MBIA’s CFO: Taking on the WSJ

At some point in his life, MBIA CFO Chuck Chaplin probably made a conscious decision that he didn’t want to be called Charlie. But like his near-namesake, he’s carrying on a scrappy one-man fight against a seemingly relentless trend — in this case, modern accounting’s penchant for fair-value meas...

By Tim Reason • May 19, 2008

You’ve Got Charges: SEC Sues Ex-AOL Time Warner Execs

The Securities and Exchange Commission filed civil fraud charges against eight former executives of AOL Time Warner Inc. for their roles in an accounting fraud that caused the company to overstate its advertising revenue by more than $1 billion.The SEC alleges that during the two years between 20...

By Stephen Taub and Marie Leone • May 19, 2008

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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

Black Mark

THIS has been a crisis of firsts. The first major crisis of the securitisation era; the first big test of the European Central Bank; and the first crisis of “fair-value” accounting, the set of standards which requires institutions to mark many of their assets to market value. Many blame fair valu...

By Economist Staff • May 19, 2008

Acxiom Restates over Revenue Accrual

Acxiom Corp. says it will restate financial statements for 2007, 2006, and prior years to correct its accounting related to accrued service revenue.The restatement will reduce net income by $2.4 million in 2006 and $2.9 million in 2007, says the provider of customer and information management sol...

By Stephen Taub • May 16, 2008

Some CFOs Spring to Fair Value’s Defense

In an environment filled with skepticism about fair-value accounting, two CFOs of large financial-services companies — Bank of America Corp. and Freddie Mac — are speaking up for the practice of marking assets to market.Their support came in very different arenas.Joe Price, B of A’s finance chief...

By Stephen Taub and Roy Harris • May 15, 2008

From GAAP to Global Accounting in Seven Months

If American companies end up being required to use international financial reporting standards, getting the accounting right will be just one of their problems. “The conversion to IFRS is not an accounting policy project,” said Morgan Stanley’s Alexandra Brougham at an industry conference on Tues...

By Marie Leone • May 14, 2008

Why CFOs Hate Fair Value

Even though fair-value accounting has been around for decades, it began spreading into nearly every cranny of corporate finance only just lately, courtesy of Financial Accounting Standards Board Statement No. 157, Fair Value Measurements, and other strictures. What’s more, the ongoing subprime cr...

By Tim Reason • May 14, 2008

Which Rules Rule? Now Ask FASB

The Financial Accounting Standards Board has issued a new statement creating a “GAAP hierarchy” intended to clarify what should happen in the event that accounting principles conflict with each other.In an effort to reduce complexity, the new statement, FAS 162, identifies the sources of various...

By Alan Rappeport • May 13, 2008

Fair Value: Nothing New under the Sun?

With the credit crisis adding to already simmering controversies about the changeover to fair-value accounting, the Financial Accounting Standards Board apparently thinks the topic worth revisiting in an informal manner. Last week, the board issued a two-page article on fair value and financial r...

By Marie Leone • May 13, 2008

Tax Court: No Theft at WorldCom

Here is a tale of woe, for at least one Worldcom shareholder.Mahdi Taghadoss was employed by WorldCom for more than 17 years. During that span, he received stock options which he exercised on October 31, 2000. He also acquired Worldcom shares in the follow way: on the open market, through Worldco...

By Robert Willens • May 12, 2008

MBIA on $2.4B Loss: Fair Value Isn’t Fair

MBIA Inc., the the holding company of struggling municipal bond insurer MBIA Insurance Corp., posted a loss of $2.4 billion for the first quarter that it says stems largely from the need to mark a pre-tax $3.6 billion unrealized loss on insured credit derivatives to market.On Monday, the company ...

By Stephen Taub • May 12, 2008

Bank Gives Up on Lost Money, Reassigns CFO

After five months of trying to figure out why it couldn’t find $6.2 million recorded on its books, a bank has given up, restated its previous financial results, and reassigned its CFO.On Monday, Willow Financial Bancorp filed an amended annual report for its 2007 and 2006 fiscal years. To make up...

