Financial Reporting

Community News

First Freddie Mac, Now Fannie Mae in the Hot Seat?

Just two weeks after a shake up at Freddie Mac led to the ouster of three executives in the nation’s No. 2 mortgage company, the No. 1 company, Fannie Mae, now finds itself under the microscope.The New York Times is reporting that industry insiders are asking about profits reported by Fannie Mae. They claim that Fannie Mae’s letter-of-the-law reporting may have shielded substantial losses last year, a statement Fannie Mae hotly contests.

Guidance Issued to Ease Transition to International Accounting Standards

Over 90 countries have decided to adopt International Financial Reporting Standards (IFRSs) over the next five years, paving the way to move from individual jurisdictional standards to one set of international accounting standards.

SEC Investigates Coca-Cola

Coca-Cola Company is under investigation by the Securities and Exchange Commission for allegations of deceptive marketing and accounting practices.

Former Employees of Dynegy, Inc. Sued by SEC For Fraud

Securities and Exchange Commission Press Release - On Thursday, the Securities and Exchange Commission (SEC) filed securities fraud charges against three former employees of Dynegy Inc. in connection with their roles in Dynegy's Project Alpha, a $300 million financing transaction that disguised the company's true financial condition. In a civil suit filed in the U.S.

Study: Citigroup Board Deemed Weakest of All Large Boards

The Corporate Library reported this week that Citigroup’s corporate board is the lowest rated among the 1,700 of the largest U.S. companies. The hit is the latest in a string of recent public relations disasters to befall the company.In April, Citigroup Chairman and CEO Sanford Weill agreed to pay a $400 million settlement in response to charges that Citi and nine other investment banks had allegedly floated Pollyanna stock research to impress investment-banking clients.After the embarrassing admission, Weill withdrew his nomination to the New York Stock Exchange Board of Directors.
Practice Management

Reports Blast Corporate Culture That Caused WorldCom Collapse

Two new reports on the collapse of WorldCom Inc. place the blame for the company’s demise on the shoulders of founder and Chief Executive Officer Bernard J. Ebbers. The reports accuse him of running a company so concerned about meeting Wall Street expectations that warnings about accounting irregularities were met with scorn and ridicule.The nation’s second-largest long distance company was the victim of executive hubris, the reports found."The fraud was the consequence of the way WorldCom's chief executive officer, Bernard J. Ebbers, ran the company," one report read.

ImClone’s Waksal Sentenced to Serve Jail Time

Martha Stewart’s friend Sam Waksal was sentenced to seven years and three months after pleading guilty to insider trading charges that have affected his family and threaten to end Stewart’s reign as America’s queen of domesticity.Waksal, the founder of ImClone Systems, was also ordered to pay $4 million in fines and back taxes.
Practice Management

Freddie Mac Fires Top Three in Accounting Shakeup

Freddie Mac, the nation’s No. 2 mortgage finance company, replaced its top three executives this week in the wake of an accounting investigation. The company’s president was accused of not fully cooperating with auditors reviewing the company’s 2000-2002 financial statements.Update 6-11-03: In spite of attempts to control damage, the mortgage giant now faces even greater scrutiny. Results of an informal probe of the company, begun by the Securities and Exchange Committee (SEC) in January, 2003, has prompted a formal investigation. Additionally, the U.S.

Six Canadian Firms Urge Ottawa to Address Corporate Governance

Accountability is contagious. Taking their lead from efforts to clean up the U.S.
A&A

Stock Option Expensing Subject of House Hearing

Robert Herz, chairman of the Financial Accounting Standards Board (FASB) strongly objected this week to proposed legislation that would place a three-year moratorium on the expensing of stock options. He said the action "would be in direct conflict with the expressed needs and demands of investors." "The moratorium would establish a potentially dangerous precedent," Herz said in testimony before a House panel.

