Financial Reporting

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.

New Tool Explains Complex Financial Statements For Potential Investors

Developed by Sageworks, EquityCents provides real-time, objective analyses of public company financials to evaluate prospective investments. Its primary customers are individual investors, investment institutions and media outlets.
Practice

Companies Plan For Possible Shift in Stock Option Accounting

A survey of large U.S. employers conducted by Mercer Human Resource Consulting shows most companies expect a change in stock option accounting over the next five years. Not all have fully analyzed how this change will affect their compensation policies.

New York City's CFO Estimates The Financial Impact of 9/11

When New York City Comptroller William C. Thompson stood up to present his report on the financial impact of the terrorist attacks on September 11, 2001, he began with a quote from John F. Kennedy: "To state the facts frankly is not to despair the future." All told, Mr. Thompson said, the attacks could cost the city up to $95 billion.The 64-page report must have been as difficult to prepare as it was to deliver.

AICPA President Details Six Leadership Roles For The Institute

In a speech made to the Yale Club in New York on September 4, 2002, AICPA President Barry C. Melancon announced that the American Institute of CPAs (AICPA) is committing to fulfilling six leadership roles to help restore confidence in the accounting profession.

Survey: Most Whistleblowers Unable to Protect Themselves

Despite recent publicity given high profile female whistleblowers, a survey by the National Whistleblower Center finds that most whistleblowers are male and many still lack the legal rights to protect themselves from retaliation by their employers. The survey was based on a random review of 200 cases reported to the National Whistleblower Center in 2002.
Practice

Labor Day Report Exposes Excessive Executive Pay

On-going publicity of lawsuits and investigations related to accounting irregularities have brought the issue of excessive executive pay back into the limelight this Labor Day. Leading the rallying cry for reforms are two liberal policy groups, the Institute of Policy Studies and United for a Fair Economy. A report recently released by these groups shows that poor accounting pays off for some CEOs, despite the harmful consequences for workers and shareholders.
Technology

IFAC Probes Issues in Reporting on the Internet

The International Federation of Accountants has pulled together some of the issues that can and do arise when companies release financial information through their Web sites.

SEC Agrees to Phase in Faster And Fuller Reporting Rules

In its first rule-making session this year with a full complement of five commissioners, the Securities and Exchange Commission (SEC) agreed to expand and accelerate the reporting requirements for large public companies. Smaller companies caught a break. The SEC decided to phase in certain requirements over time and according to the size of the company, thereby allowing smaller companies to grow into the faster and fuller reporting requirements.

E-mails Show How WorldCom Blocked Auditor Communications

A series of WorldCom e-mails released by the House Financial Services Committee confirms that members of WorldCom management were not forthcoming in their discussions with the company's auditors. Some of the e-mails hint at a "cover-up" of the accounting techniques used to improperly manage earnings. One particularly egregious accounting technique involved improper capitalization of $3.8 billion in line costs.
Technology

First Call Makes Room for GAAP-Based Earnings Forecasts

First Call, a leading information provider for investors, announced it will modify its earnings tracking system to accommodate forecasts provided in accordance with U.S. generally accepted accounting principles (GAAP). Currently, First Call tracks only profit forecasts prepared on the basis of operating earnings, a measure that excludes one-time items such as profits from selling a business unit.
Practice Management

Accountants Gear Up to Support New Reporting Guidelines

Global reporting guidelines to be issued this week provide timely new ways for accountants to help their clients as they battle a storm of public distrust caused by accounting scandals and workplace greed.
Practice Management

SEC OKs 98% of U.S. Oaths - Europeans Prepare to Swear

The Securities and Exchange Commission (SEC) announced the final results of the corporate certifications due by August 14, 2002.
Practice

Accounting Scandals Take a Toll on Bank Lending Practices

The Federal Reserve Board recently reported that few banks have encountered significant problems with the accuracy or completeness of financial statements submitted to them, but many are tightening up lending practices after widely-publicized accounting scandals and accusations about the roles of banks in cover-ups of unexpected business failures. The Fed's report is based on a survey conducted from May through July.
Practice

Companies Report More Conservative Pro-Forma Earnings

Although the Securities and Exchange Commission (SEC) has warned investors about relying on pro-forma earnings, some well-known companies still reported earnings with these numbers during the second quarter reporting season.

Some Companies Unable to Meet SEC Attestation Requirement

Last week's deadline came and went. Nine hundred forty-seven companies were asked by the Securities and Exchange Commission (SEC) to provide CEO/CFO certification of their financial statements by 5:30 p.m. EST Wednesday, August 14. Although a few stragglers have yet to be checked off the list as either complying with the SEC request or being unable to comply, most of the companies have turned in their sworn statements attesting to the accuracy of the firm's financial statements.To date, 12 companies have indicated they are unable to comply with the order.
Practice Management

AOL Swears To Financials But Warns of Accounting Errors

AOL Time Warner is probably the first company to walk a fine line by swearing to its accuracy of its financials, while simultaneously warning of potential accounting errors. The company submitted its sworn statements to the Securities and Exchange Commission on schedule, but also said it is reviewing the propriety of several advertising transactions that amount to approximately $49 million. The amount is immaterial compared with AOL Time Warner's total revenues.

SEC Deadline Passes Quietly - Accounting Jitters Subside

Investors breathed a collective sigh of relief when the markets closed up on August 14, 2002 on preliminary indications the vast majority of companies had met an important deadline set by the Securities and Exchange Commission. The SEC had given CEOs and CFOs of designated large companies until the end of the day to swear to the accuracy of their companies' financial results, and many waited until the very last minute. The SEC is still sifting through the last-minute deluge and publicly tagging statements that are inconsistent with the standard SEC format.

Markets and Credit Agencies Brace for SEC Deadline

Today is the deadline set by the Securities and Exchange Commission (SEC) for CEOs of 745 major public companies to certify the accuracy of their companies' financial statements. So far, fears of a wave of restatements have not materialized.
Community News

KPMG Consulting Reports 98% Drop in Earnings

The financial reports for KPMG Consulting for the current quarter ending June 30, 2002 show a 19 percent drop in revenues and a 98 percent drop in net income. Revenues for the quarter are $582 million compared with $722 million for the same period last year. Net income for the quarter is $404,000 compared with $22 million for the same quarter last year.

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