Financial Reporting

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.

SEC Gives Analysts Some Space - On Its Web Site

Recognizing the increasingly important role they play in today's capital markets, the Securities and Exchange Commission (SEC) has now established a separate section on its Web site to provide investor guidance and Commission information about securities analysts.

SEC Widens Its Net to Include 'Channel Stuffing'

On July 11, 2002 Bristol-Myers Squibb, one of the world's largest pharmaceutical companies, confirmed that the Securities and Exchange Commission (SEC) has launched an "informal inquiry" into its sales practices.
A&A

Lawmakers Advance Anti-Fraud Rules and FASB Act

On July 10, 2002, as capital market slides reflected a continuing erosion of investor confidence, lawmakers in both the House and Senate made progress on accounting reforms.

President Bush Plans to Move Accounting Out of The Shadows

Speaking to business leaders on Wall Street on July 9, 2002, President George Bush called for a new ethic of responsibility in Corporate America, consisting of truthful books, honest people and well-enforced laws against fraud and corruption.
Practice Management

A&P Restates Aggressive Retail Accounting Practices

The Great Atlantic & Pacific Tea Company (A&P) restated prior year earnings in a Form 10K filed with the Securities and Exchange Commission on July 5, 2002.
Community News

Senate Report: Enron's Board Knew Accounting Pushed Limits

On July 7, 2002, the day before the Senate took up the accounting reform bill, the Subcommittee on Investigations released a report finding that Enron's directors failed to perform their duties in several important respects.
Practice Management

S&P Lists Top 10 Companies With Most 'Inflated Profits'

Using its new standard for measuring profitability, Standard & Poor's (S&P) ranked companies in order of highest to lowest gaps between their reported earnings and core earnings for 2001.
Practice Management

Three Reasons to Expect More Earnings Restatements

According to a report published by the New York Times, the capital markets have good reason to worry about corporate earnings this year. Companies have at least three good reasons to drag all the skeletons out of the closet and try to wipe the slate clean with an earnings restatement. The three reasons:Legacy of the 1990s. Lawyers and accountants blame the excesses of the 1990s. They say capital markets rewarded growth stocks handsomely, and companies sought to manage stock prices as a way of maximizing the value of their stock-based compensation plans.
A&A

FASB Proposes Accounting Treatment For SPEs

On July 1, 2002, the Financial Accounting Standards Board released a draft of its proposed rules for consolidation of special purpose entities (SPEs), including the types that kept debt off Enron's balance sheet. The proposal explains that SPEs are used for all kinds of purposes, ranging from leasing, hedging, and securitization to research and development. The most troublesome SPEs from an accounting perspective are those that are controlled by a business through some means other than through clear-cut ownership of voting interests.

GASB Issues ED on Disclosures About Investment Risks

On July 1, 2002, the Governmental Accounting Standards Board (GASB) released an exposure draft (ED) designed to provide the public with better information about the risks that could potentially impact a government's ability to provide services and pay its debts.Entitled "Exposure Draft, Deposit and Investment Risk Disclosures," the ED resulted from the first project in GASB's comprehensive review of its existing accounting standards after recent Federal banking reforms. GASB Project Manager Randal J.
A&A

FASB Fights Reforms, Xerox Ignites Squabble Over GAAP

On June 26, 2002, the House Energy Committee heard testimony from the chairman of the Financial Accounting Standards Board (FASB) urging Congress to back-off, leave FASB alone, and stop trying to reform US generally accepted accounting principles (GAAP). The timing could not have been worse.
Practice Management

SEC Orders Corporate Officers to Certify Financial Statements

Support for tough accounting and audit reforms is growing, provided the reforms also include stiff sanctions and penalties for top-level corporate management of large public companies. As the first major step in this direction, on June 28, 2002, the Securities and Exchange Commission (SEC) ordered corporate officers to personally certify that their most recent reports filed with the Commission are both complete and accurate.
Practice Management

Companies Take Steps to Manage Accounting Rumors

WorldCom's plight sent the U.S. capital markets reeling in another wave of accounting shock. It was a jittery week on Wall Street when mere rumors of accounting irregularities were enough to send share prices plummeting. Clearly, the entire telecom sector is on investors' radar screens, but even industrial-era icon General Motors found itself victimized by the rumor mill on June 27, 2002.
Community News

Andersen Embroiled in $4 Billion WorldCom Accounting Fraud

Stricken Andersen has found itself at the center of an alleged $3.8 billion fraud at telecom giant WorldCom.
Practice Management

Deloitte Uses 'Quality of Earnings' to Boost Financial IQs

Deloitte & Touche is taking a leadership role in helping companies and investors understand and move beyond the reasons for today's "crisis in confidence." It recently released "Quality of Earnings," the second in a series of papers designed to help restore investor confidence through the sharing of knowledge and best practices. The paper contains an innovative tutorial that helps companies and investors boost their own financial IQs to a level that complements the Integrity and Quality (IQ) of their independent auditors.

Audit Reform Plans May Leave GASB Out in The Cold

Speaking at the 96th annual conference of the Government Finance Officers Association (GFOA), Tom L.

SEC Charges Ex-CEO of Rite Aid With Accounting Fraud

In a case involving the largest-ever corporate restatement, the Securities and Exchange Commission leveled charges against not only the former chief financial officer (CFO) but also the former chief executive officer (CEO) and other members of the management of the Rite Aid Corporation.

IASB Borrows U.S Accounting For Financial Instruments

Since the Enron collapse, it has become fashionable to criticize U.S. accounting standards and extol the virtues of "principles-based" standards. Some hoped this would improve the prospects for U.S. acceptance of the global standards set by the International Accounting Standards Board (IASB). But, on June 20, 2002, the IASB reversed direction and borrowed the U.S. approach to accounting for financial instruments.It took the IASB two weighty volumes to explain the "rules-based" approach in an exposure draft (ED).
Practice

Panel to Set Audit Guidelines For Corporate Management

After the Andersen verdict was announced, lawmakers and regulators redoubled their efforts to establish a rigorous oversight process for independent auditors, and other reformists joined together in a parallel track for management under the auspices of the Conference Board.

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