Financial Reporting

Federal Reserve Governor Calls on Accountants For Help

Speaking to a risk management symposium at Fordham University, Federal Reserve Governor Susan Bies commented on lessons learned from recent accounting scandals. She said confidence can be restored in the capital markets, if companies improve their risk reporting and accountants return to their core values.Ms.
Community News

Study Measures Impact of Intangibles on Future Earnings

Global consultant Watson Wyatt conducted a study that measures the impact of key intangibles on a company's future financial performance. The intangibles are aggregated into a human capital index (HCI) that assesses the levels of value or risk inherent in a company's management practices. The study found six factors helped future financial performance.
A&A

FASB Proposes Changes in Accounting For Stock Options

The Financial Accounting Standards Board (FASB) has issued an exposure draft of proposed changes to Financial Accounting Standard (FAS) 123, "Accounting for Stock-Based Compensation."The proposed changes would:Provide three alternative methods of transition for companies that voluntarily decide to expense stock options using the fair value method.Require clearer and more prominent disclosures about the cost of stock-based employee compensation and increase the frequency of these disclosures to inc
Practice Management

SEC And DOJ File Charges Against Former Enron CFO

The U.S. Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have both filed charges against Enron's former chief financial officer, Andrew Fastow. The charges relate to Mr.

Bear Stearns Lists Best Earnings Benchmarks by Industry

A new research report from Bear Stearns identifies the best earnings benchmarks by industry. GAAP earnings (earnings prepared according to generally accepted accounting principles) are cited as the best benchmarks for a few industries, but not many. Most use pro forma earnings or pro forma earnings per share (EPS).
Community News

Prosecutors Investigate PwC For Role in Tyco Scandal

Federal prosecutors in Manhattan are investigating PricewaterhouseCoopers (PwC) in connection with undisclosed bonuses paid to former executives of Tyco International Ltd. A report by the Wall Street Journal suggests that prosecutors may be trying to make a criminal case against PwC as Tyco's auditor.The Journal said the probe is focusing on three questions:Did PwC uncover the secret bonuses in the course of its audit work?
Community News

Gemstar's Dispute With KPMG Goes to SEC

Faced with possible delisting by the NASDAQ Exchange, Gemstar-TV Guide announced last week that it is requesting guidance from the U.S. Securities and Exchange Commission (SEC) to resolve a dispute between its audit committee and its auditor, KPMG.The dispute involves details of the company's financial results for the quarter ending June 30, 2002. On August 14, 2002, Gemstar said its audit committee has been conducting a review of the company's revenue recognition policies.
Practice Management

Former WorldCom Controller Instructed to Falsify Records

The former controller of WorldCom Inc., David F.

SEC Says Homestore's 'Round-Trips' Were Fraudulent

The U.S. Securities and Exchange Commission (SEC) filed charges against three former executives of Homestore Inc. for arranging fraudulent "round-trip" barter transactions involving online advertising. The SEC's complaint explains that online advertisements were a major source of revenue for Homestore, and that the company engaged in sham transactions related to advertising to meet Wall Street estimates.

Workers Weigh Causes And Effects of Accounting Scandals

A survey of employees working for public companies probed the workers' attitudes about the causes and effects of recent accounting scandals. The results, which were made available by Fleishman-Hillard Knowledge Solutions, show concern about corporate greed, short-term financial focus, and the impact of the scandals on the U.S.

SEC Explores Creative Approach to Corporate Accountability

In a speech to the Council of Institutional Investors, Securities and Exchange Commission Chairman Harvey Pitt introduced a new and creative approach to accounting reforms. He called on these major shareholders to exert their influence in constructive ways to help improve corporate accountability. "After all, institutional investors are really just large agglomerations of regular folks," explained Chairman Pitt. "People who choose to invest their money in the same mutual fund ...
A&A

FASB to Consider Project on International Convergence

On September 18, 2002, the Financial Accounting Standards Board (FASB) met with the International Accounting Standards Board (IASB). There were reports that the meeting ended in a definite commitment to future action. But the truth seems to be that no decisions were reached, except that FASB will consider a project on international convergence.A tentative approach might be a 3-part project to address differences between U.S.
Practice Management

Kmart's CFO Steps up to Accounting Questions

Bankrupt retailer Kmart explained the impact of accounting irregularities in a Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC) this week. Chief Financial Officer Al Koch said several employees involved in questionable accounting practices are no longer with the company.Speaking to the concerns about vendor allowances recently raised in anonymous letters from in-house accountants, Mr.

Andersen and Indian Trials Show Two Faces of Justice

After its aggressive prosecution of Arthur Andersen for matters involving alleged destruction of records related to the Enron audit, the Department of Justice (DOJ) showed the public a very different face in a case of missing records related to the American Indian trust fund.
Practice Management

Panel Unveils Plan to Promote Fairness in Executive Pay

The Conference Board's Blue Ribbon Commission on Public Trust and Private Enterprises unveiled a sweeping reform plan to address the types of unfair executive pay practices that have come under increased public scrutiny in connection with a recent wave of accounting scandals. Lawmakers and regulators have tried in the past to reform executive pay by expanding disclosure requirements and revising tax policies. But the panel says these efforts have not been entirely successful.
Practice Management

GE's Ex-CEO Gives Up Perks as SEC Opens Inquiry

In the latest ripple effect of the recent wave of accounting scandals, Jack Welch, former CEO of General Electric, asked GE to take back some retirement perks made public in his recent divorce proceeding. Separately, the company received word of an inquiry into the matter by the U.S. Securities and Exchange Commission (SEC).

American Stock Exchange Sets New Reporting Requirements

The American Stock Exchange (Amex) Board of Governors has approved changes in reporting and governance requirements for companies listed on the Exchange.Highlights of the new reporting requirements:Each Amex-listed company must adopt and disclose a code of ethics and compliance program.Each foreign Amex issuer must summarize in its annual proxy statement any material differences between Amex requirements and corporate governance practices followed in its home country.

SEC Charges Former Tyco Officers With Fraud

The U.S. Securities and Exchange Commission (SEC) has filed fraud charges against three former officers of Tyco International. Due to the nature of some of the violations cited, the enforcement action became known as "a looting case." Other charges include financial reporting violations and lying to the company's auditor, PicewaterhouseCoopers.The former officers named in the complaint are the CEO, CFO and general counsel.

Survey Provides Insight Into CFO-Auditor Relationships

"The ultimate responsibility for financial statements may lie with corporate managers, but by any measure, the audit firms have failed miserably in their role as financial watchdogs." This conclusion is based on results of the second in a series of four surveys on corporate financial practices produced by CFO Magazine.The CFO Survey of Auditor-Client Relationships demonstrates that 38% of auditors challenge the accounting practices of their clients, yet 57% of the clients retaliate by either convincing
Practice Management

Ford Defends Its Accounting for Financing Incentives

In an unusual Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) on September 10, 2002, Ford Motor Company defended its accounting for low-rate financing incentives against statements made in an analyst's report.

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