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

Fewer Class-Action Suits Cite Accounting Issues

For the second straight year, allegations of financial-restatement issues were found in a declining percentage of 2007 settled class action lawsuits — appearing in only 30 percent of settlements, according to a new report. Still accounting-related issues of all kinds continued to appear in more ...

By Stephen Taub • April 1, 2008

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

Goodbye GAAP

One of the densest thickets of generally accepted accounting principles is revenue recognition. By one tally, more than 160 pieces of authoritative literature relate to how and when companies record revenue. Now, however, U.S. and international accounting authorities are taking a scythe to the ru...

By Sarah Johnson • April 1, 2008

The GAO’s David Walker

David M. Walker is a man on a mission. Or, more accurately, a tour: the Fiscal Wake-Up Tour. As Comptroller General of the United States, Walker has been a vocal critic of the state of America’s balance sheet. Now, as part of a road show bent on educating citizens about the deficit and other budg...

By Lori Calabro • April 1, 2008

SEC Wants Firms to Explain Fair-Value Choices

The Securities and Exchange Commission has sent 30 letters to CFOs, offering guidance for use of the new fair-value accounting standard that took effect January 1. For one thing, the regulator will expect companies to explain the reasoning behind their estimates of asset and liability values base...

By Sarah Johnson • March 31, 2008

Does Disney Love New York?

Like most states, New York State permits or requires related corporations to report their results of operations, for tax purposes, on a combined basis in some situations. Most notably, combined reporting is used when there are “substantial inter-corporate transactions” among the corporations. In ...

By Robert Willens • March 31, 2008

IDT Sheds E&Y Costs, Picks Thornton

Grant Thornton is in as IDT Corp.’s independent auditor for the rest of its current fiscal year. Big Four firm Ernst & Young is out, a victim of IDT’s mission to cut costs.“It was not the result of any disagreement between the company and Ernst & Young on any matter of accounting principl...

By Stephen Taub • March 28, 2008

Derivatives: The New Disclosure Rule

If you think the Financial Accounting Standards Board’s new disclosure statement on derivatives doesn’t change things very much, ask one of the investors duped by Enron at the turn of this century.Operating in those prehistoric days, before FASB declared war on historic-cost accounting in favor o...

By David Katz • March 28, 2008

Air Supply

Even though the United States does not have mandatory carbon caps, such companies as Intel and Honeywell that generate qualified emissions credits in a voluntary program may see the value of their credits soar in about two or three years. That is when the United States is expected to start regula...

By Avital Louria Hahn • March 28, 2008

New Century Double Trouble: Bad KPMG, No CFO

Allegations of KPMG’s complicity in deficient accounting may lie at the center of the bankruptcy-court-commissioned report on the failure of New Century Financial. But the situation was made much worse by a void in the CFO position during the subprime market’s unraveling in 2006.Further, it was a...

By Roy Harris • March 27, 2008

Xerox, KPMG Settle Investor Suit

Xerox Corp. said it will pay $670 million, and KPMG LLP will pay $80 million, to settle an eight-year-old securities lawsuit filed on behalf of Xerox investors who claimed Xerox committed accounting fraud to meet Wall Street earnings expectations.Xerox said it agreed to settle without admitting t...

By Stephen Taub • March 27, 2008

UTi Runs into “Iron Curtain”

UTi Worldwide Inc. said it will restate its financials for the fiscal year ended January 31, 2007 to correct errors in tax accounting — specifically, the incorrect application of FAS 5, Accounting for Contingencies. It was unclear at press time exactly what contingencies were not properly accoun...

By Stephen Taub • March 27, 2008

India Loves IFRS, and So Does PwC

The groundswell of global support for international standards has a major new supporter: India.That nation plans to adopt International Financial Reporting Standards by 2011, according to Economic Times, an India-based business publication. “A common accounting standard is in the interest of the ...

By Stephen Taub • March 26, 2008

Ex-Riverstone Finance Execs Settle with SEC

A federal judge entered permanent injunctions in a civil action brought by the Securities and Exchange Commission against two former finance executives, three other former officers, and one former employee of Riverstone Networks. The injunctions against the employees of Riverstone, a former maker...

