VideoThese days, reporting on the finance function is a little like writing for Confidential in the 1950s. The corporate blotter has suddenly become filled with titillating -- and often scandalous -- financial items. The financial section has it all. Claims of sleazy accounting practices, often leveled by jilted employees. SEC accusations. Corporate denials. Public humiliations of top executives. Venality. Unadulterated greed. At this point, the only thing missing is a good old fashioned sex scandal -- and, hey, it's only February.
No company seems immune from the fever. The latest case: IBM. On Friday, an article in the New York Times claimed that management at Big Blue did not disclose it used $300 million from a recent sale to lower the company's operating costs. The transaction in question was the January sale of one of IBM's business units to JDS Uniphase -- no stranger itself to the cover of the financial Tattler. The Times also accused IBM of not accounting for the sale as a one-time gain, as is standard practice. Rather, the paper claimed that, during an IBM conference call, the computer giant's managers said the company's fourth quarter profits had grown because of increased productivity and higher sales of certain products.
IBM shot back. A company spokeswoman, Carol Makovich, told reporters that IBM had adequately disclosed the sale of the unit through two press releases from JDS Uniphase Corp., which bought the unit for $340 million in cash and stock in December. "IBM's accounting is conservative and fully compliant with all regulatory standards," Makovich asserted.
As you recall, the SEC recently slapped Trump Hotels & Casino Resorts with the Commission's first cease-and-desist order for pro forma reporting. The Commission claimed that management at Trump failed to mention a one-time, $17 million accounting gain when discussing the company's results for the third quarter of 1999. Without that bump, which came from the termination of a lease agreement, the SEC asserted that Trump Hotels' operating profit for the quarter would have been much lower than the company actually reported. While consenting to the issuance of the cease-and-desist order, management at Trump Hotels & Casino Resorts did not agree to or deny the SEC's findings.
Meanwhile, executives at two slightly smaller companies than Trump Hotels said they will restate recent results.
Management at Measurement Specialties Inc. reported it will restate results for that company's fiscal second quarter. At the same time, the company announced it has fired its chief financial officer, Kirk Dischino. Measurement's management also said it was in default under its loan agreements. The company's management says it needs additional time to determine and verify earnings and inventory valuation.
And management at Almost Family Inc., an adult health-care services operator, said on Friday it has identified errors in its accounting for an employee health benefits program. The company will restate its results for fiscal years ending March 31, 2000 and 2001.
As we hit the year-end auditing season, expect to see a whole lot more of these accounting true confessions.
Love is All Around -- Policies Aren't
As a rule, most human resource professionals and corporate executives frown on workplace romances. Their corporations don't generally have rules addressing the issue, however.
Or at least, that's the finding of a new survey on workplace romance jointly produced by the Society for Human Resource Management (SHRM) and CareerJournal.com. According to the survey, the majority of HR professionals (81 percent) and executives (76 percent) said that workplace romances were dangerous because they can lead to conflict in the organization. Indeed, 76 percent and 71 percent respectively said workplace romances would be something they would personally avoid.
Nevertheless, 75 percent of HR managers in the survey, as well as 59 percent of executives, said their businesses had no policy on workplace romance. "It's natural that when people work together, closely romantic feelings sometimes emerge," said SHRM President and CEO, Helen Drinan, in a press release. "That is why organizations need a workplace romance policy to help set guidelines for what is appropriate, and to prepare the organization for challenges that may arise."
The real challenge may be getting employees to refrain from workplace liaisons. Many employees still view their place of business as their love connection. Indeed, 66 percent of HR professionals and 57 percent of corporate executives in the survey said that over the past five years, workers who had been involved in a workplace romance got married. "Colleagues who are dating should find out what the company policies are on workplace romance so they can avoid potential negative consequences," says Tony Lee, editor in chief and general manager of CareerJournal.com, in the press release. "Although they may not lose their jobs, employees involved in office romances could be viewed as unprofessional, especially if they are public in their displays of affection."
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