Hedge Accounting: A Matchless Future?

The Financial Accounting Standards Board voted to start work on a proposal to eliminate one of the more onerous hedge accounting requirements: assessing and testing the effectiveness of a hedge instrument.At its weekly meeting on Wednesday, the standard-setting board agreed to move ahead with a p...

By Marie Leone • May 24, 2007

Ten Years for Mercury “Cookie Jar” CEO

A former chief executive officer who used “cookie jar” reserves to improve the appearance of his company’s performance has been sentenced to ten years in prison.John Brincat headed Mercury Finance, a subprime car-loan company whose 1997 restatement precipitated a $2 billion drop in the value of i...

By Dave Cook and Stephen Taub • May 24, 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

Ding-Dong, AS2 Is Dead

Perhaps the most hated rule to come out of the Sarbanes-Oxley Act is dead. Well, almost. On Thursday, the Public Company Accounting Oversight Board voted unanimously to replace its controversial internal-control auditing standard with Auditing Standard No. 5. Critics of the original standard shou...

By Sarah Johnson • May 24, 2007

SEC Seeks Facts on GM Forex Accounting

The Securities and Exchange Commission has asked General Motors for details about the company’s accounting for certain foreign-exchange contracts and commodities in its restatement of its previously filed financials.The matter concerns GM’s forex and commodities accounting under amendments to SFA...

By Stephen Taub • May 24, 2007

Bisys Settles SEC Accounting Charges

The Bisys Group will pay about $25 million to settle charges by the Securities and Exchange Commission that it engaged in improper accounting practices.“This is a case study in internal control failures under earnings pressure,” said Mark K. Schonfeld, director of the SEC’s New York Regional Offi...

By Stephen Taub • May 23, 2007

Convertibles: Get Ready to Leverage Up

Taking a page from Ebert and Roeper, the Financial Accounting Standards Board wants the door to the mezzanine permanently closed.That’s not the mezzanine section of an old movie theater or opera house. Rather, it’s the vague middle ground where issuers of hybrid financial instruments—those that h...

By David Katz • May 23, 2007

SEC: Guidance Yes, Extension No

The Securities and Exchange Commission has unanimously approved its new guidance for management’s assessment of internal controls over financial reporting. The vote comes after three years of companies using — and complaining about — a standard developed for audit firms. At their Wednesday hearin...

By Sarah Johnson • May 23, 2007

Options Woes for Two Tech Companies

Black Box Corp. — which earlier this year disclosed that it would restate 15 years of earnings because of incorrectly priced stock options — announced that Fred C. Young has resigned as chief executive officer and a member of the board.While seeking Young’s successor, Black Box will be managed un...

By Stephen Taub • May 22, 2007

FIN 48: Standing Naked Before the IRS

When the Financial Accounting Standards Board passed FIN 48 last July, public company tax executives worried that the new accounting rule would point the IRS straight at the company’s most vulnerable tax positions.They were right.The Internal Revenue Service is “not going to turn a blind eye” to ...

By Marie Leone • May 22, 2007

Nortel Out of the Penalty Box

Nortel Networks agreed Tuesday to pay $900,000 ($1 million Canadian) to settle charges with the Ontario Securities Commission (OSC) stemming from a number of accounting issues.Nortel was accused of using questionable accounting practices to issue misleading or false financial statements between 2...

By Stephen Taub • May 22, 2007

CDC Restates over Acquisition Accounting

Mostly because of missteps involving deferred taxes associated with acquired entities, Software developer CDC will restate results for the three years ended December 2005 and adjust previously reported financial information for the year ended December 2006.While the company expects to revise net ...

By Stephen Taub • May 21, 2007

Just Days Away: The Fate of 404

For many corporate critics of the Sarbanes-Oxley Act, the 2002 law has become synonymous with added cost and work. But when they’ve voiced their frustration with regulators and congressmen, asking them to amend or repeal the law, they’re usually talking about just one of its provisions: Section 4...

By Sarah Johnson • May 18, 2007

BlackBerry Maker Completes Restatement

Research In Motion, the Waterloo, Ontario-based company best known for its BlackBerry device, has announced it has completed a previously announced restatement largely caused by options-related errors. The company restated results downward for 2005 and 2006 by a total of $248.2 million, in line w...

