Financial Reporting

TV Commercials Play on Accounting Credibility Crisis

Congressional lawmakers, the Securities and Exchange Commission and the accounting profession are all struggling to restore confidence in the financial reporting process, but Madison Avenue advertising agencies seem to be going off in the other direction. They hope to capitalize on the credibility crisis by building business for their clients on the basis of investors' fears and doubts.

Merrill Lynch Cites Six Best Metrics For Assessing Earnings

In a research report released yesterday, Merrill Lynch identified the six key income statement and balance sheet measures that should be reviewed when evaluating corporate earnings. The measures were developed in consultation with Harvard Business School Professor David Hawkins, who is Merrill Lynch's consultant on accounting issues.
A&A

FASB Mulls Retroactive Expensing of Stock Options

With dozens of companies deciding to switch their method of accounting for stock options this year, the Financial Accounting Standards Board (FASB) agreed on August 7, 2002 to consider a significant change in the transition requirements that apply to the year of the switch.
Technology

Nasdaq Invites You to Take XBRL For a Test Drive

The Nasdaq Stock Market has made available a pilot test of how Web services and the Extensible Business Reporting Language (XBRL) will transform corporate communications. You are invited to take it for a test drive and see for yourself how real-time reporting will look and feel in the future.

Silicon Valley Workers Get Hotlines to The FBI

Silicon Valley workers were provided with telephone and e-mail hot lines to send tips about accounting irregularities and securities frauds directly to federal authorities. These fraud tip services are believed to be the first of their kind in the United States. The services were established by the Northern California divisions of the Federal Bureau of Investigation (FBI), working with the Northern California divisions of the U.S.

Warning Sign: Companies Narrowly Meeting Expectations

The Securities and Exchange Commission (SEC) is experimenting with a list of warning signs that may signal a need for additional investigation. These red flags include a pattern of narrowly meeting or exceeding the earnings estimates of securities analysts.Charles Niemeier, chief accountant of SEC's enforcement division, reportedly told the Wall Street Journal a company that consistently met earnings expectations would be of special interest to the SEC, if it also showed revenue increases while cash flow was falling.

CFO Survey Shows Surprising Results

CFO Magazine has published the results of the first in a series of surveys of CFOs of publicly traded companies. Senior financial executives at 141 publicly traded companies participated in the survey. While not definitive, the results are fascinating.Results of this first survey, the CFO Survey of Corporate Financial Planning, show that a surprising 42% of the companies surveyed use special-purpose entities, of the sort that got Enron into trouble, to keep debt off of their financial statements.
Practice Management

Four Ways Companies Combat Accounting Scandals

Shareholder Value Magazine surveyed top executives of publicly held companies to help assess the prevalence of accounting scandals and the corporate response. Respondents to the survey were primarily investor relations professionals of micro cap, small cap and mid cap companies.
A&A

FASB Issues FAS 146, Ending Six-Year Project

Yesterday, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. The statement has been six years in the making. It arrives at the tail end of an economic downturn that has forced many companies to make difficult decisions of the type addressed by the standard.
A&A

FASB to Take Up Accounting For Stock Options

In a surprise reaction to recent events, it appears the Financial Accounting Standards Board (FASB) may soon undertake a project on accounting for stock options. The project does not appear on the technical plan approved by the board on July 10, 2002.

SEC Charges Adelphia, Founder With Fraud

The Securities and Exchange Commission (SEC) filed charges yesterday against Adelphia Communications Corporation, its founder, his three sons, and two senior executives. Earlier in the day, the founder and two sons were led from a Manhattan apartment building in handcuffs. The SEC's complaint charges that Adelphia fraudulently excluded billions of dollar of liabilities from its consolidated financial statements by hiding them on the books of off-balance sheet affiliates.

Lawmakers Agree on Accounting Reform Legislation

U.S. lawmakers reached agreement on accounting reform legislation and sent the bill to President Bush for his signature.
Practice Management

Software Startup Says Growth Was Fictitious, Blames CEO

Silicon Valley companies had been mercifully spared the bad publicity of accounting scandals -- until HPL Technologies announced at a press conference earlier this week that much of its growth was based on fictitious transactions.The San Jose-based software company said it had uncovered massive accounting fraud that was apparently orchestrated by the company's founder and chief executive officer (CEO) who took the company public a year ago.HPL's audit committee chairman estimates that at leas
Practice

Cypress CEO Blasts GAAP, Urges Balance Sheet Integrity

In a paper released last week, T. J. Rodgers, chief executive officer of Cypress Semiconductor Corporation, blasted the Financial Accounting Standards Board (FASB) and generally accepted accounting principles (GAAP) for causing U.S. companies to move toward a second set of numbers known as proforma numbers.Mr. Rodgers cites a PricewaterhouseCoopers finding that 74% of semiconductor companies issue proforma earnings statements.

IASB Votes To Require Expensing of Stock Options

The International Accounting Standards Board (IASB) voted at its meeting in London to publish an exposure draft of a proposed international accounting standard (IAS) that would require the expensing of stock options. This treatment differs from U.S.
Practice Management

SEC Won't Let Companies Modify Financials

In light of the new Securities and Exchange Commission (SEC) requirement that corporate executives attest to the validity of their financial statements, there has been a wave of companies coming forward and asking to revise their financials before the August 14 SEC deadline.On June 28, the SEC ordered that corporate officers must personally certify that their most recent reports filed with the Commission are both complete and accurate.

House Rushes Penalties, Mulls Delay in Accounting Reforms

In an election-year political scramble, the House of Representatives rushed through H.R.5118, a tough reform bill containing criminal penalties for corporate fraud that are even harsher than the ones passed unanimously by the Senate a day before. The man behind the rush, the bill's sponsor, Rep.

Coca-Cola Satisfies Wall Street by Expensing Stock Options

The pause that refreshes just got a bit more refreshing - Coca-Cola Co. announced Sunday it will lead the corporate pack by treating future stock option grants as employee compensation. Quick to pick up the chant were Bank One and The Washington Post Co. AMB Property Corp., a San Francisco real estate company, chimed in as well. Boeing Co. and Winn-Dixie Stores, Inc.
Practice Management

Corporate CEOs, CFOs Voluntarily Certify SEC Filings

As stock prices continue to decline, companies seem to be growing as impatient as investors. Some corporate officers who are not required to comply with the certification order from the Securities and Exchange Commission (SEC) are doing so voluntarily, despite the risk of personal liability for making a false statement.Companies that choose to go this route may also issue press releases to make sure they get recognized by the capital markets.

Senate Unanimously Passes Accounting Reform Bill

By a vote of 97 to 0, the Senate approved an amended version of S.2673, the accounting reform bill authored by Senate Banking Committee Chairman Paul Sarbanes.This bill will create an oversight board that is empowered to set accounting and auditing standards and fine or ban any individual or firm that violates them.

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