More 404 Guidance, Please

See our special report on “The 404 Debate.”Speakers at the first panel of the Securities and Exchange Commission/Public Company Accounting Oversight Board roundtable on Section 404 requested management-specific guidance for the internal-controls assessment process and raised the hope that such gu...

By Helen Shaw • May 10, 2006

Material Weakness at the Roundtable

See our special report on “The 404 Debate.”Regulators were asked to go back to the drawing board by panelists speaking out about second-year experiences related to Section 404 of the Sarbanes-Oxley Act. Many panelists — including corporate-governance gurus Barbara Hackman Franklin and Mary K. Bus...

By Marie Leone • May 10, 2006

Panel: Don’t Audit Low-level Risks

See our special report on “The 404 Debate.”“Don’t sweat the low-risk accounts” was the message from companies to regulators during a roundtable on the second-year experiences of Section 404 implementation. Panel participants said they would like to see more qualitative factors considered during 4...

By Marie Leone • May 10, 2006

404 Makes an IPO: Mission Impossible

As a backdrop for Tom Cruise in Mission: Impossible III, satellite images of “enemy surveillance” and “global reconnaissance” are scattered about a dimly-lit, futuristic control room. The set may be a Hollywood fantasy, but the software generating the clandestine images is real, and supplied by d...

By Marie Leone • May 9, 2006

Gemstar Ex-CEO Ordered to Pay $22 Million

A federal judge has ordered Henry Yuen, former chief executive officer of Gemstar-TV Guide International, to pay $22 million to settle civil charges stemming from his role in the company’s accounting scandal, according to published reports.The sum includes penalties, interest and a return of ill-...

By Stephen Taub • May 9, 2006

Flirting with Disaster Recovery

Mention business continuity to CFOs and see how long it takes them to change the subject. Yes, it’s a risk issue, and they’ll readily agree it demands attention. Just not theirs. Typically, business continuity, which includes contingencies for business interruptions ranging from telecom outages t...

By Elaine Appleton Grant • May 8, 2006

Enron Defense Rests

Examine our Enron archive“I’m sure on January 31, you thought this day would not arrive,” Judge Sim Lake told jurors Monday at the trial of Kenneth Lay and Jeffrey Skilling, reported the Houston Chronicle.The 53-day trial has been adjourned until May 15, when closing arguments are scheduled to be...

By Stephen Taub • May 8, 2006

Ex-CFO of HealthSouth Faces Resentencing

A federal appeals court ruling may send Malcolm McVay to prison after all, according to the Daily Business Review, a South Florida-based legal and business newspaper.McVay — one of five former chief financial officers charged in connection with the $2.7 billion accounting scandal at HealthSouth ...

By Stephen Taub • May 8, 2006

Spitzer Sues Liberty Mutual

New York State Attorney General Eliot Spitzer announced Friday that he is suing another insurer for participating in what he describes as a widespread bid-rigging scheme.On Friday he filed a civil complaint against Liberty Mutual, alleging the property-casualty insurer made payoffs to insurance b...

By Stephen Taub • May 5, 2006

CFO, Chairman Leave amid Options Probe

Power Integrations Inc. came out with two big announcements on Friday: the resignation of its CFO and chairman, and initial findings from an internal investigation that cited discrepancies between actual and recorded stock-option grant dates.CFO John Cobb and chairman Howard Earhart resigned from...

By Stephen Taub • May 5, 2006

Shareholders Abandon Qwest Settlement

The life may be draining out of the Qwest Communications class-action settlement. According to company regulatory filings, many shareholders have backed out of the proposed $400 million settlement, which could mean Qwest is on the hook for a lot more money than it anticipated when it agreed to se...

By Stephen Taub • May 5, 2006

House Committee Chair Wants 404 Reform

The Chairman of the House Committee on Small Business is calling on the Securities and Exchange Commission to exempt small public companies from the Sarbox 404 reporting because the cost of compliance with the provision’s rules outweighs the benefits.At a hearing on Wednesday, Committee Chairman ...

By Marie Leone • May 5, 2006

Shareholder Suits Drop to Nine-year Low

Are shareholders becoming less litigious? That may be one explanation for the recent drop in the number of lawsuits filed. According to a new report from PricewaterhouseCoopers, for example, the number of private securities cases filed in the United States plunged to its lowest level in nine yea...

