Accounting & Tax

Late Filings Remain High: Glass, Lewis

For the quarter ended June 30, a total of 77 companies with a market cap in excess of $100 million filed for an extension, precisely as many as for...
Stephen TaubAugust 22, 2005

The high number of filing delays in the first quarter of 2005 have continued in the second, according to a new report from Glass, Lewis & Co.

For the quarter ended June 30, a total of 77 companies with a market cap in excess of $100 million filed for an extension, precisely as many as for the prior quarter. Last year, 34 companies requested an extension in the first quarter, and just 30 in the second, though a whopping 282 companies filed for an extension for the fourth quarter.

A number of last quarter’s late filers were repeat offenders from recent filing deadlines, according to Glass, Lewis. They include mortgage-finance giant Fannie Mae, which earlier this month warned it would not complete its estimated $11 billion restatement until the second half of 2006, and Terex Corp., a maker of equipment for construction and mining that intends to restate its last five years of financials.

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Glass, Lewis broke down the late filers into four broad categories:

• 14 companies have identified accounting issues that Glass, Lewis believes may lead to an as-yet-unannounced restatement, such as, Tommy Hilfiger Corp., which is analyzing its lease accounting and other tax-related issues.

• 24 companies have experienced some sort of event or transaction that caused the delay; they include Alliance One International, which is consolidating the financials and integrating the administrative and financial transactions of Standard Commercial Corp., which it acquired on May 13.

• 35 companies reported material weaknesses in internal controls, 15 of which received adverse opinions, 1 a disclaimer of opinion, and 14 of which were singled out as having “internal control issues.”

• 25 companies are still finishing work on previously announced restatements, including Fannie Mae, Ace Ltd., BearingPoint, and Flowserve.

As it does each quarter when it issues this report, Glass, Lewis stressed that quarterly financial statements are not subjected to the same stringent audit procedures as annual financials. “As such, filing delays caused by auditors not being able to complete a quarterly review should be viewed with a heavy dose of skepticism, in our view.”

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