Financial Reporting

Post Enron Analysts Focus on the Footnote Factor

Many companies are disclosing more information in their 2001 annual reports as a result of added investor pressures following the collapse of Enron. But some professional investors and analysts seem to be shying away from this trend based on their approaches to forensic accounting and the footnote factor. Wall Streeters see forensic accounting as a way to dig through ever more complicated and voluminous financial reports and make an assessment of the quality of a company's earnings.

Deloitte Publishes Free Practical Guide to IAS

In its April 1, 2002 "Accounting Roundup," Deloitte & Touche, the U.S. arm of Deloitte Touche Tohmatsu, summarized the results of the March meeting of the International Accounting Standards Board (IASB) and provided a link to a free electronic copy of its updated guide to international accounting standards (IAS).Key developments at the March IASB meeting included: Consideration of a project plan on stock-based payments.

BW Rankings Drop Companies with Accounting Issues

The crisis of confidence in accounting numbers has grown so severe, it is even affecting the annual rankings published by the business press. When Business Week published its annual ranking of the top 500 companies by earnings and revenues, it left some companies unranked because their financial statements had raised accounting questions, often accompanied by an investigation by the Securities and Exchange Commission ("After Enron, A Whole New Yardstick," Spring 2002).

SEC Sues Former Waste Management Officers for Fraud

The Securities and Exchange Commission has filed suit against the founder and five other former top officers of Waste Management Inc. for massive fraud. The complaint charges the defendants with inflating profits to meet earnings targets.

IASB Gets More Attention, Issues SIC-32

A survey of U.S. insurance executives conducted by Ernst & Young found that more than two-thirds (67%) of companies have someone tracking developments of the International Accounting Standards Board (IASB). In addition, almost half (44%) have someone within their organization participating on committees related to International Accounting Standards (IAS), and almost a third (30%) have developed an internal task force on IAS.

SEC Chairman Opposes Radical Audit Reforms

Speaking as the final witness before the Senate Banking Committee, Harvey L. Pitt, chairman of the Securities and Exchange Commission (SEC) argued against proposed legislation that would introduce radical reforms for accounting firms, but supported reforms of companies, credit agencies, and accounting standard-setters.
Practice Management

Financial Executives Revise Ethics, Support CARTA

In testimony to the House Financial Services Committee on March 20, 2002, Phil Livingston, president and chief executive officer of Financial Executives International (FEI), said FEI lends its support to H.R. 3763, the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002 (CARTA). Mr.

SEC Responds to DOJ Action with Rules, Hotlines

In response to the recent action of the Department of Justice (DOJ) against Arthur Andersen LLP, the Securities and Exchange Commission (SEC) has released guidance, consisting of a package of rules, hotlines and email addresses for use by investors, clients, and other audit firms.
A&A

FASB Endorses Radical Change in Funding

In a significant change for the accounting profession, the Financial Accounting Standards Board released on March 19, 2002 a statement by its chairman, Edmund Jenkins, saying the FASB will support legislation that would replace its private fu
A&A

FAF Issues Proposal to 'Streamline' FASB

As expected, the Financial Accounting Foundation (FAF) issued a request for comments on proposed changes designed to streamline the standard-setting process of the Financial Accounting Standards Board (FASB).

D&T's CEO Argues Against Three 'Quick Fix' Reforms

Speaking at the Senate Oversight hearings, James E. Copeland, chief executive officer of Deloitte & Touche, spoke out against three types of audit reform proposals that some lawmakers see as "quick fixes" to perceived problems with the accounting profession.Mandatory rotation of audit firms.

Senate Hearings Focus on Radical Accounting Reforms

The Senate Banking, Housing, and Urban Affairs Committee has announced that its series of hearings on accounting and investor protection issues is coming to a close. The tenth and final hearing will be held on March 21, 2002, when Securities and Exchange Commission (SEC) Chairman Harvey L. Pitt will testify. The Senate bill attracting the most attention is the Investor Confidence in Public Accounting Act of 2002. This bill is also one of the most radical reform efforts.
A&A

FASB Vows to Speed Standards, Keep Process Open

Recent Congressional hearings and legislative initiatives have zeroed in on the importance of increasing the independence of the Financial Accounting Standard Board (FASB) and speeding up its standard-setting process.

Congress Hears Testimony and Criticism of AICPA

Barry C. Melancon, president and CEO of the American Institute of CPAs (AICPA), was a key witness at the March 13, 2002 hearing on the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 (CARTA).

International Accounting Standards Get New Respect

No longer the impossible dream, international accounting standards (IAS) just took another step closer to gaining widespread acceptance.
Practice Management

GE and IBM Raise the Bar for Annual Reports

The sudden collapse of Enron has prompted investors to demand greater transparency, and companies are responding by expanding their annual reports. Every company has its own unique disclosure challenges, but corporate giants General Electric (GE) and IBM are clearly at the forefront when it comes to complexity.

President's Accounting Reform Plan Gets Mixed Reviews

On March 8, 2002, President George Bush introduced his ten-point plan to improve corporate responsibility and protect America's shareholders. For the most part, the plan endorses reforms already suggested by the Securities and Exchange Commission (SEC). Reactions were mixed. Some, including the Business Roundtable, think it is a good plan. Others think it doesn't go far enough.

XBRL Statements Make Their Internet Debut

Microsoft Corporation has announced that it is the first technology company to publish its financial statements on the Internet using Extensible Business Reporting Language (XBRL). The company’s second-quarter earnings results, as well as the first- and second-quarter 10-Qs and fiscal year 2001 10-K statement are available as XBRL documents on its investor relations site. XBRL uses tags based on standardized accounting definitions to describe and identify each item of financial information, such as net revenue.

Merrill Lynch Readies GAAP-based Analytical Standards

In an effort to improve the quality of its research, Merrill Lynch has issued an internal memo telling its stock analysts to use a variety of metrics to gauge the state of companies' financial performance, rather than relying on pro-forma earnings. According to the Wall Street Journal, the memo is part of a project to develop and define internal standards for analyzing financial performance.
Community News

Andersen Provides New Insights for Audit Committees

Accounting giant Arthur Andersen is rolling out a new series of publications for audit committees. The inaugural edition of a newly-released newsletter aptly named Insight is available now on the firm's web site.

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