VideoIn a September 6 letter to the SEC, BDO cited the company's "lack of an experienced CFO, deficiencies in recording material transactions," and the failure to organize and retain documents, according to the article.
Report: SEC Probing Lucent's Accounting
They're very busy at the SEC these days.
Besides the probe into Pitt's handling of the PCAOB fiasco, the commission is also investigating possible improper accounting at Lucent Technologies. This, according to an article in USA Today, citing government officials.
The SEC is reportedly looking into whether the telecom-equipment company used aggressive accounting in 1999 and 2000 to inflate sales numbers.
The SEC plans to send the company the dreaded "Wells notice" within a few days, said the paper, citing a government source familiar with the investigation. These notices advise that the SEC plans to recommend filing civil charges and give the recipients a chance to reply.
Generally, a Wells notice leads to a civil lawsuit.
About two years ago, Lucent restated $679 million in revenues after conducting its own internal review of its bookkeeping practices.
In February 2001, theWall Street Journal reported the SEC was formally investigating Lucent's accounting practices. The agency wound up taking no action, however.
The company, though, is currently facing a lawsuit alleging Lucent executives booked hundreds of millions of dollars in bogus revenue by claiming nonexistent sales and so-called channel stuffing—that is, executives booked large sales and shipped product after reaching private agreements with distributors that they didn't have to pay for any Lucent products they didn't sell.
(Editor's note: According to CFO PeerMetrix, Lucent's cost structure continues to be way out of whack with costs at other network-equipment specialists. To see how Lucent stacks up in our cost-management ranking—or to compare your company against peers—click here.)
SEC Files Embezzlement Complaint Against Former Treasurer
And yet more from the SEC. Yesterday, the commission filed a complaint in U.S. District Court alleging Larry Ohms, the former treasurer of Dallas-based United States Lime & Minerals Inc., embezzled nearly $2.2 million from the company between January 1998 and December 2001.
The agency claims Ohms forged the signatures of other company officers on checks, and falsified the company's check register to create the appearance that these checks were for the company's legitimate business expenses.
The SEC also alleges that Ohms supervised U.S. Lime's internal accounting controls and financial reporting, and used his position to escape detection by falsifying the company's books and records, lying to its outside auditors, and preparing false financial statements that he then caused the company to file with the SEC.
The complaint charges Ohms with fraud, circumventing internal controls, falsifying books and records, and lying to auditors.
The SEC requested that he be barred from serving in the future as an officer or director of a public company, and ordered him to disgorge the full amount that he stole from U.S. Lime, with prejudgment interest.
Businesses Sitting on their Wallets
Recovery? What recovery?
U.S. businesses, the key to any sustained economic rebound, said they don't plan to increase hiring during the next few months and have cut spending plans. Or at least that's the takeaway from a quarterly survey conducted by the National Association for Business Economics.
More of the 108 companies that responded to the survey fired workers than hired them in the July—September quarter. In addition, more businesses expect to pare their payrolls in the next six months than expand them.
Businesses also cut capital spending for the sixth straight quarter, the longest stretch of declines in the survey's 20-year history.
While more companies plan to boost spending in the next 12 months than cut it, those spending plans have been scaled back of late.
Short Takes
- Aon Corp., whose earnings jumped 78 percent last quarter, said it plans to raise about $1 billion to meet debt and pension obligations in 2003. It said $500 million to $600 million would be in the form of equity-linked securities. The company also expects pension obligations to hurt future earnings.
The increase in pension expenses "is very large even for a company of Aon's size," Joanne Smith, an analyst at UBS Warburg LLC, told Reuters.
- Freddie Mac issued $1 billion of 10-year global subordinate callable notes, priced to yield 5.28 percent, or 130 basis points over comparable U.S. Treasuries. The lead underwriters were Credit Suisse First Boston, Lehman Brothers Inc., and Salomon Smith Barney.
- IBM is slashing prices on the new version of its database software for midsize companies, according to Reuters. The company's entry-level DB2 Workgroup Server Unlimited Edition database, geared toward companies with fewer than 1,000 employees, will now go for $7,500 per processor, 46 percent lower than the price on the current version. That database is also called DB2 standard edition.
IBM also merged two high-end database products—DB2 Enterprise Edition and DB2 Extended Enterprise Edition—and simplified its pricing structure for the new, combined product, Reuters reported.
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