U.S. GAAP: Riding Off into the Sunset?

By summer, the Securities and Exchange Commission will issue a proposal allowing foreign private issuers to file financial reports using either international financial reporting standards (IFRS) or U.S. generally accepted accounting principles (U.S. GAAP).U.S. issuers may soon have the same optio...

By Dave Cook and Stephen Taub • April 25, 2007

Cardinal Reserves $600M for Class Action

Cardinal Health has set aside a $600 million reserve to cover a pending class-action securities lawsuit regarding its financial reporting and disclosures between 2000 and 2004. The reserve will result in an after-tax charge to third-quarter earnings of approximately $384 million.The drug distribu...

By Stephen Taub • April 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

No Accounting for Taste

Of all the grounds for the firing of a financial accounting professor, those behind the dismissal of Nicholas Winset of Boston’s Emmanuel College may be among the strangest. The 37-year-old teacher was dismissed last week after leading a classroom discussion about the Virginia Tech shootings, in ...

By Roy Harris • April 23, 2007

Buyback Accounting Forces TDS to Restate

Telephone and Data Systems, Inc. said it will restate its financials for 2004 and 2005, quarterly information for 2005 and 2006, and certain selected financial data for 2003 and 2002 to correct its accounting for share repurchases by its U.S. Cellular subsidiary.TDS, which owns more than 80 perce...

By Stephen Taub • April 23, 2007

In Rare Move, Auditor Sues Client

KPMG has countersued its former client Fannie Mae for “fraudulentdeception” stemming from the mortgage giant’s $6.3 billion accounting scandal, according to published reports.In a filing with the U.S. District Court for the District of Columbia, the Big Four firm asserted that from 1998 until 200...

By Stephen Taub and Dave Cook • April 23, 2007

Novell Discloses Options Errors

In a regulatory filing, Novell disclosed it utilized incorrect measurement dates for some stock-based compensation awards granted from November 1, 1996, through September 12, 2006. As a result of its independent investigation, the business-software maker will revise the measurement dates for thes...

By Stephen Taub • April 20, 2007

Lasik for Revenue Recognition?

LCA-Vision will restate its results for 2004 through 2006 to reflect a change in revenue recognition for separately priced extended warranties.The provider of laser vision correction services expects to reduce 2006 revenues by about $18 million and net income by about $10 million. The revision al...

By Stephen Taub • April 19, 2007

Improve Auditor-change Disclosure: CFOs

Companies should be required to give reasons when they dismiss an auditor, or when an auditor resigns or chooses not to stand for re-election, according to a recent survey from audit firm Grant Thornton.Of the 135 chief financial officers and controllers who responded to the survey, 67 percent sa...

By Stephen Taub • April 19, 2007

PCAOB Identifies Flaws in AS2 Use

Auditors could do a better job of integrating audits, applying a focused top-down approach, testing risk-level assertions, and using the work of others, according to a Public Company Accounting Oversight Board study of the second year of implementation of Auditing Standard No. 2.In a 13-page repo...

By Roy Harris • April 18, 2007

Motorola Settles Suit for $190 Million

Correction: This story has been corrected to reflect the fact that Charter Communications itself is not a defendant in the lawsuit against Motorola now pending before the Supreme Court.Motorola has agreed to pay $190 million to settle a securities class-action lawsuit regarding a business arrange...

By Stephen Taub and Dave Cook • April 18, 2007

Nu Horizons Subpoenaed in “Vitesse Mess”

Nu Horizons Electronics disclosed that the company and its wholly owned subsidiary Titan Logistics received subpoenas from the Securities and Exchange Commission regarding their business relationship with Vitesse Semiconductor.Both the parent company and the subsidiary distribute electronic compo...

By Stephen Taub • April 17, 2007

Getty Restatement Focuses on Backdating

Getty Images will restate results by between $28 million and $32 million after a special committee determined that incorrect measurement dates were used for certain equity compensation awards. Most of the revisions will be applied to 2002 and earlier years.According to the stock-photo company, th...

