Who wants to be a CFO?

Financial executives' salaries on the rise
Financial executives on average reported nearly a 5 percent salary increase, according to a new study by Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI).
The second annual executive compensation study, which provides a year-to-year comparison of compensation for finance professionals, examined salaries, bonuses, long-term incentives, and retirement benefits of over 1,900 financial executives from both public and private companies, of which nearly half were CFOs. The findings were unveiled Monday at FEI's 2008 Summit in Phoenix, Arizona.

"While the current economic conditions and market turmoil are likely to impact the C-Suite this year, our results show that the salaries of the overall financial professional group are still up," said FEI/FERF CEO and President Michael P. Cangemi. "As an important benchmark, the Financial Executives Compensation Survey is unique since it is completed by financial executives themselves, and members of the financial community will be able to utilize it as a tool to measure how their pay stacks up against their peers'."

Salary and Bonuses
The estimated average salary increase of all respondents was 4.75 percent, with public companies awarding the highest salary increases (4.96 percent). The two industries with the highest reported salary increases were advertising (8 percent) and metals (7.5 percent).

For the second year in a row, the base salaries of public and private company CFOs were proportionate to the annual revenues of their employers. However, median base salaries for CFOs at public company with less than $25 million or over $5 billion in annual revenues are generally consistent or slightly higher from the prior year. No public company CFOs from companies with annual revenues of less than $25 million earned more than $400,000 per year.

2008 CFO Median Base Salary Ranges
Public companies:
All: $226,000 - 250,000
Companies <= $25 million annual revenues: $201,000 - $225,000
Companies >= $5 billion annual revenue: >$401,000

Private companies
All: $176,000 - 200,000
Companies <= $25 million annual revenues : $151,000 - $175,000
Companies >= $5 billion annual revenue: No responses from a company of this size

With regard to bonuses, annual bonuses of private company CFOs were lower than those of public company CFOs. Most bonus percentages for public company CFOs fell within the range of 21-70 percent, while those of private company CFOs fell within the range of 11-60 percent. The study also showed that many public companies with annual revenues of $99 million or less received discretionary bonuses...

Long-term incentives
# 20.3 percent were eligible to receive cash-based long-term incentive compensation (of those 43.6 percent were from public companies and 50.4 percent from private companies), a decrease from last year
# Stock-based awards decreased from 2007, as many respondents noted that their target award is based on a fixed number of shares or units

Perks
# Most popular perk continues to be company car or car allowance (29 percent of CFOs receive)
# Least popular perk continues to be housing or other living expenses (2 percent of CFOs receive)

Performance measures
# Most common performance measures used to determine annual compensation were company and individual goals and objectives
- Company Goals/Objectives (Nearly 79 percent of public company respondents)
- Individual Goals/Objectives (75 percent of public company respondents)

Source: AccountingWEB.com

Big four control directly linked to higher audit fees

Concentration in the audit market is directly linked to higher audit fees, research released today shows
Research commissioned by BDO Stoy Hayward and conducted by London School of Economics reveals audit fees are certain to escalate should one of the big four firms exit the audit market, leaving only the big three in control.

The report demonstrates the reduction from big five to big four firms in 2002, following the collapse of Arthur Andersen, fuelled a 2.4% jump in the average audit fees paid by listed companies, excluding other factors such as changes in regulation. Audit fee growth has continued every year since then.

The research also shows that a drop of just 10 percentage points in the market share the big four hold at present could lead to the annual audit fees paid by UK’s listed and private companies easing by 7%.

Currently, all FTSE-100 companies are audited by one of the big four and 3% of FTSE-350 companies are audited by other firms.

‘This research reveals there is a real cost of high market concentration among auditors, and that the current market structure needs to change,’ Jeremy Newman, BDO Stoy Hayward LLP managing partner, said. ‘It also highlights the potential impact of another firm leaving the marketplace and the need to act now to mitigate this.
‘At present, the audit market is not adequately prepared to cope with the departure of another major firm from the marketplace and this must be a cause for concern for all those involved in this industry – the accountancy profession, investors, regulators and listed companies alike.’

Newman suspected that, if data were available, a similar issue would emerge relating to the non-audit services.

Dr Mariano Selvaggi, researcher at LSE, said previous studies had looked at the relationship between market concentration and audit fees, but the latest research raised new concerns about the current structure of auditing services.

