CFOs Push IT Managers for More Info About Projects

Computerworld - The financial reporting regulations that were signed into law last year are spurring some chief financial officers to demand that CIOs provide them with more detailed information about the status of IT projects, according to executives and analysts.

The Sarbanes-Oxley Act, which is aimed at producing more complete and accurate assessments of the financial condition of public companies, requires businesses to disclose "all material off-balance-sheet transactions" that may affect their capital expenditures or other aspects of their finances.

Because IT spending accounts for more than half of all capital expenses at many companies, CFOs are pushing hard to ensure that they can update quarterly earnings reports with as much information as possible about ongoing IT projects, said business and technology executives.

"Without question, CFOs are going to place more pressure on everyone in the organization because of Sarbanes-Oxley," said Paul McFeeters, CFO at Kintana Inc., a Sunnyvale, Calif.-based vendor of software for monitoring IT operations and automating tasks like project management.

Companies "can't run off with multimillion-dollar IT projects without good visibility and controls," added McFeeters, who uses Kintana's digital dashboard software to keep track of internal IT projects. He said senior executives are also requesting more thorough financial reports from corporate officers to satisfy a provision of Sarbanes-Oxley that requires CEOs and CFOs to attest to the accuracy of a company's financial data.

Steve McDowell, CIO at privately held Holiday Retirement Corp., a Salem, Ore.-based operator of senior citizen housing, said he's talked with IT executives from public companies about Sarbanes-Oxley and they "are really afraid that it will dominate their projects and budgets for a while."

The push for CIOs to deliver more comprehensive information about IT spending "is very much a trend that we're seeing," said Jeremy Grigg, a Gartner Inc. analyst based in New York. But like McFeeters and others, Grigg noted that the reporting demands being placed on CIOs aren't tied solely to Sarbanes-Oxley.

Indeed, a growing number of companies are taking a portfolio management approach to evaluating the returns being generated by their IT investments . Steve Denny, CIO at Plano, Texas-based FreightPro, has delivered a formal report on the status of IT projects to the logistics provider's board of directors each quarter for the past three and a half years. The reports detail the anticipated cost, timeline and benefits of both new and existing projects, he said, adding that IT work typically accounts for the bulk of FreightPro's capital expenditures.

Financial Reporting Recommendations For CIOs Educate your company’s CFO on the technical and financial requirements needed to deliver status reports about IT projects. Account for spending on internal IT projects and joint ventures that may require your systems to be linked to those at other companies. Reach out to peers in Europe and other regions to see how they’re complying with financial reporting rules that are already in place there.

Read more about Gov't Legislation/Regulation in Computerworld's Gov't Legislation/Regulation Topic Center.