Broadcom Pays $12 Million for Backdating

Broadcom Corp. agreed to pay $12 million to settle Securities and Exchange Commission charges that it falsified its reported income by backdating stock option grants over a five-year period. Without admitting to or denying the SEC’s allegations, Broadcom also agreed to a permanent injunction agai...

By Stephen Taub • April 22, 2008

High Court Curbs Taxation on Subsidiary Sale

Can a state tax a part of the capital gain realized by a non-domiciliary corporation on the sale of stock of a subsidiary? That was the issue in a case entitled MeadWestvaco Corp. v. Illinois Department of Revenue US_(2008). The Supreme Court concluded that the decision of the Appellate Court, pe...

By Robert Willens • April 21, 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

Tax Man Takes Aim at Mercury Ex-CFO

The former CFO of Mercury Interactive was hit with an Internal Revenue Service criminal complaint accusing her of tax evasion in one of the first cases in the stock-option backdating scandal.The IRS said that in 2001, Sharlene Abrams tried “to evade and defeat a large part of the income tax due”...

By Stephen Taub • April 21, 2008

For Some, Minority Interests Will Be a Major Boost

New rules that change the way companies account for minority interests in their financial statements will have a small — yet measurable — effect on reported income and debt ratios, says a new study. And some industries and individual companies will see significant changes, according to the report...

By Marie Leone • April 18, 2008

Fair-Value Liability: A “Parallel Universe”?

With its twists and turns through the entire range of financial reporting, the transition to fair-value accounting is throwing off a plethora of brain-busting problems. There is, however, a logical place for senior finance executives to go for guidance: the body that spawned the rules, the Financ...

By David Katz • April 17, 2008

E&Y Revision Prompts Hedge Fund to Restate

One of the handful of hedge funds that went public last year is restating its financials to correct accounting errors. And the decisioni to restate comes after its accounting firm, Ernst & Young, LLP, revised its guidance in the area. GLG Partners said it will restate its financial statements...

By Stephen Taub • April 16, 2008

IFRS Won’t Let Sealegs Get Its Sea Legs

New international accounting rules have plunged a small New Zealand marine company called Sealegs Corp. into the red, just when it was about to break even.About a month ago, Sealegs said it expected break-even operating results for the full year when it posted the results in April. But CEO David ...

By Stephen Taub • April 16, 2008

Accountancy PKF Cyprus Settles with SEC

A Cyprus-based accounting firm agreed to pay $261,565 to settle Securities and Exchange Commission civil fraud charges stemming from audits of AremisSoft Corp., a Nasdaq-traded company that went bankrupt in 2002.According to the U.S. regulator, Savvides & Partners/PKF Cyprus, consented to cha...

By Stephen Taub • April 16, 2008

“Bad Debt” Tax Break Is Not a Sure Thing

The Internal Revenue Service is clear: Section 166(a) of the tax code says that “there shall be allowed as a deduction any debt which becomes wholly worthless within the taxable year.” However, in the case of a guarantor of another party’s debt, a special set of rules operates to determine the t...

By Robert Willens • April 16, 2008

PCAOB Pings Grant Thornton on Lax Testing

Grant Thornton didn’t do enough testing to support some of its 2006 audit opinions, according to the Public Company Accounting Oversight Board’s most recent inspection report of the second-tier independent audit firm. Released on Tuesday, the report says Grant Thornton failed to test the effectiv...

By Sarah Johnson • April 15, 2008

Tax Audits Will Hit Small Biz Much Harder

The largest corporations have a much less chance of being audited than in the past. But smaller companies — especially those with less than $50 million assets — are getting much more Internal Revenue Service attention.According to a new report by the Transactional Records Access Clearinghouse (TR...

By Stephen Taub • April 14, 2008

Two Views of Volatility

Regardless of whether they like fair-value accounting or not, most of the players involved with the wholesale changeover to the new system begun this quarter agree that it will deliver shocks to the financial system. The likely outcome? Waves of volatility through the capital markets for the fore...

By David Katz • April 14, 2008

Bankers: Fair Value Is Like Throwing Gasoline on a Fire

Trade groups representing the international banking community say that current accounting standards requiring fair-value measurement of financial instruments are, as American Bankers Association president and CEO Edward Yingling put it in a statement, “a step in the wrong direction.”The ABA and i...

