Writing Up Your Writedowns

Companies continue being forced to write down the deterioration of asset values, including those reflecting acquisitions made in the last few years of higher valuations. This week’s additions: H.B. Fuller Co., OfficeMax, UnitedRentals Inc., and Regions Financial.It is a trend that is likely to co...

By Stephen Taub • Jan. 21, 2009

What’s More Important than Fair Value? Plenty

The call to shut down fair-value accounting, especially for financial instruments in illiquid markets, may be waning. Despite its vilification by bankers for exacerbating the current financial crisis, fair-value accounting shouldn’t be as big an issue for standard-setters as securitization and co...

By Marie Leone • Jan. 20, 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

Knife Maker Splits Royalty Hairs and Loses

Last week, a tax court upheld the government’s notion that some royalties must be capitalized.Specifically, in Robinson Knife Manufacturing Co. Inc. v. Commissioner, T.C. Memo. 2009-9, the taxpayer was actively engaged in the business of designing, developing, manufacturing, marketing, and sellin...

By Robert Willens • Jan. 20, 2009

Pro Forma Distractions at Satyam

Editor’s note:The Kroll report cited below incorrectly reported that percent of Satyam shares held at the beginning of the year by family members was 36 percent. This story has been changed to reflect the correct amount, which was 9 percent.Last February, Srinivas Vadlamani, the CFO of Satyam sin...

By Tim Reason • Jan. 20, 2009

Volcker Calls for New Look at Fair-Value Rules

Calling for a fresh look at current mark-to-market financial reporting rules, Paul Volcker, a top economic adviser to President-elect Obama, has signed off on a financial-reform program more sympathetic to bankers’ views than the current Financial Accounting Standards Board’s fair-value regime ha...

By David Katz • Jan. 16, 2009

Flexible Accounting: KPMG UK Offers Staff a Four-day Week

KPMG UK has invited all 11,000 of its employees, including partners and auditors, to apply to work a four-day week. The firm also told employees they could request partially paid leave for periods ranging from 4 to 12 weeks.A spokesman for the accounting firm said the offer was made to increase t...

By Tim Reason • Jan. 16, 2009

Top Obama Advisers Clash on Global Accounting Standards

With six days to go before Barack Obama’s inauguration as president, two important members of his economic team expressed clashing views on the move to a global system of financial reporting. If Paul Volcker, for instance, has anything to say about it—and if anyone has the president-elect’s ear o...

By David Katz and Sarah Johnson • Jan. 15, 2009

One of Many Issues: Does Satyam Have Enough Cash?

While Satyam Computer Services remains in triage mode in the wake of a $1-billion-plus accounting fraud scandal — and the arrest of its ex-CEO and CFO — the company also seems to be running low on cash. Further, it is unlikely that banks will be willing to lend to India’s fourth-largest software ...

By Marie Leone and Don Durfee • Jan. 14, 2009

Price Waterhouse Denies Report of Office Raid in India

Price Waterhouse India has denied that its offices in Hyderabad were raided by criminal investigators as they searched for information related to the accounting scandal at Satyam Computer Services. According to a statement released by the audit firm in India, there “was no raid” at the Hyderabad ...

By Marie Leone • Jan. 13, 2009

Satyam’s Sins Spur a Credit Suisse Wish List

The fraud committed by Hyderabad-based outsourcing giant Satyam Computer Services is leading to many cries for reforms of Indian accounting rules and practices. But Credit Suisse Securities has put its own calls in the form of a “wish list.”In a report published Monday, Credit Suisse Securities n...

By Stephen Taub and Roy Harris • Jan. 12, 2009

Swapping Multiple Properties Can Nix Tax Play

The often-used Section 1031 rule allows two companies that swap similar properties to defer recognition of capital gains until a sale takes place. Essentially, if two corporations exchange two properties of “the like kind” the gain is not immediately recognized. The term “of a like kind” usually ...

By Robert Willens • Jan. 12, 2009

Have Cash, Won’t Borrow

In what world is Google being outgunned by Baidu.com or is Microsoft being left in the dust by Autodesk? In the realm of free cash flow — or at least that of a relatively new metric called a “free cash growth profile.”The metric reflects the ability of a company to generate free cash flow while i...

By Marie Leone • Jan. 9, 2009

Which One When?