‘Our findings have important implications for the future evolution of the UK audit market,’ he said.

Source : Accountancyage.com

PwC supports Global Campaign against malaria

Three of Canada's Big Four Accounting Firms to Pay Overtime Retroactively

extract from an article taken from A Counting School
As reported by Accman in late March, Ernst & Young reviewed who it was paying and realized the smart course of action was to voluntarily step up and pay people who weren't getting overtime.
E&Y's situation looks less extreme than that at KPMG, because its "support" staff were already eligible for either overtime or extra time off. But it realized that the IT groups had people who weren't considered accounting "profesionals" under provincial law - just smart and clever people not doing accounting designations.

So who does gets paid overtime?
Basically, staff or seniors who are not CA students, as well as those studying for the CGA or CMA. Members of the CA/CGA/CMA group are all automatically excluded from getting overtime by provincial law for reasons we'll get to in a moment.

How do I file an E&Y overtime claim?
Go to this site and fill in the appropriate form - sadly, Firefox is not supported, so either use your IE tab plug-in, or just load this link in Internet Explorer. Note - the deadline is May 15, 2008.

The site makes it clear that the money will be paid out to both current and former staff, so hurry up and hit the link even if you've left the firm.

PricewaterhouseCoopers to follow E&Y's lead - will also pay overtime
As mentioned by the Calgary Herald, PWC has come to the same conclusion. Take a growing IT group - everything runs on computers these days - which doesn't necessarily need CA students to get the job done - brilliant people who are comfortable computers can pick up business terminology quickly too - and you find yourself with a group of people who slipped under the HR radar.

Oops, they may not be exempt, but they've been treated the same way as everyone else.

How do I file a PWC overtime claim?
Go to this site and fill in the appropriate form. Note - the deadline is June 16, 2008.

Do I have to calculate how many hours they owe me for?
Fortunately, no. Since these are, after all, accounting firms, they have detailed records on file - basically, all your timesheets.

If you diligently reported all your time - spent on both client and non-client work - the system should automatically calculate how much you're owed.

Is there a catch?

Well if you were "eating" time - not recording work you did, you shot yourself in the foot. I don't know if you have a way of proving you worked more hours than your timesheets showed, but you better start looking through your files to see if there's anything which proves how hard you've been working if you didn't record it at the time. Can you even remember how many hours you did or didn't report?
Hopefully most people don't have this problem - in which case, the only catch is that the firm wants to be safe. That means they'll ask you to sign a release form when they send you the money, where you agree that "it's all good". That'll be the point in time when you'd better check the math to make sure it adds up.

Keep in mind, if you're in Ontario, that you only get overtime for hours over 44 per week. Thanks Mike Harris, we all hate you for that one. The rest of Canada, if I've been told correctly, gets overtime after 40 hours.

And of course, the same rules I described in the previous section apply across the country - if you're a CA - like me - or a CA student - like me one week ago - you are not paid any overtime in pretty much any Canadian province.

You'll find that both the PWC and E&Y sites include detailed descriptions of who is and isn't eligible.

What about KPMG's lawsuit? Why are the lawyers still upset?
Lawyers often earn a percentage of the winnings from a court case. So if they could win punitive damages from KPMG, they win would be more successful. And everyone likes to score a big "win", so if you're the lawyer who forced someone to pay their client $40 million instead of $10 million you'll obviously be proud of their accomplishment - and depending on the local rules - may also enjoy a larger payout from the victory as well.

What now?

Speaking with colleagues at all the firms, there a few general reactions I've seen - a mix of positive and negative for sure:

1. Well that sucks, because I'm a CA so I get nothing, and will continue to get nothing extra
2. I'm from Quebec and I'm not a CA - my province's rules mean that I'm not getting anything anyway. Oh nuts.
3. I'm happy for my non-CA friends - good for them!
4. Well the firms are just doing what they're supposed to do, no big deal - they should've known about it already and done this sooner.
5. The firms are doing what they're supposed to do, but they're doing it well - addressing the problem as soon as they learned about instead of wondering if it would go away.

The interesting question now, of course, is to determine how long before Deloitte joins the other three - since they have a large consulting practice this could be a very expensive proposition for them. Lots of free vacation current employees perhaps?