Study Predicts 50% Cut in Free Cash Flow

The median free cash flow for nonfinancial companies could sink by 50% during the next year, especially if the recession continues to choke revenue streams, a new report says.Up until now, cash-flow margins — free cash flow measured as a percentage of revenue — have remained flat. But recessions ...

By Marie Leone • March 27, 2009

Real-Life Accounting Scam Nets Producers

Note to Mel Brooks: It’s no longer fiction, as two of the biggest of Broadway’s former producing bigshots — Garth Drabinsky and Myron Gottlieb — were found guilty of engaging in an elaborate accounting fraud.The cofounders of the now-defunct Livent Inc. were found guilty in a Canadian court of tw...

By Roy Harris and Stephen Taub • March 26, 2009

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Tax policy shifts: What CFOs need to know to stay ahead

Discover how evolving tax policies are creating new opportunities and challenges for CFOs.

By CFO.com staff

Digging Common Ground on Bank Accounting

For what could be the first time in history, a meeting of accounting standard-setters this week may have some relevance to the critical G20 meeting set for next week.At a joint session held in London this week, the International Accounting Standards Board and the Financial Accounting Standards Bo...

By Marie Leone • March 26, 2009

E&Y Settles HealthSouth Case for $109M

Ernst & Young agreed to pay $109 million as part of a settlement with HealthSouth shareholders stemming from the health care provider’s earlier accounting scandal.The accounting firm, which agreed to the settlement without admitting to or denying the allegations, had been named in a class-act...

By Roy Harris and Stephen Taub • March 25, 2009

Is Harrah’s in a Hurry to Exchange Debt?

Faced with the potential prospect of defaulting on final bond payments, some struggling companies will choose to exchange notes that have fast-approaching due dates and swap them for new bonds that have extended maturity dates. In many cases, the move is aimed at buying more time for companies th...

By Robert Willens • March 24, 2009

Ticketmaster Takes Goodwill Hit As Stock Sinks

Ticketmaster Entertainment says it took a $1.1 billion noncash, pretax impairment charge to goodwill in the fourth quarter. The charge reflected a plunge in share price since the company was spun off from IAC/InterActiveCorp in August 2008 and the recent economic uncertainty.Ticketmaster’s stock ...

By Stephen Taub • March 20, 2009

Gregg Announces Opposition to Taxing Bonuses

Senate Budget ranking member Judd Gregg (R-N.H.) announced Friday that he opposes Congressional attempts to retroactively tax employee bonuses at companies that received a federal bailout.Gregg, a fiscal hawk who withdrew as President Barack Obama’s Commerce secretary pick last month, said in a p...

By Roll Call Staff • March 20, 2009

FASB Impairment Changes Could Boost Banks’ Profits

Newly proposed guidance on FAS 157, the Financial Accounting Standards Board’s fair-value measurement rule, grabbed headlines this week. Some observers interpreted the guidance as a way in which FASB could re-emphasize that it was not suggesting that banks should use fire-sale prices in valuing t...

By Sarah Johnson • March 19, 2009

Break for the Press: IRS Allows Tax-free Intangibles Swap

The headlines for newspaper businesses have been grim of late. But it seems the federal government is stepping in to lend a hand. No, not with a bailout, but by reversing a position regarding intangible assets, which may make it easier, from a tax perspective, to swap troubled assets if there is ...

By Marie Leone • March 19, 2009

FASB Fair-Value Proposal Fights Sticky Wicket

Fighting an apparently uphill battle against a reading of its fair-value measurement standard that has mistakenly led to fire-sale asset pricing, the Financial Accounting Standards Board on Tuesday night proposed new guidance on mark-to-market accounting.The proposed guidance would come, if it’s ...

By David Katz • March 18, 2009

Crocs Steps onto Going-concern Turf

The stream of companies getting going-concern qualifications from their auditor is widening as the downturn deepens — and as accounting firms get more cautious.Stepping out in the latest round of warnings about what their auditors might say about future viability was Crocs Inc., which got its sta...

By Stephen Taub • March 18, 2009

Ex-BDO Seidman Exec Guilty of Tax Evasion

A former vice chairman and board member of BDO Seidman pleaded guilty to tax evasion in connection with a multimillion-dollar tax-shelter scheme aimed at wealthy clients of the accounting firm.Adrian Dicker, a former partner in the firm’s New York office, was accused of conspiring with others to ...

