Fed change won’t improve economy, U.S. finance execs say

BY KEN TYSIAC

Although U.S. CFOs and finance chiefs say a Federal Reserve chairman has the ability to significantly affect the world’s economy, they are not optimistic that the coming change in Fed leadership will hasten the economic recovery.

Nearly six in 10 (59%) of 688 U.S. CGMA designation holders surveyed in October said the arrival of a new Fed chairman would not speed up the economic recovery.

Fed Vice Chair Janet Yellen was recommended by a US Senate committee Thursday. If confirmed by the full Senate, she will succeed current Chairman Ben Bernanke.

The survey responses demonstrate ongoing concern about the U.S. government. A majority (58%) of survey respondents said the Fed leadership position can significantly influence the world economy, but they said uncertainty in Washington is the biggest challenge they face, ahead of shifting customer demands, access to capital, and the pace of changes in technology.

Sixty-one per cent of CGMA respondents said the comments of a Fed chairman have at least a moderate influence on their business planning.

“As leader of the central bank for the world’s largest economy, the Federal Reserve chairman has considerable sway over the cost of capital, the strength of the dollar, and other facets that affect how we do business,” Jim Blake, CPA, CGMA, who is CFO of Morey’s Piers amusement parks in New Jersey, said in a news release. “Finance teams across the country and around the world are monitoring the confirmation process for any hints of shifts in policy direction that could have repercussions for business planning.”

As lawmakers mull Yellen’s nomination, survey respondents said they want to see more focus on unemployment and transparency. Strategies for investment, borrowing, and hiring are among the plans some CGMA designation holders are rethinking as the Fed leadership change occurs, according to the survey.

Thirty percent said they wanted to see a faster end to the Fed’s quantitative easing program.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Post-busy season checklist

Now that tax season is over, pause for some introspection to guarantee that next year’s busy season is even better. Bonus: “Dirty dozen” scams list to share with your clients. Sponsored by Thomson Reuters, Bloomberg BNA, Bloomberg BNA // Software and Wolters Kluwer.

QUIZ

News quiz: Risks are top of mind in finance

Americans are worried about risks to their financial security. Accountants also see risks to their organizations and their careers. See how much you know about recent news and reports with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.