No Consensus on International vs. U.S. Accounting Standards, Energy
Conservation Moves to Front Burner
CFOs State Their Choice for Next U.S. President
FLORHAM PARK, N.J., and NEW YORK, June 27 /PRNewswire/ -- American
companies are forecasting single digit percentage increases in capital
spending, hiring, and the prices of their products over the next 12 months,
according to a recent survey of CFOs conducted by Financial Executives
International (FEI) and Baruch College's Zicklin School of Business.
However, these expected increases are trending downward from earlier
forecasts.
In the 2007 second quarter "CFO Outlook Survey," the weighted expected
increases for the next year average 2.3 percent for capital spending, 4.1
percent for hiring, and 1.9 percent for product prices. These anticipated
increases are lower than the CFOs have forecast in earlier quarterly
surveys. In the first quarter the predicted averages were 7.9 percent, 5.2
percent and 2.1 percent, respectively. The only area which saw an increase
from the last quarter was technology spending, which rose from 9.6 percent
to 11.3 percent.
"The CFOs' forecast of price increases of less than 2 percent during
the coming 12 months represents a relatively benign inflation environment,"
said John Elliott, Dean of the Zicklin School of Business at Baruch
College. Dean Elliott also noted that the weighted average values cited are
smaller than the average values (which give equal weighting to responses
regardless of company size), suggesting that larger firms expect less
capital spending, lower hiring and smaller price increases.
Further, 67 percent of the CFOs indicate they are reducing their rate
of inventory growth and 41 percent are actually shrinking levels. Overall,
the CFOs expect a 0.6 percent reduction in inventory levels.
One contradictory inflation signal from the CFOs is that they consider
"finding qualified workers" a top business challenge over the next 12
months, second only to general market "competition."
Their economic optimism decreased slightly from the prior quarter, as
did their optimism about their own company.
Accounting Standards Debate
CFOs are almost evenly divided in their views about the use of
International Financial Reporting Standards (IFRS) vs. U.S. GAAP. Just over
half of the CFOs queried (55%) said they would support a proposed change by
the SEC that would allow foreign private issuers registered with the
commission to choose between IFRS or U.S. GAAP in filing their financial
reports. Forty-five percent would not support the change.
The SEC plans to request comments on a proposed change that would allow
U.S. issuers the choice of using IFRS or U.S. GAAP. CFOs are also split
50/50 in their views on this change.
"The globalization of the capital markets demands that we create a
dialogue about the virtues of GAAP and IFRS," said Michael P. Cangemi, FEI
President and CEO. "At this point, U.S. financial executives need to become
more familiar with IFRS. It will at some future point have an impact on how
financial statements are prepared."
Related, FEI and the European-American Business Council will hold a
first time conference on Sept. 28 in New York, titled Global Financial
Reporting Convergence Conference, to address the specter of IFRS adoption
by U.S. firms.
For more information, visit http://www.fei.org/global
Companies Respond To Climate Change And Energy Costs
Sixty-one percent of the companies surveyed have changed manufacturing
or other policies to conserve energy. Some are examining solar and wind
energy, solar reflective installations and conversion to steam heat created
by burning their own wood waste. Others have improved electric motors and
equipment cooling technology, and reduced packaging waste.
Further, one-third of the companies have discussed or addressed the
long- term implications of climate change or global warming. The most
common immediate goals are creating environmentally friendly office space
and new products.
CFOs Cast Straw Votes For New U.S. President
If the U.S. Presidential election were being held today, American CFOs
would vote in a Republican candidate, with Rudy Giuliani, former Mayor of
New York City, and Fred Thompson, former Senator from Tennessee, the front
runners. Mitt Romney, former Governor of Massachusetts, and John McCain,
Senator from Arizona, were the third and fourth most popular choices.
Hillary Clinton, Senator from New York and the CFOs' most popular
Democratic candidate, received 6 percent of the votes.
About the Survey
Full survey results are available at http://www.cfosurveys.com or from Andrew
Healy at ahealy@middlebergcommunications.com.
This quarter, the CFO Outlook Survey, conducted by Financial Executives
International and Baruch College's Zicklin School of Business, interviewed
157 corporate CFOs electronically the week of June 11. CFOs from both
public and private companies and from a broad range of industries, revenues
and geographic areas, including some off-shore companies, are represented.
Survey respondents are members of Financial Executives International.
Revenue-weighted averages are provided for projected changes in capital
spending, technology spending and prices of products. An employee-weighted
average is provided for the projected changes in hiring.
FEI has been conducting surveys gauging the country's economic outlook
from the perspective of CFOs for the past nine years.
About FEI
Financial Executives International (FEI) is the leading advocate for
the views of corporate financial management. Its 15,000 members hold
policy- making positions as chief financial officers, treasurers, and
controllers. FEI enhances member professional development through peer
networking, career planning services, conferences, publications, and
special reports and research. Members participate in the activities of 86
chapters, 75 of which are in the United States and 11 in Canada. For more
information about FEI, visit http://www.fei.org.
About Baruch
Baruch College, founded in 1847, is a senior college of the City
University of New York. The Zicklin School of Business at Baruch College is
the largest and most diverse AACSB accredited collegiate school of business
in the nation. Baruch has a long tradition of producing accounting and
finance graduates who become leaders as CPAs and CFOs. http://www.baruch.cuny.edu
SOURCE Financial Executives International; Baruch College
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Related links:
http://www.fei.org
http://www.baruch.cuny.edu http://ww.fei.org/global
http://www.cfosurveys.com
http://www.prnewswire.com/comp/310650.html /
CONTACT:
Andrew Healy, of Middleberg Communications,
+1-212-354-5020; or Chris Allen, of FEI, +1-973-765-1058; or John
Elliott, of Baruch College, +1-646-312-3032
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