CSC Blames Filing Delay on FIN 48

Computer Sciences Corp. holds up its first-quarter results, unsure of how the FASB standard will affect its earnings.
Stephen TaubAugust 14, 2007

Computer Sciences Corp. will not be able to file its June quarterly results on time due to an accounting review. Company officials have yet to determine how FIN 48 will impact CSC’s financial statements and do not know when they will file the report for the quarter ending June 29.

Passed more than a year ago by the Financial Accounting Standards Board, FIN 48 is the board’s interpretation of how companies should account for uncertain tax positions. It became effective for fiscal years beginning after December 15, 2006. In a regulatory filing last week, CSC said FIN 48 was the reason it could not meet the August 8 filing deadline but still expected to file the report by the August 13 extension widely provided to companies. However, late Monday, the technology outsourcing giant conceded it had missed this later deadline as well.

The latest announcement from CSC isn’t the first time this year the technology outsourcing giant has announced issues with its accounting and an expected delay in filing its financial reports. In May, CSC reported finding “significant” tax errors in its accounting for tax liabilities in fiscal years 2000 through 2006 and subsequently restated its financials and delayed its fourth quarter and fiscal year-end 2007 earnings. Correcting the errors, as well as less significant slip-ups, resulted in a total charge of $300 million to $400 million through March 31, 2006, the company said at the time.

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The news about those changes came soon after the company announced that it would delay its fourth quarter and fiscal year-end 2007 earnings announcement and conference call to buy added time to finalize the accounting for income taxes related to certain prior-period transactions. Around the same time, the company said Van B. Honeycutt resigned as CEO.

In March, the company restated its results to add $68 million in expenses — $59 million after tax — in connection with stock option grants dating back to 1996. The company explained that 9,234 grants should be modified, primarily because of issues related to when they were authorized and approved and missing documentation.