NEC Gives Up over Revenue Recognition

NEC Corp. says it is stumped by U.S. accounting rules for revenue recognition and has given up trying to comply with them.The Japanese electronics giant says it realizes this will likely lead to the delisting of its ADR shares on Nasdaq. It also says it will not be able to file its 2006 annual re...

By Tim Reason • Sept. 21, 2007

No Penalty: Jabil Settles Options Suit

Jabil Circuit said it has settled a derivative lawsuit stemming from the backdating of stock option grants to certain members of senior management. The proposed settlement does not entail payment of any fines or penalties, the company said in a press release.However, the company also noted that i...

By Stephen Taub • Sept. 21, 2007

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

Ex-Auditors Settle Securitization Charges

The securitization fraud that is partly responsible for putting a financial-services firm out of business is now causing problems for that company’s former auditors. On Wednesday the Securities and Exchange Commission reached a settlement with three former auditors of National Century Financial E...

By Marie Leone • Sept. 21, 2007

Jersey Football Fans Sacked for Tax Loss

The privately-funded stadium that is currently being built to house New York City area’s two professional football teams is apparently not so private after all. It turns out that taxpayers will be hit with part of the bill, even though the New York Giants and New York Jets are shelling out $1 bil...

By Stephen Taub • Sept. 20, 2007

Ex-CFO Says He Won’t Be the “Fall Guy”

Bradley Rush wants restitution. The former chief financial officer of Sunrise Senior Living launched a lawsuit on Tuesday against his former employer for breach of contract and defamation. The suit, filed in a Virginia court, claims that Rush was abruptly terminated without cause in May 2007, and...

By Stephen Taub • Sept. 19, 2007

Will the SEC Go Green?

A coalition of state governments, institutional investors, and environmental groups is urging the Securities and Exchange Commission to get tough with publicly-traded corporations that don’t fully disclose risks tied to climate change on their financials.The groups make their case in a 116-page l...

By Marie Leone • Sept. 19, 2007

Quest’s Quest Finds More Backdating Errors

Quest Software Inc., in discussing an expected $143 million pre-tax charge to correct errors in past accounting for stock options, said it had found additional mistakes in its historical financial statements that need correcting.The Aliso Viejo, Calif.-based developer of database management softw...

By Stephen Taub • Sept. 19, 2007

Investor Advocate to Leave Audit Oversight Board

When Kayla Gillan, a founding member of the The Public Company Accounting Oversight Board, leaves the PCAOB by the end of January, it will be with the sense of having crafted a work in progress.Earlier this week, the PCAOB announced that Gillan would step down after more than five years with the ...

By Alan Rappeport • Sept. 19, 2007

UTStarcom Restates to Correct China Revenue Errors

Revenue-recognition problems in Asia continue to plague UTStarcom. The maker of wireless network equipment and cellular phones said Tuesday that it would restate its results for the seven-year period ended December 31, 2006 to correct the way it recognized revenue generated in China.Part of the ...

By Stephen Taub • Sept. 18, 2007

SEC Aims to Clean Up Grocery Spill

The Securities and Exchange Commission charged two former executives at supermarket operator Penn Traffic Co. with inflating reported income by improperly accounting for promotional rebates and other vendor allowances. The two – former chief marketing officer Leslie H. Knox and former vice presid...

By Marie Leone • Sept. 17, 2007

Mentor to Fraud? Two Former Execs Settle with SEC

The Securities and Exchange Commission has settled financial fraud charges with a former top finance executive and the former chief executive at a now-defunct eyeglass frame distributor, which allegedly overstated its assets by as much as 35 percent as a result of the scheme.The regulator accused...

By Stephen Taub • Sept. 17, 2007

Fairchild Dumps KPMG

For the second time this week, a mid-cap company replaced its Big Four auditor with a smaller accounting firm. On Thursday The Fairchild Corp. hired BDO Seidman after ousting KPMG as its independent auditor. Fairchild, which generates $350 million in annual revenues, paid KPMG $3.5 million in fee...

By Marie Leone • Sept. 14, 2007

A Splitting Headache?

A new proposal by the Financial Accounting Standards Board could permanently dampen the current enthusiasm for so-called cash-settled convertible debt. Such securities have accounted for the lion’s share of convertibles issued on Wall Street for the past two years or so — billions and billions of...

