FEI Members and Prospective Members
Memphis is the birthplace of this issue of FEI Express. I'll be
visiting our chapter here shortly, after a nice meeting with our Western
Michigan Chapter last night. Thanks to Bill Waanders for inviting me to speak
to the group!!! I will be in Chicago next week to speak at the Illinois CPA
Society Controllers Conference. I hope to see many FEI members there, too!
Audit Committee Reports and
Companies are now regularly filing their audit committee
charters, auditor fees, and committee reports. Caterpillar Inc.'s proxy just
hit my desk, and it does a great job with each section. We've posted them on
our web site to make it easy for you to download and alter for your use: Here's
CAT's Audit Committee
Charter and their Audit
Some of this may be like "breathing air" to you, but I think
highlighting some of the key points in their audit committee charter is
- They specify the AC will meet at least four times a year,
twice privately with the auditor.
- "It is understood that the independent auditor is ultimately
accountable to the audit committee and the Board." The AC has the authority and
responsibility to select or replace the auditor.
- "The AC periodically reviews the adequacy of accounting and
financial controls with management and the auditors, and elicits
recommendations for improvements for increases in controls.
- Prior to the 10-Q being filed, the AC reviews any significant
issues arising out the auditor's quarterly review.
- Other areas of review for the AC include: significant
litigation or regulatory matters; senior officer expenses; transactions with
management; adequacy of information technology controls; and the use of
The Caterpillar examples are good ones, and I hope you find them
useful. Unrelated to Caterpillar, one thing I hear over and over again (and
witness in practice) is the widespread belief by too many directors that the
primary role of the audit committee is beat the public accountant fee down each
year. I am totally supportive when it comes to saving money, but this task
rests in management's capable hands. Audit committees are so time-pressed to
exercise their important oversight role of financial reporting and control that
this menial task should rarely find its way into their agenda.
But speaking of fees, Caterpillar, as required this year,
disclosed the fees paid to its external auditors for 2000. The audit cost
totaled $6.7 million, services for IT system design and implementation totaled
$3.4 million and all other services totaled $12.8 million.
Berkshire Hathaway Annual
Warren Buffett's latest letter to shareholders is out, and can
be accessed in full at
voices his support for the FASB's proposed new rules for business combinations
and the non-amortization of goodwill. He has been a long-time opponent of
pooling accounting and the general use of stock as an acquisition currency. He
also expresses his support for Reg FD. He encourages management teams to shy
away from the use of EBITDA ("does management think the tooth fairy pays for
capital expenditures?"). He also encourages CEOs to explain the company's
direction and strategy in their own words, and avoid publicly stating their
expectations for long-term growth rates. It's always thought-provoking reading,
whether you agree with him or not.
Siebel Systems and Customer
I recently read a really good interview with Tom Siebel,
chairman and CEO of Siebel Systems, in this month's edition of the Harvard
Business Review. Siebel Systems does close to $2 billion in software sales
each year, leading the Customer Relationship Management (CRM) category. Here
are some of his key insights to their success:
- The cornerstone of their corporate culture is customer
satisfaction. All their communications (advertising, shareholder reports,
brochures etc) are targeted at employees, emphasizing Siebel's commitment to
- He sees his primary job as cultivating a company culture that
benefits all employees and customers.
- He disdains CEOs who consider their primary job to be driving
up the company's stock price. He sees that as a secondary concern understanding
what customers need, and delivering it.
- His company measures customer satisfaction in a very
quantifiable way, with surveys every six months that cover everything from the
quality of documentation to the contracting process.
- They set organizational objectives quarterly, which he
communicates on the first day of each quarter.
Monthly Financial Executive
Our magazine editors, Jeff Marshall and Ellen Heffes,
and art director, Laura Avello, have moved Financial Executive magazine
up to another level. We now run a monthly survey, with the results reported in
the magazine. Click here to give us
your answer to the question: "Have the results from your year 2000
e-commerce/e-business initiatives been: as expected, better than expected, less
than expected, or 'what e-business'?"
Benchmarking the Quality of
Don't miss Benchmarking the Quality of Earnings, a
practical one-day conference co-sponsored by FEI and the AICPA. It's taking
place on April 26 in New York, at the Hilton Hotel. The agenda and on-line
registration are available here.
Registration is $149 for the full day.
We have a great line-up of top speakers, from SEC Commissioner
Isaac Hunt and Chief Accountant Lynn Turner to leading financial analysts,
prominent accounting experts, academics, and FASB rule-makers, as well as
senior executives responsible for financial reporting. High-quality reporting
is not only vital to our capital markets, but its an important issue for
practitioners who must deal with tougher regulations and closer scrutiny by the
investment community. Audit effectiveness and the role of audit committees will
be another key area of discussion at the conference, and Shaun O'Malley,
chairman of the Panel on Audit Effectiveness, will be on board to share his
FEI Yellow Pages: A Resource for
Members get a free listing in our online b-to-b
directory. Take advantage of it by clicking
FASB/SEC European Financial
Reporting Conference in Frankfurt
In keeping with the "International"
in FEI and the expanding reach of FEI Express, we would like to make our
readers aware of the Third European FASB-SEC Financial Reporting Conference,
being held April 5-6, 2001 in Germany at the Johann Wolfgang Goethe-University
Frankfurt/Main. The conference will focus on identifying key accounting and
financial reporting problems European companies face when they adopt U.S. GAAP,
particularly when they prepare to list themselves on U.S. stock exchanges. Also
featured will be the development of globally acceptable, high-quality financial
accounting standards. The FASB, the SEC and the new German Accounting Standards
Committee (GASC) will outline their respective positions on setting global
standards. For more information, visit
The Kinesthetic Speaker: Putting
Words Into Action, How Leaders Motivate People To Act on Their
Don't miss our upcoming teleconference, Tuesday, April 10 at 2
PM ET. Register here.
Chemical Reactions Examined:
DOW's Insights on the E-Bond
Last August, Dow Chemical became the
first nonfinanical corporation to sell its bonds via a Web-based Dutch auction,
where the market, not Wall Street, sets the price. Dow Treasurer Geoff Merszei
will lead a discussion of this watershed event and its implications for saving
corporate issuers significant dollars. Join us on Tuesday, March 20, at 3 PM
ET. Sign up now by clicking
Job Posting- CFO
Job #5224) - National firm located in Morris County, NJ, is seeking a
professional who will direct all accounting, finance and treasury functions.
Will represent company to outside financial parties, including bankers and
investors, will manage banking relationships, ensure convenant compliance,
present monthly financial statements to Management and Board of Directors,
maintain a system of internal controls and identify/implement improvements.
10-15 years relevant experience; service industry background preferred.
Hands-on experience managing Accounting/Finance. Direct experience with IPO
process and communications with investment community. CPA/MBA preferred.
Familiarity with accounting software/systems. Please fax resume to: (973)
To view other jobs, visit the FEI Job Posting Center (voted one of
the "Best of the Web" by Forbes magazine) at http://www.financialexecutives.org/careers/agreement.cfm.
Congratulations to Bob Dilly, Controller, Adidas America,
Greer, SC, and There du Pont, VP, Finance, Wawa Inc., Philadelphia, PA.
That's all for now,
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