By Stephen Taub • March 25, 2008

What Are Pensions Worth?

The Financial Accounting Standards Board’s crusade to get companies to report their financials in fair-value terms is plunging deeper into the forests of pensions and health care benefits.Last year, FASB required pension plan sponsors to record the funded status of the plans on their balance shee...

By David Katz • March 25, 2008

Minnesota Accountancy Is Sued in Sentinel Chap. 11

The Bloomington, Minn.-based accounting firm of McGladrey & Pullen, along with the partner in charge of now-defunct Sentinel Management Group Inc.’s audit, were sued for $550 million by a Chapter 11 trustee for Sentinel. The trustee charged that accountancy “itself participated in the wrongdo...

By Stephen Taub • March 24, 2008

The Accounting Clock Is Ticking on the Bear Stearns Deal

Even assuming that the reported book value (some $84 per share) of The Bear Stearns Cos. is overstated — because substantial asset write-downs have yet to be incurred — it seems apparent to most observers that the “true” book value is probably much closer to the reported figure than to the price ...

By Robert Willens • March 21, 2008

Ex-KPMG Partner Charged in Saipan Scheme

Former KPMG partner Robert Pfaff was charged in a two-count indictment with participating in a conspiracy to defraud the Internal Revenue Service by concealing tax-shelter fee income, and with conspiring to defraud a company based in Saipan.The indictment was announced jointly by the IRS and Mich...

By Stephen Taub • March 19, 2008

The Fair-Value Blame Game

Despite the beating fair-value accounting has taken from financial-services firms that have absorbed huge write-downs, the concept of mark-to-market valuations is here to stay, according to David Tweedie, chairman of the International Accounting Standards Board.Tweedie predicts that fair value wi...

By Sarah Johnson • March 19, 2008

Uneasy REITers

The Securities and Exchange Commission settled securities fraud charges against real estate investment trust management company W.P. Carey & Co. and two of Carey’s finance executives after alleging that they paid undisclosed compensation to a brokerage firm that sold the REITs to investors.Th...

By Stephen Taub • March 18, 2008

Stepping-Up Isn’t Easy

In an acquisition, the buyer’s objective — from a tax viewpoint — is to secure a “cost basis” with respect to the target’s assets. To be sure, the cost basis is ordinarily described as the original value of an asset, or in an acquisition, the purchase price. And the cost or “tax” basis is used to...

By Robert Willens • March 17, 2008

Rite Aid Deferred-Tax Charge May Hit $1B

Rite Aid Corp. said it will record a non-cash accounting charge of between $800 million and $1 billion for its fourth quarter ended March 1, 2008, related to a valuation allowance on deferred tax assets.The charge is being taken in order comply with Financial Accounting Standard 109. The valuatio...

By Stephen Taub • March 17, 2008

“Tailwind” Brings Down Ex-CFO, Controller

The Securities and Exchange Commission has settled fraud charges against four former officers of a document-management company, including two finance executives. The four are William Rauwerdink, the ex-CFO of Lason Inc.; Robert Bassman, the company’s onetime controller; Gary Monroe, who was CEO; ...

By Stephen Taub • March 14, 2008

BDO International Back on Hook in $521M Negligence Case?

BDO Seidman’s international arm could be brought back into a lawsuit in which the accounting firm was found negligent for failing to detect a Portuguese bank’s massive fraud and ordered to pay $521 million. At issue is the relationship between BDO Seidman and BDO International and whether the lat...

By Sarah Johnson • March 13, 2008

At Nash, “Fresh Start” Begins by Settling Suit

Nash Finch Co. agreed to pay $6.75 million to settle a class action lawsuit that had stemmed from statements it made about an acquisition of two Roundy’s Supermarkets distribution divisions.Putting the suit behind it, said the CEO, will help the Minneapolis-based food distributor concentrate on i...

By Stephen Taub • March 12, 2008