Despite a challenging business environment, chief financial officers' optimism about the economy and their own companies' financial prospects remains high, according to a recent poll.
In spite of high oil prices, increases in health-care costs and added expenses to protect their companies from a possible terrorist attack, CFOs' economic optimism averaged 71.98 out of 100, just off last quarter's record high of 73.55, according to the September "CFO Outlook Survey," conducted by Financial Executives International and Baruch College's Zicklin School of Business. Optimism about company prospects was also virtually unchanged at a near record high of 76.06.
"Overall, CFOs see the economy as staying the course," said Burton Rothberg, assistant professor of accounting at Baruch College. "While they acknowledge the burden of numerous external factors, their forecasts suggest spending, earnings and revenues will increase. They're also expecting modest increases in employee count and salaries, with a spike in prices planned over the next year that exceeds today's inflation rate."
Almost 60 percent of surveyed private companies plan to comply with at least some aspects of Sarbanes-Oxley. Among those who are complying at least in part with SOX, 61 percent said "it's a better way to run a business," while 52 percent said "they anticipate it will apply eventually to private companies." Some 35 percent said "stakeholders should be treated like public investors." Of the private companies that might consider going public, 54 percent say SOX won't deter them, while 20 percent said they won't go public because of the requirements.
Despite expectations to the contrary, Sarbanes-Oxley isn't creating widespread problems with earnings announcements, according to the poll results. Sixty-nine percent of public company CFOs surveyed said the timing of their company's year-end earnings release won't be affected by SOX, and 59 percent said their book-closing process isn't taking longer.
