Fair Value Footnote Rule Is Step to Convergence

Global accounting took another small step toward convergence today when the International Accounting Standards Board released its new rule on disclosures related to measuring financial instruments at fair value.Known as IFRS 7, the new rule requires companies to disclose the level of liquidity ri...

By Marie Leone • March 5, 2009

The Growing Concern over “Going Concern”

In what may have been a gross understatement, General Motors CFO Ray Young summarized 2008 as “a tough year” in a conference call with investors last week. And GM’s future certainly didn’t look any brighter today, as Deloitte & Touche expressed its doubts that its carmaker-client will stay vi...

By Sarah Johnson • March 5, 2009

Explore the Trendline➔

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

Sinking Like a Phoenix? It Reports Accounting Error

Phoenix Cos. Inc., a financial planning firm, reported some problems with its own financial planning: an accounting error that is forcing it to revise the fourth-quarter and full-year results released last week.In its original report, Phoenix reported a net loss of $424.3 million for the quarter....

By Stephen Taub • March 4, 2009

Former SEC Chief Accountant Blames FASB for Meltdown

Former Securities and Exchange Commission chief accountant Lynn Turner says accounting standards-setters “deserve an F” for allowing companies to incorrectly move assets off their balance sheets and for caving in to political pressure to alter rules.Speaking at a panel discussion in New York this...

By David McCann • March 4, 2009

Comverse Backdating Suit Raises Auditor Liability Questions

In the latest example of an auditor’s work being tied to fraud allegations, former Comverse Technologies CEO Jacob “Kobi” Alexander and the company’s one-time legal counsel, William Sorin, are suing Deloitte & Touche in connection with the purported $57-million stock-option backdating scandal...

By Marie Leone • March 4, 2009

Customers “Banking” on Your Working Capital

Nonfinancial companies are unwittingly acting as banks these days, as customers slow down their payments in an attempt to give their own working capital flexibility.In a recent survey of corporate credit-department managers, 94 percent said they suspect that their customers are leaning on them fo...

By Sarah Johnson • March 4, 2009

Confident Citi Makes a “Risky” Tax Bet

The bad news was not unexpected. In its 2008 annual report, Citigroup reported a $32.1 billion loss from continuing operations, and a net loss of nearly $28 billion. However, the filing, released late last month, also revealed that the bank accumulated about $44.5 billion in net deferred tax asse...

By Marie Leone • March 3, 2009

How Auditors Self-audit: PCAOB Revises Plan

The Public Company Accounting Oversight Board plans to revisit a proposal introduced last year that advises audit firms on how to evaluate their work internally.The board will vote on whether to re-propose the auditing standard during its meeting on Wednesday. The firms’ internal evaluations, whi...

By Sarah Johnson • March 3, 2009

HSBC, Wendy’s, Reliant Lead the Writedowns

Within HSBC Holdings PLC’s filing this morning, detailing the scaling back of its U.S. consumer business, the British banking giant also reported that it took a $10.6-billion goodwill impairment charge for its Personal Financial Services business. And while the largest such writedown, it was one ...

By Stephen Taub • March 2, 2009

Ominous Matters

Talk about being stuck between a rock and a hard place. Back in the autumn of 2007, Paragon Group, a UK-based buy-to-let mortgage specialist with £10 billion (€11.2 billion) of assets under management, had a £280m credit facility due to expire the following year. Paragon’s board members had two c...

By John Zhu • March 2, 2009

Treaty Fails to Save Interest Deductions

Foreign treaties do not necessarily allow companies to sidestep the U.S. tax code, as is illustrated in a legal advisory released last year. In a so-called field attorney advisory (FAA) issued by the Internal Revenue Service in April 2008, (FAA 20090801F, April 24, 2008) a U.S. corporation, condu...

By Robert Willens • March 2, 2009

Taxed to the Max

As jobs vanish and Washington mulls a vast range of economic policy options, one that’s conspicuously absent is corporate tax reform. That alarms many business advocates, who fear that current tax policy is outdated and will cripple U.S. companies if global growth resumes later this year or early...

By Randy Myers • March 1, 2009

Why the Recession Is Good for You

Are you feeling more fit these days? If so, you can possibly thank the recession. So posits Chris Ruhm, a professor of economics at the University of North Carolina at Greensboro, whose research shows that a deteriorating economy inspires people to improve their health. Ruhm, who has studied econ...