Molasses gets a bad rap for being slow — particularly in January — but 90 years ago this month more than 2 million gallons of it flooded the city of Boston, killing 21 people. Unbelievable as it sounds, a burst storage tank sent a tidal wave of goop racing through the streets at 35 mph, knocking ...

By Alix Stuart • Jan. 1, 2009

Goodwill Hunting

When boards of directors convene to review a dismal 2008, many will vote to leave shareholders with even less. They may have little choice. At dozens of public companies, market values now languish below book values, a situation that makes write-offs likely. While many CFOs may balk at such a mov...

By S.L. Mintz • Jan. 1, 2009

Global Crisis Group Offers Integrity Backstop

The newly established Financial Crisis Advisory Group — a heavyweight board made up of current and former regulators and financial-services executives, and headed by a former commissioner for the Securities and Exchange Commission and a Netherlands regulator — has its work cut out for it in 2009....

By Sarah Johnson • Dec. 31, 2008

Best of 2008: IFRS

The Securities and Exchange Commission’s timeline, proposed in late August, presented long-awaited plans for eventually requiring all U.S. publicly traded companies to change their accounting language. But it raised more questions than answers. Will the plan actually take effect? Or will “interna...

By CFO Editorial Staff • Dec. 30, 2008

Did Reliant’s Ending of Merrill Deal Create a Default?

Merrill Lynch is suing Reliant Energy for terminating a $300 million working capital facility, but Reliant challenges the investment bank’s assertion that the termination constitutes a default of a second agreement between the two companies.In an action filed in New York State Supreme Court, Mer...

By Stephen Taub • Dec. 30, 2008

SEC Oil, Gas Rule Changes Finally Come

Unamimous approval of the long-expected revisions in Securities and Exchange Commission oil and gas company reporting requirements — the first changes in more than 25 years — should modernize the industry’s reporting in major ways. The new disclosure requirements allow companies to use new techno...

By Stephen Taub • Dec. 30, 2008

A Stroke-of-Midnight Change to Fair Value

Standard-setters have thrown their fair-value critics a bone in the waning days of 2008, a year that will be remembered by accounting professionals as — among other things — the true testing ground for mark-to-market measurements of financial instruments.Critics believe that fair-value rules have...

By Sarah Johnson • Dec. 29, 2008

Best of 2008: Tax

Year-end may be the best time to review corporate tax-related coverage. And CFO.com this year offered up a raft of timely information, often digging into consequences of the fourth-quarter collapse of credit markets and Wall Street’s descent into the realm of a back alley.But far beyond those cal...

By CFO Editorial Staff • Dec. 29, 2008

Grant Thornton Picks Top 2008 Tax Issues

For the second year in a row, uncertainty about legislation and court decisions affecting state and local tax laws complicated auditing firm Grant Thornton’s outlook on state and local taxation issues. This year, however, the economic crisis added yet another element of uncertainty to its review ...

By Kate Plourd • Dec. 24, 2008

Valuation Fix Leads Navistar to Restate

Navistar International is restating its results for the nine months ended July 31, 2008, to correct accounting errors that involve cost of products sold, inventory, and accounts-payable valuations.As a result, the company will increase earnings by $50 million to $70 million for the period. The ma...

By Stephen Taub • Dec. 24, 2008

Best of 2008: Fair Value

By year’s end, the fair-value war that had raged throughout 2008 seemed to have fizzled out. With the financial services industry’s seeming crash-dive in public favor to a spot below journalists and lawyers, few bankers had the stomach to continue claiming that their troubles stemmed from mark-to...

By CFO Editorial Staff • Dec. 24, 2008

Rulemakers Launch Revenue-Recognition Makeover

Accounting standards for corporate recognition of revenue from the sale of products and services need an extreme makeover, and American and international standard setters are asking for long-range help. On Friday, the Financial Accounting Standards Board and the International Accounting Standards...

By Marie Leone • Dec. 22, 2008

One Beneficiary of IFRS Switch: the Taxman

Advocates of the move toward international financial reporting standards claim the global rules would make U.S. companies’ financial statements look better. And studies show that, more often than not, a company’s earnings are higher under IFRS than when calculated under U.S. GAAP. But while new r...

By Sarah Johnson • Dec. 22, 2008