Big GAAP, Little GAAP

Small companies are feeling the pinch of increased regulation these days. Many CFOs of small businesses say they are being unfairly punished for the indiscretions of such large companies as Enron, WorldCom, and Tyco by having to implement new rules that are disproportionately time-consuming and c...

By Joseph McCafferty • June 28, 2004

SEC Settles with Two Former Qwest Execs

The Securities and Exchange Commission settled civil fraud charges against two former Qwest Communications International, Inc. officers. The charges involved the alleged roles of the ex-officers in helping the telecom overstate revenues.Augustine Cruciotti, a former senior vice president of Qwest...

By Stephen Taub • June 24, 2004

Career Education Corp. Faces SEC Probe

Career Education Corp. reported that it received a formal order of investigation from the Midwest Regional Office of the Securities and Exchange Commission .The company, which operates 80 colleges and universities in the United States and overseas, said it intends to continue to fully cooperate w...

By Stephen Taub • June 24, 2004

Lay’s Attorney on the Offensive

Over the weekend, the Houston Chronicle reported that in about two weeks, U.S. prosecutors will ask a federal grand jury to hand up an indictment of former Enron Corp. chairman Kenneth Lay.Rather than sit back, Lay’s attorney — Mike Ramsey — has gone on the offensive. Ramsey called a press confer...

By Stephen Taub • June 23, 2004

You Bought It, Now Audit

These days, audits are rarely a source of solace, but finance executives who find IT daunting may actually be relieved to know that IT audits are suddenly in vogue, and provide exactly the sort of big-picture view that most CFOs need. IT audits are not, as you may have guessed, a matter of pure a...

By Bob Violino • June 23, 2004

Beware the ”Trash” Folder

As more and more business becomes documented in E-mail rather than memos and reports, document retention becomes a challenge on several levels. Whether it’s compliance with the Sarbanes-Oxley Act of 2002, Securities and Exchange Commission regulations, or laws governing the handling of patient da...

By John McPartlin • June 22, 2004

Former HealthSouth CFO Gets Probation

If you are one of the scores of top corporate executives who have been accused of committing accounting fraud during the past few years, the best place to have performed these transgressions, it seems, was at HealthSouth Corp.Even though the government has boasted that it quickly extracted guilty...

By Stephen Taub • June 22, 2004

Donaldson Rails at Proxy Critics

William Donaldson, chairman of the Securities and Exchange Commission, lashed out at critics of the SEC’s proposed rules that would open up the proxy process.In a speech over the weekend to a meeting of corporate directors at Stanford University, Donaldson decried the “escalating, shrill, and fea...

By Stephen Taub and Joseph McCafferty • June 22, 2004

Andersen Conviction Upheld on Appeal

A federal appellate court in New Orleans unanimously upheld the two-year-old jury conviction of accounting firm Arthur Andersen for obstruction of justice related to its client Enron, according to the Houston Chronicle.Andersen was convicted on June 15, 2002. That October, U.S. District Judge Mel...

By Stephen Taub • June 18, 2004

Proxy Season Quieter in 2004, Says ISS

The 2004 proxy season was less confrontational than it has been in recent years, according to an analysis by research firm Institutional Shareholder Services.In fact, said the ISS, the trend this season saw corporations listening to and acting upon reasonable shareholder concerns. Sure, there wer...

By Stephen Taub • June 18, 2004

Voluntary Sarbox for Private Companies

The Sarbanes-Oxley Act, which was created to better scrutinize and police the accounting and controls of public companies, has inspired a growing number of private companies, to change their accounting practices voluntarily.In a survey of 1,359 chief financial officers of privately held businesse...

By Stephen Taub • June 16, 2004

Halliburton Accused of ”Deficiencies” in Iraq

Government auditors are turning up the heat on Vice President Dick Cheney’s former company.William Reed, director of the Pentagon’s Defense Contract Audit Agency (DCAA), testified in congressional hearings that his agency found “significant deficiencies” in how Halliburton has handled billions of...

By Stephen Taub • June 16, 2004

Calpers to Oppose Health-Care Merger

The California Public Employees’ Retirement System announced that it would oppose the proposed merger of WellPoint Health Networks and Anthem Inc., citing excessive pay packages to be given to top WellPoint executives.Calpers is calling on other shareowners to oppose the merger, which would creat...

