- CFOs Provided Candid Insight into Earnings Management Issue
- CFO.com Webcast, “Managing Earnings Management” Discussed Auditors, Executives and SEC Trends and Responsibilities
- CFO.com | US
- June 26, 2002
New York-June 26, 2002- “You can’t turn a frog into a prince,” said one panelist on yesterday’s CFO.com Earnings Management webcast, referring to finance executives’ growing temptation to want to “dress up” earnings numbers. The panel discussion, moderated by John Goff and Marie Leone – Editor-in-Chief and Senior Editor of CFO.com - was held yesterday, and is one in a series of educational webcasts hosted by CFO.com. The timeliness and relevance of the earnings management subject comes on the heels of a number of earnings restatements, fraud allegations and general angst in the financial community, when CFOs are facing greater pressures than ever before to satisfy the often diverse needs of the many constituents they serve – from shareholders, to management, to the analyst community, and everyone in between.
Topics covered in the in-depth panel discussion included: the inherent problems with some of FASB’s (Financial Accounting Standards Board) most precise rules, the use of “cookie jar” reserves, and how analyst expectations, stock prices and executive compensations all motivate earnings management attempts. In addition, the Microsoft, Rite-Aid and Xerox rulings were debated and no one stated the panels’ opinion better than Sharlene Abrams, when she talked about how the CFO tends to take the heat but that it is all of management’s responsibility to be truthful.
Abrams, finance consultant and panel member stated, “When and if the public and analysts start to take a more visionary and longer term look at companies, and stock prices stop being volatile based on quarterly earnings– then we will see management less tempted to perform unnatural acts. The focus needs to change from making the quarterly numbers to the overall health of the business. This will begin to lessen the pressure to skew earnings one way or another,” said Abrams.
The CFO community responded enthusiastically to the roundtable discussion. One participant, J.P. Villamizar, a senior consultant with Jacobs Consultancy, said of the event, “I had never attended a CFO.com webcast. From now on I plan to attend as many as possible. The balanced and candid opinions provided by the panel members provided excellent insights into different ways earnings management could be approached, [as well as] a clear explanation of how auditors, the SEC and the general public view earnings management. I can say this was an invaluable experience and I feel I’ve found [in CFO.com’s Executive Forum] my resource for what is happening in the financial world.”
The Managing Earnings Management webcast is part of CFO.com’sExecutive Forum, a series of webcasts focusing on high impact areas facing financial executives. Yesterday’s webcast was moderated by John Goff, Editor-in-Chief of CFO.com and Marie Leone, Senior Editor, CFO.com. The panel was comprised of leading experts in the area of Earnings Management: Sharlene Abrams, finance consultant, Mark W. Nelson, associate professor of accounting at Cornell University’s Johnson Graduate School of Management; and Theodore J. Sawicki, Partner of Alston & Bind LLP.
CFO.com used PlaceWare Web Conferencing. to power the technology behind the Webcast. The format enabled attendees to interact with panelists via polling and a live Q&A session, and will be available via an archive and transcript on http://www.cfo.com early next month.
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