By Stephen Taub • May 4, 2006

The Official 404 Roundtable Agenda

9:00 a.m. Opening Remarks Chairman Christopher Cox, U.S. Securities and Exchange Commission (SEC) Acting Chairman Bill Gradison, Public Company Accounting Oversight Board (PCAOB)9:15 a.m. Introduction and Panel One — Overview of the Second Year Lead Moderator: John W...

By Securities and Exchange Commission • May 4, 2006

SEC Chief Accountant Defends 404

The Securities and Exchange Commission’s acting chief accountant, Scott Taub, defended the SEC’s implementation of Sarbanes-Oxley 404 today, suggesting soaring costs were due to overly detailed controls testing. Taub also threw more cold water on industry hopes that 404 might be modified for smal...

By Ronald Fink • May 4, 2006

The Second Time Around

The Securities and Exchange Commission and the Public Company Accounting Oversight Board have set the stage for another donnybrook between corporate executives and their independent auditors on matters concerning internal controls over financial reporting. The agenda for the regulators’ May 10 ro...

By David Katz • May 4, 2006

Accounting Expert Endorses Enron Moves

Examine our Enron archiveAn accounting expert in the Enron trial defended the company’s decision to shift part of one business unit to another, which the prosecution claims was done to hide losses, according to the Associated Press.Testifying for a second day, Walter Rush, a consultant and former...

By Stephen Taub • May 4, 2006

Accounting Experts Back Enron’s Numbers

Examine our Enron archiveAccounting experts testifying for the defense endorsed Enron Corp.’s financial statements, said the Associated Press. Jerry Arnold, an accounting professor at the University of Southern California, told jurors that third quarter 2001 financials that former Enron Chairman ...

By Stephen Taub • May 3, 2006

Panels on 404 Skirt Small-Company Woes

The Securities and Exchange Commission and the Public Company Accounting Oversight Board have made it clear that their upcoming May 10 roundtable on financial internal controls reporting and auditing will have little to do with the experiences of small companies.That’s because the panelists at th...

By David Katz • May 2, 2006

Lay Finishes Testimony

Examine our Enron archiveCalling the company’s collapse “the most painful thing in my life,” the former Enron Corp. chairman Kenneth Lay left the witness stand after a final testy exchange with federal prosecutor John Hueston, the Associated Press reported. Hueston reportedly scoffed at earlier s...

By Stephen Taub • May 2, 2006

Shareholder Settlements Leveling Off?

Shareholder class action settlements hit a new peak in 2005. Excluding the Enron and WorldCom settlements, the average settlement value was $24.3 million, surpassing the previous high of $23.7 million in 2002. Yet, settlements may be stabilizing and may fall in the next two years, according to a ...

By Helen Shaw • May 2, 2006

Former Patterson-UTI CFO Pleads Guilty

Jonathan Nelson, the one-time chief financial officer of oil and gas drilling company Patterson-UTI Energy Inc., pleaded guilty to defrauding his former company. Nelson’s plea agreement, reached last week, included one count of wire fraud and one count of engaging in monetary transactions derived...

By Marie Leone • May 1, 2006

Prosecutors End Cross-Examination of Lay

Examine our Enron archiveProsecutors wrapped up their cross-examination of former Enron Corp. chairman Kenneth Lay after three days of testy, spirited exchanges.In his final salvo, prosecutor John Hueston accused Lay of engaging in insider trading, pointing out that in late November, just three h...

By Stephen Taub • May 1, 2006

HealthSouth May Collect from Ex-CFO

HealthSouth Corp. apparently aims to collect a $1.4 million judgment award from a former CFO who has been sentenced to five years in prison.The health care company won the award in March against one-time finance chief William Owens. HealthSouth filed the judgment with the Shelby County (Alabama) ...

By Stephen Taub • May 1, 2006

Financial Firms Prep for Another 9/11

Responding to government pressure in the wake of 9/11, the Manhattan-based organizations that clear and settle the bulk of financial transactions now have data and operations centers far from their main sites, according to a report just issued by the Federal Reserve, the Comptroller of the Curren...

By David Katz • April 28, 2006