Essentially, CAOs have emerged at more companies as a strong financial No. 2 to the CFO, able and willing to take on tasks that have grown in importance because of increased regulatory scrutiny and demands but which don’t fall into the strategic bailiwick of the chief financial officer.
A fixture at large multinational companies, according to The Wall Street Journal, “thanks to the cost and intricacies of today’s regulatory and accounting requirements, their numbers have multiplied and their duties have expanded beyond managing their company’s books and preparing financial statements.”
Overall, about 40 percent more companies have added CAO jobs since 2009, according to Russell Reynolds Associates, an executive-recruiting firm.
These typical CAO duties include deciding when and how to recognize revenue, how to report quarterly results to comply with both U.S. and foreign standards, and attesting to the accuracy of their company’s financial filings—along with assuming legal liability, like the CFO and CEO, if the results later prove to contain some false information.
Companies that recently created a CAO function include Virginia Beach, Virginia-based Wheeler Real Estate Investment Trust and Ft. Lauderdale, Florida-based AutoNation, a major automotive retailer.
Companies’ heavier emphasis on internal controls stems in large part from the passage of the Sarbanes-Oxley corporate-governance law of 2002.
“So all of a sudden you’re going to have someone with more skills to handle” the job, Don Whalen, director of research for Audit Analytics, told the Journal.
Of course, compensation for seasoned executives with the background and skills to qualify for the demanding CAO jobs of today has increased along with the demand, with many jobs at big companies paying seven-figure salaries.