By Marie Leone • April 14, 2008

Bear Stearns Delays 10-Q

Bear Stearns says it will not be able to file its quarterly report for the period ended February 29 on time, but assures it will do so by the April 14 extended deadline.The embattled investment bank, which has agreed to be acquired by JPMorgan Chase, says its liquidity crisis and executing the me...

By Stephen Taub • April 11, 2008

PCAOB’s Gradison: Let’s Get Cracking on Convergence

The Public Company Accounting Oversight Board’s standards risk becoming the only auditing rules in the United States and abroad that aren’t connected to international guidelines, according to board member Bill Gradison.“Unless PCAOB modifies the format of its standards writing, it may, in two yea...

By Sarah Johnson • April 11, 2008

What Price Fair Value Assumptions?

The Blackstone Group nearly bared it all last month when it revealed in a regulatory filing details about financial instruments it records at fair value. In its fourth-quarter results, the asset management company provided investors with a relatively complete look at its fair value assumptions.Fo...

By Marie Leone • April 10, 2008

The SEC’s Fair Value Letters: Read Between the Lines

In March, 2008, the Division of Corporation Finance of the Securities and Exchange Commission sent an eagerly-anticipated letter to certain public companies (presumably those in the financial services “space”) identifying a number of disclosure issues. Specifically, the regulator asked companies ...

By Robert Willens • April 9, 2008

Audit-Rules Convergence Plays Catch-Up

The large accounting firms have been building the welcome wagon for international financial reporting standards over the past year, encouraging American companies to pay attention to the possibility that IFRS could one day replace U.S. GAAP. Many accounting observers believe the widespread adopt...

By Sarah Johnson • April 8, 2008

Steinway Drums Out Deloitte to Lower Costs

Steinway Musical Instruments is the latest company to drop a Big Four auditor, switching from Deloitte & Touche to UHY Advisors for its fiscal year ending December 2008. Like several other companies that recently made similar moves, Steinway cited cost savings as the chief motivator. “We ha...

By Stephen Taub • April 8, 2008

Split Decision

It was the last thing accounting professor Vivien Beattie expected when she hopped into a taxi in Cardiff, Wales, a few years ago. When the driver learned what she did, he launched into a tirade on the recent demise of Enron. Anyone could see, he said, the company was ripe for fraud given that it...

By Jason Karaian • April 7, 2008

Rite Aid Struggles with Tax Break Prescription

Recently, Rite Aid Corporation made a stunning announcement. The company stated that in compliance with the accounting rule known as FAS 109, Accounting for Income Taxes, “…it expects to record a non-cash income tax expense in its fourth quarter ended March 1, 2008, related to a valuation allowan...

By Robert Willens • April 7, 2008

Corporations Escape Patent Threat

Companies that hold patents won a legal victory over the U.S. Patent and Trademark Office (USPTO) on Tuesday when a Virginia district court struck down two controversial rules that attempted to streamline the patent process. Critics argued that the new rules, issued in November but stopped by the...

By Marie Leone • April 4, 2008

Charges vs. Ex-Andersen Auditor Dropped

After two hung-jury trials, a federal judge has dropped the criminal charges against a former Arthur Andersen accountant and an accounting manager who worked on Peregrine Systems’ financial statements while fraud was going on at the software company. On Tuesday, U.S. District Judge Thomas Whelan ...

By Sarah Johnson • April 2, 2008

CFO Calls It Quits after Accounting Probe

The CFO of VeriFone Holdings has resigned after an audit committee investigation into inventory accounting errors that forced the company to announce it would restate results for prior periods. Barry Zwarenstein’s resignation will be effective upon completion of the restatement and the filing of...

By Stephen Taub • April 2, 2008

Fair-Value Question Stalls Derivative Standard

The attempt to curb complexity in financial reporting can spawn complexities of its own—especially when it comes to derivatives and their ilk. That’s what the Financial Accounting Standards Board is finding as it tries to streamline standards for gauging the value of financial instruments.On the...

By David Katz • April 1, 2008