As financial executives of both public and private companies absorb the events of 2008 and look ahead at what's in store this year, Financial Executives International CEO and President James J. Abel has compiled the following list of the Top Challenges for 2009--in no particular order:
* Global Economic Crisis. Top-of-mind will be the continued fallout from the economic crisis that had its early beginnings in the subprime market crisis, which was identified as one of last year's Top Challenges. Companies will continue to assess the impact of this situation on their businesses, including the ability to access capital, while speculating how long it will last and what changes will need to be made, if any.
It is also likely that Congress will look to increasing regulation of the financial markets, with the securitization process and credit-rating agencies as potential targets. Regardless of company size or structure, these are challenging times for corporations and individuals leaving many hoping that the new administration under President Barack Obama will provide solutions.
* Fair Value Measurements. Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157), was effective for financial assets and liabilities for fiscal years beginning after Nov. 15, 2007. The standard will become applicable for remaining nonfinancial assets and nonfinancial liabilities, effective for fiscal years beginning after Nov. 15, 2008.
In addition to the implementation of "phase 2" for nonfinancial assets and liabilities, there was continued focus late last year on the significant impact of FAS 157 on the balance sheets of financial institutions and its potential role in the resulting bankruptcies, unprecedented government intervention and numerous resulting mergers.
Additionally, as a result of the Emergency Economic Stabilization Act of 2008, the U.S. Securities and Exchange Commission is reviewing FAS 157 in light of recent market developments to determine what, if any, modifications need to take place to ensure that the application of the standard has not inadvertently created unforeseen consequences. FASB and the international Accounting Standards Board are also holding roundtables and conducting research.
* Business Taxation. Kay policymakers initiated dialogue on several high-stakes tax issues last year, and it is likely that tax reform, including a focus on the corporate tax rate, will...