'Corked' Financial Statements - Guest Article

Guest article, contributed by Michael K. ShaubThe bat exploded in Sammy Sosa’s hands as it struck the pitch, resulting in a weak ground ball to second base. The Cubs’ announcers duly noted the run that had scored, mission accomplished for Sosa despite an unexpected setback. And then both announcers voiced concern as the umpires began to examine the bat. Perhaps the bat was not all it was cracked up to be.
Community News

NASD Pushes CEO, 'Chief Compliance Officer' Assurances

The National Association of Securities Dealers (NASD) wants its member firms to act to reassure investors that they have proper supervisory policies and procedures in place.
Community News

Judge Approves $125M KPMG Rite Aid Settlement

U.S. District Judge Stewart Dalzell has approved a $125 million settlement by KPMG to settle allegations that the Big Four firm's audits of the Rite Aid corporation misled investors.The settlement was agreed to in March 2003, but was delayed because a shareholder in the suit argued that legal fees were too high - as much as $2,500 per hour.

GASB Updates Statement No. 34, Issues Statement 41

Updating guidance put forth in its landmark Statement No. 34, Basic Financial Statements — and Management’s Discussion and Analysis — for State and Local Governments, the Governmental Accounting Standards Board (GASB) recently issued Statement No. 41, Budgetary Comparison Schedule — Perspective Differences.GASB establishes and improves financial accounting and reporting standards for state and local governments.The new statement clarifies existing guidance on budgetary comparisons set forth in Statement No. 34.
Community News

IBM Accounting Practices Again Being Scrutinized by SEC

Computer giant IBM disclosed in a press release late Monday that the SEC has launched an investigation into its accounting practices."The SEC is seeking information relating to revenue recognition in 2000 and 2001 primarily concerning certain types of customer transactions. IBM believes that the investigation arises from a separate investigation by the SEC of a customer of IBM's Retail Store Solutions unit.
Community News

Audit Fees Expected to Rise by as Much as 35%

Complying with Section 404 of the Sarbanes-Oxley Act will cost public companies an average of 35% more in audit fees, according to a recent survey of companies by Financial Executives International (FEI). FEI is the leading professional organization serving Chief Financial Officers (CFOs) and other senior financial executives.

Software Companies Launch Sarbanes-Oxley Compliance Solution

With implementation requirements related to the Sarbanes-Oxley Act coming fast and furious from the SEC and PCAOB, how is a company to cope with all the new rules? HandySoft and Plumtree Software think they may have an answer.The firms announced last week that they have developed the Sarbanes-Oxley Accelerator, a solution that helps publicly traded companies comply with the Sarbanes-Oxley Act of 2002.
A&A

FASB Agrees to Rethink Pension Rule Change

Under increasing pressure, the Financial Accounting Standards Board (FASB) agreed to take another look at its proposed rule that would change the way some pensions are valued which could have had a possible negative impact on some companies’ balance sheets. Industry groups decried the proposed rule change, which would have required companies to use an interest rate tied to a market index—a one-year Treasury bill, for instance—to place a value on their pension liabilities.

SEC to Require Stricter Internal Controls

As part of its ongoing attempts to show the buck stops in the CEO’s office, the SEC voted this week to approve strict new internal control requirements — requiring CEOs to sign off that the rules are in place and being followed.The new requirements would apply to public companies under the jurisdiction of the Securities and Exchange Commission and is widely applauded by industry groups, including the American Institute of Certified Public Accountants.The SEC voted to adopt rules concerning management's report on internal control over financial reporting and certification of disclosur

CFOs Feel Pressure From Sarbanes-Oxley Compliance

CFOs are burning the midnight oil a little more these days as they work longer and harder to ensure their companies meet the requirements of Sarbanes-Oxley, according to an article this month on CFO.com. The article discusses the increased workload CFO’s face as they certify financial statements and verify the adequacy of internal control systems, as mandated by the new legislation.Since the enactment of Sarbanes-Oxley, CFOs are working an average of three more hours a week.

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