Accounting Changes Also Hit Private Firms

June 14, 2004 ( - Not only have accounting reform measures brought significant change to the public company market, they have likewise prompting nonpublic firms to make voluntary alterations.

In the recent Robert Half Management Resources survey of privately held businesses, 48% of chief financial officers (CFOs) said they have made adjustments to their firms’ accounting processes since the scandal-prompted reforms. Respondents cited payroll and benefits as the most frequent areas of change.

“Even though private businesses are not legally required to comply with regulations such as Sarbanes-Oxley, many firms are looking at their high-exposure areas with increased scrutiny,” said Paul McDonald, executive director of Robert Half Management Resources, in a survey. “As a result, nonpublic companies are reviewing wages, salary and bonuses, as well as medical and other employee benefits such as phantom stock options, as though they were publicly traded.”

The Robert Half survey asked: “In which of the following areas, if any, has your company made changes to its current financial accounting and reporting processes in light of regulations such as the Sarbanes-Oxley Act of 2002?”

Among the 48% who cited a specific area of change, their responses were:

  • Payroll/benefits,   44%
  • Expenditure/purchasing,   37%
  • Accounts receivable/sales, 31%
  • Capital assets, 31%
  • Conversion/inventory,  31%
  • Credit management/collections,  29%
  • Disbursements,    25%
  • Financial close,     22%
  • Other,   3%.

Fifty-two percent of the CFOs polled indicated they have not made any changes in the above areas. The survey was developed by Robert Half Management Resources and covered 1,359 CFOs at private U.S. companies with more than 20 employees.