Watchdog

Tax

High Court Overturns Andersen Conviction

Calling jury instructions too vague, the U.S. Supreme Court unanimously overturned the 2002 obstruction of justice conviction of the once-mighty Arthur Andersen LLP.The accounting firm, which shredded documents connected to the fallen Enron Corp., was convicted after jurors were told that Andersen could be found guilty even if they determined that the accounting firm "honestly and sincerely believed that its conduct was lawful,” the New York Times reported.
Tax

Suit Alleges PWC Missed 'Key Warning Signs' at AIG

The decades-long relationship between PricewaterhouseCoopers (PWC) and American International Group (AIG) is being scrutinized as regulators allege the accounting firm overlooked problems and issued false audit reports.Advertisement
Tax

Florida Seeking Answers from AIG

Florida's insurance regulator has ordered American International Group Inc. to disclose information about financial misrepresentations and fire those responsible.If AIG does not comply, it faces the possibility of being barred from doing business in the state.The Office of Insurance Regulation ordered AIG, and its 43 units operating in Florida, to hand over information on the nature and extent of misrepresentations on the company's financial statements, Reuters reported.
Tax

AIG Execs Subject of State, Federal Probe

If the former chief executive is found responsible for accounting irregularities at American International Group Inc., as a Wall Street Journal report suggests, the company could try to recover some of his pay under the Sarbanes-Oxley Act.The Journal reported that former top executive Maurice R. “Hank” Greenberg and former Chief Financial Officer Howard I. Smith may have been behind some of the improper accounting that will eventually result in more than four years of earnings restatements.
Tax

Top Ten TV Moms

TV characters are not often cited as role models. Neither are mothers, though they certainly should be and more frequently than TV, movie and sports stars commonly idolized by popular culture. In honor of Mother’s Day, Fox News came up with a list of the top ten TV Moms, proving that while not all TV characters give sound advice, there are a few worth listening to and maybe even learning from.10.
Tax

FBI Begins Wider Look at Insurers' Accounting Practices

The Federal Bureau of Investigation is reviewing accounting practices across the insurance industry to determine whether it may become “the next big one,” in terms of corporate scandals, an FBI assistant director told the New York Times.The comments of Chris Swecker, who oversees the FBI's financial crimes unit, came as agents across the country were instructed to look for accounting irregularities similar to ones ensnaring American International Group, which is being investigated by multiple state and federal authorities."I'm not going to say it is the next crisis, but I will say we
Tax

States Probe AIG's Workers' Compensation Contributions

Problems at American International Group (AIG) intensified this week as New York Attorney General Eliot Spitzer announced plans to audit the insurance giant to ensure it has paid its fair share of workers' compensation premiums, the Associated Press reported.Spitzer's announcement came on the heels of news reported Tuesday by The New York Times that AIG has uncovered at least $1 billion more in accounting problems.
A&A

Fraud Hits Small Businesses the Hardest

As any small-business owner knows, fraud, waste and abuse are hardly confined to major corporations.Scandals featuring high-flying executives living lavish lifestyles can grab headlines - and in the case of Enron, scandal can even make it onto the big screen. Smaller-scale crimes, however, can also levy serious damage. According to the Association of Certified Fraud Examiners, the most costly abuses occur in organizations with fewer than 100 employees.
Tax

Apology for Accounting Failures May Have Been Premature

“I am sorry,” Daniel H. Mudd, interim chief executive of mortgage giant Fannie Mae to ld the Senate Banking Committee last week.
Tax

Credit Card Company Warns 180,000 of Potential Breach

The latest in a string of high-profile data thefts seems to have originated with retailer Polo Ralph Lauren Inc., the Associated Press reported.Data was reportedly stolen from the popular clothing retailer, forcing banks and credit card companies to inform 180,000 customers that their credit-card information may have been exposed.HSBC North America, a division of London-based HSBC Holdings PLC, has begun notifying holders of the HSBC-issued, General Motors-branded MasterCard that criminals may have obtained access to their credit card information and that the cards should be replaced, th
Tax