By Stephen Taub • April 16, 2007

IRS Audits Not Paying Off, Says Study

Internal Revenue Service agents are “spending substantially more of their time on corporate audits that produce no revenue for the government than they did in the recent past,” according to a study by Transactional Records Access Clearinghouse.TRAC, a data-research organization associated with Sy...

By Stephen Taub and Dave Cook • April 13, 2007

E&Y Settles PNC Accounting Suit

Ernst & Young has agreed to pay $9.08 million to settle a class-action lawsuit stemming from an accounting scandal at PNC Financial Services Group, according to published accounts.The settlement likely marks the end of litigation involving the bank’s multimillion-dollar restatement for 2001. ...

By Stephen Taub • April 13, 2007

Rated R, for Restatement

Movie-theater chain AMC Entertainment disclosed that it will restate its results for the fiscal year ended March 30, 2006, for the first three quarters of fiscal 2006, and for the first three quarters of fiscal 2007.In a regulatory filing, AMC elaborated that the revisions are primarily due to er...

By Stephen Taub • April 12, 2007

Will ESOARS Fly?

The push toward fair-value accounting continues its fitful progress as a new method for valuing stock options wins approval but also raises concerns.In January, the Securities and Exchange Commission signed off on the approach, dubbed ESOARS (Employee Stock Option Appreciation Rights Securities),...

By Karen M. Kroll • April 12, 2007

Royal Dutch Shell to Pay $350M

Royal Dutch Shell has agreed to pay $352.6 million, plus administrative costs, to settle a lawsuit stemming from its 2004 restatement of reserves. The oil giant stressed that the agreement, with non-U.S. investors who purchased Royal Dutch shares outside the United States, would be effective only...

By Stephen Taub • April 11, 2007

Caught in the Machine

3D Systems Inc. CEO Abe Reichental had his first inkling in last year’s second quarter that the company’s financial reporting might be flawed.The news couldn’t have come at a busier time for the provider of three-dimensional printing, prototypes, and manufacturing systems for a range of business ...

By Roy Harris • April 11, 2007

Manufacturer In Dutch over Accounting

Thor Industries — which manufactures recreational vehicles and buses under numerous brand names, including Airstream — announced it will restate its results due to accounting issues at one of its subsidiaries.After an internal investigation into the company’s Dutchmen Manufacturing subsidiary, Th...

By Stephen Taub • April 9, 2007

FASB Announces Trott’s Replacement

Lawrence W. Smith, a 25-year veteran of KPMG, has been appointed to the Financial Accounting Standards Board to replace outgoing member Edward Trott. He will serve a five-year term beginning July 1. Trott is retiring after seven and a half years with the board on June 30. Smith has been a member ...

By Sarah Johnson • April 9, 2007

Easton Finds Crack in Internal Controls

Easton-Bell Sports disclosed a material weakness in its internal control over financial reporting at its Bell Sports subsidiary. At year-end, the company explained, “our policies and procedures did not provide for effective oversight and review of the reconciliation of accountsÂat the end of each...

By Stephen Taub • April 9, 2007

Rectifying International Accounting

International Rectifier, a manufacturer of integrated circuits used in power management systems, disclosed that an internal investigation has uncovered accounting irregularities at a foreign subsidiary.The company added that it may restate prior results to correct the irregularities, which includ...

By Stephen Taub • April 9, 2007

Restatement: Screw-up or True-up?

A proposed auditing standard could help companies more clearly show that a restatement occurred because they implemented a new accounting rule or changed their accounting methods — and not because they had made an accounting error. Since the Financial Accounting Standards Board adopted FAS 154, ...

By Sarah Johnson • April 5, 2007

SEC Tells Staff to Revise AS5

The Securities and Exchange Commission is sending its accounting staff to work with the Public Company Accounting Oversight Board on additional revisions to the auditing standard that has been criticized by public companies and legislators for creating costly audits of internal controls. At a Wed...

By Sarah Johnson • April 5, 2007

Weak Signal: Wireless Reseller Restates

InPhonic, an online reseller of wireless products and services, will restate its results for the second and third quarters of 2006 due to improper revenue recognition.The revisions, including amendments to InPhonic’s year-end results, will widen its previously reported net loss for 2006 by betwee...

By Dave Cook and Stephen Taub • April 4, 2007