"He feels it would be less disruptive for his family," company spokesman Gordon Andrew told the wire service. "He's just trying to make life as normal as he can for them."

Fastow's current home is hardly a shack. Located in another upscale Houston neighborhood, the 4,666 square foot house is reportedly valued by the county at $700,000.

According to an Enron internal report, Fastow made at least $30 million off outside partnerships he created for the company. Those partnerships helped the Houston trading specialist keep debt of the company's balance sheet. After the SEC insisted Enron management consolidate those partnerships—that is, put them on the balance sheet—Enron declared bankruptcy.

FASB Issues New Standard
The Financial Accounting Standards Board issued Statement No. 146, which requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.

Examples of costs covered by the standard—"Accounting for Costs Associated with Exit or Disposal Activities"—include lease-termination costs and certain employee-severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity, said FASB in a press release.

Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Statement 146 replaces Issue 94-3.

"Liabilities represent present obligations to others," said Linda A. MacDonald, FASB project manager, in a statement. "Because a commitment to a plan, by itself, does not create a present obligation to others, the principal effect of applying Statement 146 will be on the timing of recognition of costs associated with exit or disposal activities. In many cases, those costs will be recognized as liabilities in periods following a commitment to a plan, not at the date of the commitment."

Mirant to Restate Financials
Management at Atlanta-based energy company Mirant said it will restate several balance-sheet items from its 2001 financial statements.

Those items include an $85 million overstatement of a gas-inventory asset, a $100 million overstatement of an accounts-payable liability, and a potential $68 million overstatement of an accounts-receivable asset. "These figures represent a fraction of Mirant's $22.8 billion balance sheet reported as of year-end 2000," the company's management stressed in announcing the rejiggering.

"These issues were uncovered during consolidation of our corporate and Americas accounting groups and their effort to reconcile differences in asset accounts and liability accounts," said Marce Fuller, Mirant's CEO. "Our internal review has tentatively concluded that any mistakes were made honestly."

Even so, the company said it has retained the King & Spalding law firm to conduct an independent review and provide advice to the company's audit committee. That move was made, explained Fuller, "given the justifiable concerns that all investors share about accounting issues and disclosure in corporate America..."

Fuller said the bookkeeping issues will adversely impact financial results for the first or second quarters of 2002.

Short Takes

• Management at Sprint Corp. said the company obtained commitments for a new $1.5 billion revolving bank credit facility, replacing an existing $2 billion facility. That facility would have expired in August 2003. The telco's management said it has no plans to draw against the new facility. Sprint's share price went up more than 13 percent on the news.
  
  

• The SEC selected Paul Munter and David B. Smith as academic accounting fellows for a one-year term beginning August 2002.
  
  

For the past 14 years, Munter has been professor and chairman of the Department of Accounting at the University of Miami. He is a CPA and has a doctorate in accounting from the University of Colorado-Boulder, and bachelor's and master's degrees from Fresno State University.

He has also co-authored four books and monographs, and more than 150 articles and technical papers primarily on financial accounting and auditing matters in such journals as Journal of Accountancy, CPA Journal, Accounting Review, Behavioral Research in Accounting, and Practical Accountant.

As for Smith: he's currently the Union Pacific Corp./Charles B. Handy Professor of Accounting at Iowa State University. He served as the ISU Department of Accounting chairman from 1998 to 2001.

Not surprisingly, Smith is a CPA and a chartered financial analyst. He holds a doctorate in accounting from the University of Illinois, a master's degree in business administration from the University of Pennsylvania (Wharton School), and a bachelor's degree from Carleton College in Northfield, Minnesota.

For the past two years, he has served on the SEC Liaison Committee of the American Accounting Association. Smith's current research interests include issues related to revenue recognition, financial-statement disclosure of business-segment information, and the use of accounting information to value common stocks.

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