Another Wrinkle for Smaller Companies

It's no surprise that CFOs at small public companies - the ones who come under the microscope of Sarbanes-Oxley this weekend - are sweating under the glass. They've had to struggle with changing guidance, high bills from outside auditors, and a dearth of candidates for the jobs they need filled in order for their accounting departments to keep pace with truckloads of new work that comes along with compliance. Not only that, some CFOs are worrying about the impact the increased overhead will have on their competitiveness.

John Fodera, a partner at New York-based accounting firm Eisner, seems unmoved by that last argument. He told Financial Week:

that Section 404 is pushing public companies to place the proper level of resources - manpower in this case - into their accounting departments to deal with such issues as transparency and tax compliance. “Over the years,” he argued, “accounting departments have been a bit leaner than they have needed to be.”

But Christian Dufresne, CFO and treasurer of Spire Corp., a $20 million electronics maker, notes that finding candidates who understand auditing and can set up proper controls is a challenge unto itself:

“It’s hard enough to find one guy, and I have to have a couple,” Mr. Dufresne lamented. “Adding two or three people is a drag on cash flow, and it makes your business less profitable.”

Like other companies, Spire has centralized its business operations as it prepares to operate under SOX 404, which among other things requires company executives to certify the internal controls in place to ensure their financial reporting is accurate.

That centralization can't be helping CFOs in their quest to find accountants to join their companies. It's removing some of the flexibility they might have had when they could post professionals at different locations. It's not a huge deal, but it's one of those details that makes a tough challenge tougher.

SarbOx writ small: Newbies struggle [Financial Week]