By Edward Teach • Sept. 14, 2007

Unregistered Auditors Busted by SEC

The Securities and Exchange Commission has charged 37 unregistered audit firms and 32 audit partners with violating the Sarbanes-Oxley Act. The auditors had opined on the financial statements of public companies allegedly without registering with the Public Company Accounting Oversight Board, the...

By Sarah Johnson • Sept. 13, 2007

Swaps and Ends

For nearly 25 years, Charles Mulford and Eugene Comiskey have been making investors wiser and CFOs warier. Professors of accounting at the Georgia Institute of Technology in Atlanta, the two have conducted copious research on financial reporting — in particular, on how companies manage the operat...

By Edward Teach • Sept. 12, 2007

SEC Takes Aim at Ex-Nortel Finance Execs

In a move that doubles the number of defendants facing charges of financial fraud at Nortel, the Securities and Exchange Commission Wednesday accused four vice presidents of finance at four different business units of helping the CEO, CFO, and controller use reserve accounts to fraudulently manag...

By Tim Reason • Sept. 12, 2007

FIN 48 Shocker

After complaining bitterly that a new accounting rule — FIN 48 — would expose companies to greater IRS scrutiny, Corporate America got an unpleasant surprise: the newly required financial statement disclosures were also drawing scrutiny from Senate investigators. In August, investigators solicite...

By Marie Leone • Sept. 11, 2007

CSC Tax Review Uncovers a Decade of Errors

A Computer Sciences Corp. analysis of the impact of FIN 48 led to the discovery of accounting errors dating back 10 years, the company said Tuesday.FIN 48, which passed over a year ago and became effective for fiscal years beginning after December 15, 2006, requires companies to report the reserv...

By Stephen Taub • Sept. 11, 2007

Cognex Ousts E&Y; Names Grant Thornton

Cognex Corp. said Ernst & Young LLP was “dismissed” as the company’s auditor, and replaced by Grant Thornton LLP. Ernst & Young LLP had been the Cognex auditing firm for the past four years. The maker of vision sensors that are used in automated manufacturing said the decision to change a...

By Stephen Taub • Sept. 11, 2007

Deckers to Restate for Errors at a China Unit

Deckers Outdoor Corp. said it will restate its financial reports for 2004 through 2006, along with some earlier financial information, to reflect past underreported payroll declarations and tax payments in China.The Goleta, California-based footwear company said the total amount to be restated wi...

By Stephen Taub • Sept. 11, 2007

IRS to Non-Profits: Take Charge of Retirement

Non-profits will have to kick a 40-year-old habit of handing off responsibility for defined-contribution plans to vendors. That’s because an Internal Revenue Service rule issued in late July revamps the existing tax code, forcing employers to take greater responsibility for developing and oversee...

By Marie Leone • Sept. 10, 2007

Feeling the Pinch, Centex Taps JP Morgan

In yet more fallout from the credit crunch, Centex Corp.’s mortgage subsidiary has entered into a $450 million warehouse credit facility with JPMorgan Chase so that the homebuilder’s unit can continue to issue mortgage loans.Until recently, Centex’s CTX Mortgage Co. subsidiary funded the originat...

By Stephen Taub • Sept. 7, 2007

California Collects Backdating Taxes from 46 Companies

Nearly 50 California companies have paid state taxes incurred by rank-and-file employees when they exercised stock options that had been backdated or mispriced last year.California’s tax-administration agency, the Franchise Tax Board, announced on Thursday that it had collected nearly $31 million...

By Sarah Johnson • Sept. 7, 2007

Ace Hardware Hammered by $154 Million Inventory Error

Ace Hardware said it discovered a $154 million accounting discrepancy between its general ledger and its actual inventory¸ which will force it to restate prior results and put its plans to go public on hold. The cause of the error is still unknown.The retailer-owned cooperative, with 4,600 hardwa...

By Stephen Taub • Sept. 6, 2007

Saks Settles SEC Vendor-Allowance Suit

Saks Inc. has settled Securities and Exchange Commission charges that some of the retailer’s employees practiced deception in order to meet the retailer’s “aggressive” earnings targets.From the mid-1990s until 2003, employees of the department store operator’s Saks Fifth Avenue Enterprises divisi...

By Stephen Taub • Sept. 5, 2007