By Josh Hyatt • March 1, 2009

PCAOB Audit Chief Thomas Ray Steps Down

Thomas Ray, chief auditor and professional-standards director of the Public Company Accounting Oversight Board, will step down March 6 to return to the private sector, according to the PCAOB.Ray was one of the board’s first professional staff members, having joined as deputy chief auditor in June...

By David Katz • Feb. 27, 2009

Is GM a “Going Concern”? Wait and See

General Motors warned that it anticipates receiving a “going concern” opinion from its auditors, underscoring in yet another way the depth of the embattled automaker’s financial problems.GM said the company and its auditor, which is Deloitte & Touche, “must determine whether there is substant...

By Stephen Taub and Roy Harris • Feb. 26, 2009

In the Impairment Aisle, Macy’s Is Tops

Macy’s Inc. led another wave of companies taking writedowns of goodwill, reporting impairments totaling between $4.5 billion and $5.5 billion for the fourth quarter stemming from the retailer’s August 2005 acquisition of May Department Stores Co.Macy’s said that the impairment charge relates to t...

By Stephen Taub • Feb. 25, 2009

What’s Your Free Cash Flow Margin?

Intuitively, financial executives know that a recession puts the brakes on discretionary spending. Free cash flow dwindles, so that little is available for funding dividends, stock-buybacks, debt repayments, and acquisitions. And companies move into survival mode.A new study, being released today...

By Marie Leone • Feb. 25, 2009

Out of Its Misery: Recording Gains on Condemned Property

Owning condemned property presents some interesting issues with regard to tax strategies, and a private letter ruling released last week by the Internal Revenue Services goes a long way toward answering many of the associated questions.In general, condemned property triggers an “involuntary conve...

By Robert Willens • Feb. 24, 2009

The Impairment Hits Keep Coming

Markdowns in equity values are forcing another round of sizable impairment charges at companies. While they are accounting events, and don’t involve a reduction in cash, the hit to company balance sheets sometimes is severe.Novelis, the Canadian subsidiary of Indian aluminium major Hindalco Indus...

By Stephen Taub • Feb. 23, 2009

Economics Focus: Full Disclosure

Its promises are alluring, yet elusive; everyone, from politician to pundit, calls for more. In its recent report on financial reform, the Group of Thirty, a body of financial experts, mentioned it more than 30 times. Transparency is in vogue. Yet few ask whether it actually works.Not long ago th...

By Economist Staff • Feb. 20, 2009

Study: Many Companies Fail to Write Down ARS Losses (Corrected Version)

(Editor’s Note: This is a substantially cut version of a story first published on CFO.com on February 18. We felt the cuts were necessary after a check of some of the data of the report against company filings showed that the report contains numerous factual errors. We thus recommend that readers...

By David Katz • Feb. 20, 2009

Credit Insurer CEO: We’re not Scapegoats

“Fair-weather friends” prone to make “fairly arbitrary decisions.” These are a few of the criticisms recently hurled at credit insurance companies, who are seen as exacerbating the tension between buyers and suppliers during the downturn.CFO.com put these gripes to Jérôme Cazes, CEO of Coface, a ...

By Jason Karaian • Feb. 20, 2009

Failed But Not Forgotten: The Sequenom Tax

Early last month, Sequenom Inc., a maker of genetic analysis products, attempted a hostile takeover of EXACT Sciences Corp., a genomics company working on cancer cures. By January 28, Sequenom withdrew its bid after EXACT Sciences entered into an intellectual property deal with Genzyme Corp., som...

By Robert Willens • Feb. 19, 2009

Sport: Is It Recession-Proof?

Gloomy days, these, for English cricket. On February 7th the England Test (international) side was skittled out for 51 runs, its third-lowest total in 132 years and 880 matches, as it slid to ignominious defeat against the West Indies, one of the lowest-ranked Test sides in the world.England may ...

By Economist Staff • Feb. 19, 2009

FASB Adds Fair-Value Fix to 2009 Agenda

The Financial Accounting Standards Board is working on guidance to ease accountants’ confusion over how to measure fair value in illiquid markets.FASB said that the new guidelines will discuss how to determine whether an asset or liability’s market is active or inactive and whether a transaction ...

By Sarah Johnson • Feb. 19, 2009