX Act came about following numerous financial scandals that involved publicly traded corporations, accountants, investment bankers, and brokers, with most of the provisions of the SOX Act traceable to specific misdeeds. For example, the provision for the reimbursement of bonuses prevents lucrative exits of executives from companies that were involved in accounting misstatements, such as those that occurred at Gateway. As another example, the provision for the independence of the audit committee members from management of the company prevents management from participating in the dealings with auditors, which was a problem in the case of Adelphia Communications.

The provisions of SOX 2002 that directly affect the CFO include the following:

Section 206: This section reduces potential conflicts of interest by making it unlawful for a CFO, CEO, controller, or equivalent officer to have been employed by the independent public accounting firm and have participated in the audit of the company within one year of the audit.

Section 302: This section requires the CEO and CFO, or equivalent officers, to certify annual and quarterly reports and, in signing, they are responsible for the establishment and maintenance of internal controls. By certifying, they are also attesting to have reported any deficiencies to the auditors and the Audit Committee of the Board of Directors.

Section 304: This section permits the Securities and Exchange Commission (SEC) to sue for forfeiture of any incentive-based, equity-based, or other bonus compensation of management in the event of a restatement of financial statements due to noncompliance. This provision deters management from manipulating reported financial accounting results for personal benefit.

Section 401: This section requires that periodic financial reports not only be presented accurately but be presented in a manner that includes incorrect statements or fails to state material information. It also requires that the issuer disclose material off-balance sheet transactions, contingent obligations, and other relationships between the issuer with unconsolidated entities such as special-purpose entities.

Section 404: This section requires disclosure of management assessment of internal controls and independent public accounting firm attestation of management's assessment. The requirement of reporting on internal controls imposed substantial startup costs on companies. More important, however, is the fact that this section creates a liability risk that is borne by the CEO and CFO. That is, the auditing firm and the executives signing off on the internal control report bear the liability for any failing in the internal control system.

Section 409: This section requires real-time, plain-English disclosures of material changes in the company's operations or financial condition. The effect of this is (1) an expansion of the number of events that require a company filing a Form...