LexisNexis Breach Affects Hundreds of Thousands

Criminals who stole information from a LexisNexis database in the U.S. may have accessed the names, addresses, Social Security and driver license numbers of nearly 310,000 people, the Associated Press reported.The number of people affected is 10 times as many as publisher and data broker Reed Elsevier Group PLC had originally thought, the company acknowledged Tuesday. Last month, the company reported that personal information about 32,000 people had been accessed in a breach of LexisNexis' recently acquired Seisint unit.
Tax

Greenspan Urges Stricter Regulation of Fannie Mae, Freddie Mac

With the Fannie Mae and Freddie Mac's chief regulator acknowledging it could take years to straighten out accounting problems at Fannie Mae, Federal Reserve Chairman Alan Greenspan is now calling for strict limits on the companies' $1.5 trillion in holdings, the New York Times reported.Greenspan testified Tuesday before the Senate Banking Committee, taking issue with the enormous portfolios held by the two companies, which represent nearly a quarter of the home-mortgage market.
Tax

FBI Starts Investigation into Delphi Books

The FBI has started an investigation into irregular accounting practices at Delphi, the world's largest auto parts supplier.Delphi, based in Troy, Mich., announced last week that it had incorrectly accounted for $237 million in cash payments made in 2000 to General Motors, its former parent company. The errors, Delphi said, resulted in overstatement of pretax income by about $61 million in 2001, the Detroit News reported.The probe stems from an investigation launched by the Securities and Exchange Commission in August.
Tax

Accounting Troubles at AIG Appear Extensive

American International Group (AIG) is conceding it made numerous improper accounting transactions, including the deal it made with a unit of billionaire Warren Buffet's company, the New York Times reported.The deal in question occurred in 2000 between the insurance giant AIG and General Re, a unit of Buffett's company Berkshire Hathaway in which AIG's reserves were artificially inflated by $500 million. Reserves are important to investors and represent the funds an insurer puts aside to pay future claims, the Times reported.AIG now says its accounting for the deal was improper.
Tax

Fannie Mae Facing Another Class Action Lawsuit

On Friday, March 24, 2005, a class action lawsuit was filed against Fannie Mae in the District of Columbia federal court. Attorneys from the Law Office of Frank J. Johnson filed the complaint on behalf of traders in Fannie Mae stock options against the mortgage giant.The complaint alleges Fannie Mae and its top executives misrepresented or failed to disclose the troubled company’s true financial condition in public statements between April, 2001 and September, 2004.
Tax

Son of Boss Settlement Causes Firms to Refocus Priorities

With the nation's largest accounting firms returning to their core business of auditing publicly held companies, they seem to be moving away from the tax-shelter business that landed the firms-and their clients-in the hot seat with the Internal Revenue Service.The tax-shelter boom of the 1990s, complete with a marketing machine operating at full speed, seems to be phasing out as the IRS cracks down on abusive shelters, such as Son of Boss.Last Thursday, the IRS announced it had collected a record $3.2 billion in taxes and penalties from participants in an abusive tax shelter known as Son
Tax

FDIC Wants Banks to Notify Customers of Identity Theft

On Friday, March 18, 2005, regulators at the Federal Deposit Insurance Corp. (FDIC) voted 5-0 to approve a ruling that would force U.S.
Tax

SEC Charges Time Warner with Fraud

The Securities and Exchange Commission this week charged Time Warner Inc. (formerly known as AOL Time Warner) with materially overstating online advertising revenue and the number of its Internet subscribers, and with aiding and abetting three other securities frauds. The Commission also charged that the company violated a Commission cease-and-desist order issued against America Online, Inc. on May 15, 2000. In a separate administrative proceeding, the Commission charged Time Warner CFO Wayne H. Pace, Controller James W.
Tax

Board Members Pay to Settle WorldCom Suit

In a settlement that has sent shock waves through corporate boardrooms, 11 former WorldCom Inc. board members have agreed to pay $20.2 million of their own money to settle a lawsuit tied to the company's $11 billion accounting fraud.The Wall Street Journal reported that the settlement, once sidelined by a legal technicality, was reached on Friday.It is highly unusual for board members to have to tap into their own resources to pay settlements such as this, and the WorldCom settlement, first announced in January, shocked many corporate boards.
Tax

SEC Charges Former Qwest CEO and Eight Others with Massive Fraud

The Securities and Exchange Commission this week charged Joseph P. Nacchio, former co-chairman and chief executive officer of Qwest Communications International Inc., and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws.

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