By Sarah Johnson • May 9, 2008

It’s Cott to Be Late

Cott Corp. will file its results late for the quarter ended March 29, its second straight such delinquency. The embattled soft-drink maker says it has revisited a foreign tax issue and is investigating the amount of the possible liability, which entails evaluating accounting and disclosure requir...

By Stephen Taub • May 9, 2008

The Long March

The Financial Accounting Standards Board, America’s maker of accounting rules, reached out to China last week in an effort to nudge it closer to the fold of countries converging toward an international accounting standard.In a memorandum of understanding signed by FASB chairman Robert Herz and hi...

By Alan Rappeport • May 9, 2008

Audit Board Finds Fault with BDO Seidman

The Public Company Accounting Oversight Board found audit deficiencies at five of BDO Seidman’s clients in its latest round of inspections of the second-tier firm. The complaints about BDO from the audit firms’ overseer include a failure to “adequately audit” a client’s recorded loss for a sold b...

By Sarah Johnson • May 8, 2008

Fair Value Rule Triggers $800 Million Loss

The new accounting rule on fair value measurement has caused a private equity firm to plunge into the red. American Capital Strategies reported a loss of $813 million for the first quarter of this year — compared with earnings of $134 million last year — as a result of implementing FAS 157, Fair ...

By Stephen Taub • May 7, 2008

Marsh Bogged Down by Kroll’s Goodwill

Marsh & McLennan Cos. took a $425 million goodwill impairment charge for the first quarter ended March 31. The company said it took the non-cash charge in connection with its assessment of Kroll.Under the accounting rule known as FAS 142, Goodwill and Other Intangible Assets, companies are re...

By Stephen Taub • May 7, 2008

How Far Can Fair Value Go?

Members of a Securities and Exchange Commission advisory committee doubt that the U.S. financial reporting system will ever make a wholesale jump to fair-value accounting. They want the SEC and the Financial Accounting Standards Board to work out some practical issues first — something that could...

By Sarah Johnson • May 6, 2008

REIT Tax Rule Could Help in a Downturn

In a sputtering economy, owners of real estate investment trusts (REITs) may want to consider a novel approach to dividend payouts — use stock to conserve cash. The downside, however, is that the REIT could put its dividend tax deduction in jeopardy if it uses stock, rather than cash, to keep sha...

By Robert Willens • May 6, 2008

At Zoltek, Errors Are Found and CFO Is Out

Zoltek Cos. announced that CFO Kevin J. Schott resigned, effective May 2, and that Chairman and CEO Zsolt Rumy assumed his finance duties on an interim basis.In the same news release, however, the St. Louis-based supplier of carbon fibers used in wind turbine blades and other equipment said that ...

By Stephen Taub • May 5, 2008

Putting the Dimmer on Bright Lines

The Securities and Exchange Commission’s advisory committee plans to erase the so-called bright lines in accounting. Its Committee on Improvements to Financial Reporting (CIFR) believes that “GAAP should be based on a presumption that bright lines should not exist,” according to a report put toge...

By Sarah Johnson • May 5, 2008

The Beginning of the End of GAAP

Mark June 16 down in your BlackBerry. It’s the day the Financial Accounting Standards Board and the Financial Accounting Foundation will host a public forum to discuss a new national blueprint for moving the United States to international financial reporting standards.The forum, to be held at Bar...

By Marie Leone • May 2, 2008

SEC Settles Telecom Twofer

The Securities and Exchange Commission has announced separate settlements of charges against people at two telecommunications companies.Former UTStarcom CFO Michael Sophie and current company chief executive Hong Liang Lu settled a case involving false financial reports and recurring internal-con...

By Stephen Taub • May 2, 2008

Auditor Angst

Want to drive your auditors crazy? Try this: First, meet with them ahead of the annual audit and agree on a date when your work papers will be ready. Then, when they arrive for the audit, tell them you’re “almost ready” and hand over just enough material to keep them busy until lunch. Repeat as n...

By Alix Stuart • May 1, 2008

To Err Is Human, and Common

The Sarbox era has seen a surge in both financial restatements and the finger-pointing associated with them. The two most commonly blamed villains are confusing regulations and overly conservative auditors, but new research challenges that conventional wisdom.Marlene Plumlee, of the University of...

By Kate Plourd • May 1, 2008