By Stephen Taub • May 18, 2007

Will FIN 48 Spark State Tax Scrutiny?

Accounting for uncertain tax positions has never been a cut-and-dried exercise. But now another wrinkle — this time having to do with state tax authorities — seems ready to emerge.State legislators and tax authorities have become more aggressive about implementing and enforcing corporate tax laws...

By Laura DeMars • May 18, 2007

Treasury Audit-Firm Study to Start This Fall

The Treasury Department’s initiative to study issues caused by the shrinking number of auditing firms is expected to begin with a meeting this fall, after members are selected for the nonpartisan advisory committee headed by former Securities and Exchange Commission chairman Arthur Levitt and for...

By Roy Harris • May 17, 2007

Restatements Draw Treasury’s Ire

The Treasury Department — shocked by the explosion in restatements that now has more than 10 percent of companies correcting errors in previous financials — is commissioning “a rigorous analysis of factors driving financial restatements, and their impact on investors and the capital markets.” Sec...

By Roy Harris • May 17, 2007

FASB: A Segue to More Segmenting

The Financial Accounting Standards Board is proposing a significant change in how companies present the health of business-unit finances, asking internal accountants to paint a more detailed picture for investors than current segment reporting provides.At its weekly meeting on Wednesday, FASB agr...

By Marie Leone • May 17, 2007

PCAOB Gives Better Grades to BDO Seidman

The Public Company Accounting Oversight Board released its third inspection report on BDO Seidman on Wednesday, and noted several instances where the audit firm failed to show evidence that it had done proper testing during its 2005 audits. The PCAOB listed 11 instances of significant audit defic...

By Sarah Johnson • May 16, 2007

Earnings ‘R’ Restated under SAB 108

Toys ‘R’ Us finally filed its annual report on Wednesday and disclosed that it has restated its fiscal 2006 earnings upward to correct certain tax accounting issues.The privately held children’s retailer revised net income for the fourth quarter of fiscal year ended February 3 to $224 million, fr...

By Stephen Taub • May 16, 2007

PCAOB to Vote on Internal Controls on May 24

The Public Company Accounting Oversight Board will vote on a final standard on auditing internal controls over financial reporting on May 24. If it’s adopted, the new standard will replace the controversial Auditing Standard No. 2, which has been hit hard for being based too heavily on rules rath...

By David Katz • May 16, 2007

The Great GASB: A Novel Benefits-Accounting System

A new accounting standard is forcing public-sector finance chiefs to calculate the future value of total retiree health benefit assets or liabilities and include those figures on their companies’ balance sheets. For some, the downside numbers will be staggeringly high. Thus, if the government age...

By Sarah Johnson • May 15, 2007

Delphi Avoids $1.4B Collision with IRS

Delphi has reached a deal with the Internal Revenue Service that will allow it to transfer some pension liabilities to its former parent, General Motors, according to the Associated Press.The deal also enables the bankrupt auto-parts maker to avoid up to $1.4 billion in excise taxes, reported the...

By Stephen Taub • May 15, 2007

Cold-Sore-Drug Maker Gets Wells Notice

Biovail, a Canadian specialty drug company that makes a cream for treating herpes cold sores, disclosed that it has received a Wells notice from the Securities and Exchange Commission regarding a previously disclosed investigation of accounting and disclosure practices for fiscal 2003 and certain...

By Stephen Taub • May 14, 2007

Ex-Enterasys VP Settles Rev-Rec Charges

Another former executive of Enterasys Networks has agreed to settle civil fraud charges regarding improper revenue recognition with the Securities and Exchange Commission.Gayle Spence Luacaw, once a vice president at the maker of computer network hardware, participated in a companywide scheme to ...

By Stephen Taub • May 14, 2007

Krispy Kreme Out of the Hole?

The “Hot Now” sign is back on at the corporate headquarters of Krispy Kreme Doughnuts. The doughnut chain, which suffered under the weight of a massive accounting scandal, says in a filing that it now wants to offer franchises in all 50 states.“Krispy Kreme is able to file this document because i...

By Stephen Taub • May 14, 2007