Survey: CFOs Upbeat on Economy

New York, NY, March 29, 2006--According to a survey from accounting firm Grant Thornton, senior U.S. financial executives are overwhelmingly confident in the financial performance of their own companies, even if the economy does not perform well this year. The survey, which polled 122 chief financial officers and comptrollers at U.S. companies, found that more executives said they expected results to improve at their own firms than said they expect the U.S. economy to improve. "Corporate America has a sense of confidence that they are going to get better," said Ed Nusbaum, chief executive officer of Grant Thornton. Also, many executives said that the costly corporate reforms in the last few years are beginning to have real benefits, and were supportive of further accounting changes. Two-thirds, or 66 percent, of executives polled said they expect their companies to see improved financial performance in 2006, and 62 percent said they expect the U.S. economy to improve in 2006. Seventy-one percent of the financial executives said they expect inflation to increase. But financial executives were also increasingly confident in their ability to raise prices. Two-thirds said they expect prices charged by their firms will increase this year, and 60 percent felt higher energy prices would not weaken financial performance. However, only about half of the executives said they would hire more workers this year. Since the Sarbanes-Oxley corporate accounting and internal control reforms were passed in 2002, executives have consistently complained the costs of compliance with the law were too high. But the survey showed that executives are beginning to see benefits from tougher compliance rules. Fifty-five percent of the executives polled believed the quality of financial reporting has improved since the Sarbanes-Oxley act was passed. "The tone that comes out of this from the accounting side, is that they are in favor of improved accounting standards," Nusbaum said. "Of course, they are always concerned about the cost benefit." Executives also were supportive of further accounting reform. More than 80 percent of the executives felt there should be uniform global accounting standards and that companies should be required to account for pension plans on their balance sheet. And despite the perception that increased liability for directors would hurt the ability of companies to fill corporate board seats, 64 percent of the executives polled said they are not finding it more difficult to recruit directors. But executives were not so confident in the ability of auditors to catch mistakes as nearly 70 percent of executives felt it is still possible to intentionally misstate financial statements without an independent auditor finding the error. "We can't catch everything," said Nusbaum, who runs the fifth largest U.S. accounting firm by revenue. "We can only increase our procedures and reduce the likelihood of material mistakes."