The frothy initial public offerings market capped Friday by SpaceX’s debut at a market cap of over $2.2 trillion is worrying Francine McKenna, a Big Four veteran and CPA-turned journalist and self-styled accounting industry watchdog. 

The general theme she’s concerned about — and that she thinks CFOs should be concerned about too — is that the current “overwhelming desire” for more companies to go public could be pushing some to do so without the proper internal controls and governance systems that will enable them to thrive over the long haul.

McKenna, who takes her critical eye to the accounting and auditing industry in her substack column titled The Dig, fervently believes companies should not be publicly listed and taking money from the public and retail investors unless they are absolutely “ready for prime time.” That means they’ve established strong accounting and financial infrastructure, strong IT systems, and strong internal controls, she told CFO Dive in an interview last week. 

“If you’re just promoting it as an economic win and not worried about how [the company] works over time, you are really abdicating your responsibility as a regulator or an actor in the financial markets,” said McKenna, who sees finance chiefs as key financial market gatekeepers. “CFOs need to be thinking about their role as protectors or preservers of the integrity of the financial reporting of the company and to stand up to the CEOs, stand up to COOs and stand up to the board.” 

One example of a company that went public prematurely was WeWork, she said. Just months after it went public in October of 2021, the office-sharing company said it would restate several quarters of its results due to a material weakness in its internal controls related to its misclassification of certain shares, The Wall Street Journal reported at the time. WeWork filed for Chapter 11 bankruptcy protection in 2023.   

In her substack column Friday, McKenna catalogued the red flags and risk factors related to the SpaceX IPO that she is keeping an eye on. For example, she cites the Financial Times blog FT Alphaville, which states that SpaceX is using 23 banks in its IPO which has a side benefit of subduing “potential for criticism.” In addition, she noted that the company’s cash balances have been propped up by borrowing, and that its prospectus notes it has incurred net losses over the past two years, including $4.9 billion last year and that the company has “no idea when it will ever be profitable.” 

One hurdle to CFOs bringing more rigor to the IPO process or to delaying it until a company is ready is that many companies going public are overly dependent on their advis,ors who often have a vested interest in the IPO going forward, she said. Then too, since the Dot-com bubble, an increasing number of companies have hired CFOs who aren’t accountants and don’t always have an understanding of the controls that companies need. 

“CFOs who have an accounting background or at least some interest or aptitude in accounting develop a more long-term view,” McKenna said. “They also understand the consequences of making the wrong decisions, of juicing earnings, juicing reporting, juicing metrics or whatever, in order to get paid today.” 

McKenna is also concerned about the Securities and Exchange Commission’s plan to loosen the oversight of certain public companies. Last month, it proposed to raise the thresholds that determine which public companies qualify as “large accelerated files,” a status that requires compliance with stringent reporting and internal-control audit requirements, CFO Dive previously reported. The agency frames its plan as an effort to encourage more companies to participate in the markets at a time when many have cited regulatory costs as a deterrent. 

From McKenna’s perspective, the proposal will advance earlier efforts by the Trump administration to pull back on the requirements, leaving even more companies free from the checks and balances of the required internal control oversight. 

“So you have this situation where companies may live with significant weaknesses for a very long length of time,” McKenna said.