By Stephen Taub • June 16, 2004

Link Found Between Candor, Share Prices

Honesty is the best policy, if a company’s leadership wants a better stock price.That’s the conclusion of the Rittenhouse Rankings survey, which claims that there’s a positive correlation between candid communication and superior share-price performance. Of the sample 100 Fortune 500 companies su...

By Stephen Taub • June 15, 2004

Computer Associates Suit Mulled

Activist investor Sam Wyly could be causing yet another stir at Computer Associates, which has been the target of an investigation by the Securities and Exchange Commission and Department of Justice for more than two years.Ranger Governance Ltd, an investment group led by Wyly, a Texas investor, ...

By Stephen Taub • June 11, 2004

Lea Fastow Headed to Detention

Lea Fastow, the former Enron employee and wife of former Enron CFO Andrew Fastow, will start serving her one-year sentence on a misdemeanor tax charge on July 12, according to published reports.She has been ordered to report to the Federal Detention Center in downtown Houston, which is considered...

By Stephen Taub • June 10, 2004

Whistle-Blower Claims Mostly Dismissed

One of the most frequently used provisions of the Sarbanes-Oxley Act empowers corporate whistle-blowers, explicitly laying out procedures that protect them from being punished by the companies they blow the whistle on. Under the act, such employees are entitled to get their jobs back and be reimb...

By Stephen Taub • June 10, 2004

Managing the Risks of Sarbox 409

Even as it spawns new risks for their corporations, the pressures imposed by real-time reporting under the dictates of Section 409 of the Sarbanes-Oxley Act can add to the legal liabilities of finance chiefs and their bosses.Under that section, companies must disclose the facts about financially ...

By David Katz • June 10, 2004

The Reality of Real-Time Reporting

To report or not to report?When finance executives must choose whether to pump out an 8-K or wait until the quarter’s end to reveal a possibly important business event, now might be a good time to err on the side of caution. That, at least, is the working philosophy of Mike Gersie, chief financia...

By David Katz • June 10, 2004

AMEX Passes on Proxy Action

The American Stock Exchange chose not to take action against a company on a matter involving a shareholder proposal that had not appeared on the company’s proxy statement.In November 2003, Espey Manufacturing & Electronics Corp., a small maker of electronic-power supplies and other components...

By Stephen Taub • June 9, 2004

Sullivan Pleads Guilty to Conspiracy

Former WorldCom CFO Scott Sullivan pleaded guilty to a Mississippi state charge stemming from his role in the telecom company’s accounting scandal.The ex-finance chief pleaded guilty to one count of conspiracy to commit securities fraud, according to the Associated Press. Although sentencing was ...

By Stephen Taub • June 9, 2004

Enron Trial, Martha Sentencing Postponed

One judge postponed the start of the first scheduled Enron criminal trial while another judge postponed the sentencing of Martha Stewart, who has been convicted of obstruction of justice.In Houston, U.S. District Judge Ewing Werlein, who will preside over the first scheduled Enron criminal trial,...

By Stephen Taub • June 8, 2004

Vivendi’s Ex-CFO under Investigation

Guillaume Hannezo, the former chief financial officer of Vivendi Universal SA, is being investigated by French officials looking into alleged wrongdoing at the media and telecom giant, according to wire service reports.Hannezo was formally put under investigation on Friday for possible stock mani...

By Stephen Taub • June 8, 2004

Company Size and 404 Compliance

How companies approach compliance with Section 404 of the Sarbanes-Oxley Act varies widely, depending upon the size of the company, a survey has found.According to Parson Consulting, which surveyed 96 finance directors and financial controllers of U.S. public companies, there are “pronounced diff...

By Stephen Taub • June 8, 2004

SEC Toughening Up on Noncooperation

Last week’s $37 million settlement between the Securities and Exchange Commission and Symbol Technologies — part of the bar code giant’s $138 million settlement of civil and criminal charges — reflects a stronger stance by the commission toward companies that fail to cooperate with SEC investigat...

By Stephen Taub • June 7, 2004