By Stephen Taub • March 18, 2009

Tempers Flare as IASB Looks to Change Fair-Value Rules

The pressure by bankers to suspend fair-value accounting rules is mounting, and now the build-up seems to be spilling over into the standard-setting process.Last week, the U.S. Financial Accounting Standards Board was at the receiving end of vitriolic accusations made by U.S. lawmakers and bank l...

By Jason Karaian and Marie Leone • March 17, 2009

Merck’s “Unusual” Deal Moves Beyond Taxes

Merck’s acquisition” of its rival, Schering-Plough is being structured in an unusual manner. Despite the relative sizes of the two companies (Merck is vastly larger than Schering and has, by far, the higher market capitalization), Schering will function as the “issuing” corporation in the transac...

By Robert Willens • March 16, 2009

A Fair Value Antidote Is Rushed by FASB

The Financial Accounting Standards Board is encouraging companies to do more legwork when estimating the fair value of assets that are not actively traded.FASB has proposed expedited guidance for a 15-day comment period in response to pressure by bankers, regulators, and lawmakers that the fair-v...

By Sarah Johnson • March 16, 2009

When Can an Asset Sale Become a “Merger”?

As companies move to boost liquidity by selling off assets, some executives will be surprised to find that the transactions may be subject to a new merger rule. The reason: The relatively new accounting rule known as FAS 141(R) expands the definition of a business.As a result, more asset sales wi...

By Marie Leone • March 16, 2009

Accounting: a Narrative Art?

(Click here to view video of this and all other available presentations from the latest CFO Rising conference.)The move to a principles-based accounting system is likely to demand that corporate finance executives be good yarn-spinners, speakers at the annual CFO Rising conference said.A system l...

By David Katz • March 13, 2009

Power Down: PowerCold, Execs Settle with SEC

Climate-control systems maker PowerCold Corp. and three current or former executives — including two former CFOs — settled Securities and Exchange Commission charges that they engaged in fraudulent revenue recognition.PowerCold, which makes heating, ventilating, and air conditioning systems, was ...

By Stephen Taub • March 12, 2009

Congress Members Fume at Fair Value

In their most public flogging to date, fair-value accounting rules were vilified in a congressional hearing today for causing major writedowns at financial institutions and allowing the crisis to continue.For more than a year, the standards have been blamed for bringing volatility to financial re...

By Marie Leone and Sarah Johnson • March 12, 2009

Retail Hits: Writedown in Aisle Three

The impairment hits keep on coming, as companies big and small mark down the value of acquisitions or other assets. Lately, the markdowns have been in the retail aisle.Neiman Marcus led the way with its noncash impairment charges of $560.1 million most recent second quarter, ended Jan. 31 The ups...

By Stephen Taub • March 11, 2009

Oust the SEC as Sole Accounting Watchdog?

Politics are creeping into accounting once again. This time it’s through a proposed law that would replace the Securites and Exchange Commission as the sole overseer of accounting standards, and turn that role over to a high-level group that would let bank regulators have a say in approving accou...

By Marie Leone • March 10, 2009

The State of Restatements: Sharply Falling

For the second straight year — after six years of Sarbanes-Oxley-related increases — the number of corporate financial restatements fell in 2008.Last year, public companies filed 869 restatements, down 29.6 percent from the 1,235 restatements filed in 2007, according to a new study from Audit Ana...

By Stephen Taub • March 10, 2009

Sun Goes Down on Solar Company Execs

The Securities and Exchange Commission settled civil charges with the former CFO and CEO of a defunct solar energy products company for their alleged roles in a financial fraud case.Allen Barnett, the former CEO of AstroPower Inc., and Thomas Stiner, the former CFO, agreed to pay civil penalties ...

By Stephen Taub • March 10, 2009

Data Biz Tax Status No Longer on Shaky Ground

Within the mix of securities that are traded on U.S. exchanges, there are units of publicly traded partnerships (PTPs), which are sometimes referred to as master limited partnerships. The shareholders – or unitholders – of PTPs enjoy the liquidity of corporate stocks and the tax advantages of a l...

By Robert Willens • March 9, 2009

New York CPAs Slam IFRS Roadmap

A prominent accountants group filed a comment letter with the Securities and Exchange Commission Thursday displaying deep skepticism about the workability of the current roadmap for requiring U.S. public companies to use international financial reporting standards.The New York State Society of Ce...

By David McCann • March 6, 2009