No More “Allowances” for Kmart, Vendors

The Securities and Exchange Commission has announced it settled charges against the final two defendants who allegedly caused Kmart to issue materially false financial statements by improperly accounting for millions of dollars worth of vendor “allowances.”In December 2004, the SEC filed civil ch...

By Stephen Taub • March 2, 2007

The Great Controls Divide: Small v. Big

Fewer big U.S companies disclosed material internal controls flaws in 2006 than they did in 2005, according to a new report by Glass Lewis. But soaring numbers of domestic microcaps revealed big controls weaknesses.In all, the number of U.S. public companies reporting material controls weaknesses...

By Stephen Taub • March 1, 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

Computer Sciences to Reboot Financials

Information technology outsourcer Computer Sciences will restate its results to add $68 million in expenses ($59 million after tax) in connection with stock option grants dating back to 1996.The company explained that 9,234 grants should be modified, principally due to delays in authorization and...

By Stephen Taub • March 1, 2007

Nortel Adds Another “Re” to Restatement

Nortel Networks disclosed Thursday that it will restate its financials for 2004, 2005, and the first nine months of 2006. For the Canadian telecom company, this is at least its fourth restatement in the past four years.For 2006, revenues will increase about $24 million and net earnings will incre...

By Stephen Taub • March 1, 2007

Congress to Solve Your Accounting Woes

The grandstand for principles-based accounting was officially sold out Tuesday night. By a vote of 412-0, the U.S. House of Representatives approved a bill that would require the chairs of the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and the Financial Acc...

By David Katz • Feb. 28, 2007

Study: Restatements Up, But Sarbox Works

Restatements surged to a new high last year. Companies with U.S.-listed securities filed 1,538 financial restatements in 2006, up 13 percent from what had been a record number in 2005, according to an annual study by Glass, Lewis. Out of that total, 118 restatements were made by foreign issuers. ...

By Stephen Taub • Feb. 28, 2007

Sanyo Earnings Still Not in Hi-Def

Amid reports that its accounting practices are under investigation by Japanese regulators, Sanyo Electric disclosed that it may restate its earnings, reported the Associated Press.A Sanyo spokesman told the AP that board members at the electronics giant agreed to consider a “revision and correcti...

By Stephen Taub • Feb. 27, 2007

AES Accounting Continues to Flicker

AES will restate prior results to correct errors in its financial statements. The utility uncovered many of these errors during it continuing remediation of previously identified material weaknesses; others came to light during the company’s quarterly and year-end accounting reviews.“The company ...

By Dave Cook and Stephen Taub • Feb. 27, 2007

Checkpoint’s Woes Go Beyond U.S. Shores

Checkpoint Systems said it will restate its financial results for the 2004 and 2005 fiscal years, and for the first three quarters of 2006, blaming the adjustments on accounting errors. The maker of security tags cited several reasons for the restatement, including “improper activities of certain...

By Stephen Taub • Feb. 26, 2007

AS5: More Flexible, Less Effective?

With just a few days until the comment period ends, the Public Company Accounting Oversight Board got an earful from its advisory board on Thursday about the new standard for auditors’ attestation of corporate internal controls. In a nutshell, the corporate executives and accounting experts quest...

By Sarah Johnson • Feb. 23, 2007

Forensic Audits: Got a Clue?

The idea that public companies should undergo periodic forensic audits designed to detect fraud failed to excite a panel of audit experts during a meeting of the Public Company Accounting Oversight Board’s Standing Advisory Group. Most members of the panel seemed unconvinced that a companywide fo...

By Rob Garver • Feb. 23, 2007

New CFO Walks Into a Quagmire

UpdatedGreenfield Pitts has his work cut out for him. The new chief financial officer of Emerson Radio Corp., will have to contend with corporate accounting problems, a late regulatory filing, a possible loan covenant default, and potential delisting negotiations with the American Stock Exchange ...

By Marie Leone • Feb. 22, 2007

Veritas and Consequences

The Securities and Exchange Commission has settled a civil fraud action against Veritas Software for engaging in a fraudulent earnings management scheme and filing false and misleading financial statements. The SEC also charged Veritas with securities fraud regarding an improper round-trip transa...

By Dave Cook • Feb. 21, 2007

Shelters Leak on Tech Execs

Five Silicon Valley executives are suing Ernst & Young, claiming they owe millions of dollars because of tax shelters they bought from the Big Four accounting firm, according to The San Jose Mercury News. Four of the plaintiffs have ties to Cisco Systems, the newspaper noted.In 2004 the execu...

By Stephen Taub • Feb. 16, 2007

Ex-CEO of i2 to Settle for $8.3M

Former i2 Technologies chief executive officer Gregory A. Brady has agreed to pay $8.3 million to settle charges with the Securities and Exchange Commission stemming from a scheme to overstate revenues.Brady is one of three former officers of the software company who were charged by the SEC in Ju...

By Stephen Taub • Feb. 16, 2007

Company Stumbles at U.S.-Canada “GAAP”

Mining company Silver Wheaton disclosed that it will restate certain prior results due to a recent accounting interpretation regarding the treatment of its share purchase warrants.The Vancouver-based company, which trades on the New York Stock Exchange, reports using Canadian generally accepted a...

By Stephen Taub • Feb. 15, 2007

Post-404, Fees Spiked 66 Percent: Study

Between 2003 to 2005, the first three years in which many companies had to comply with Sarbanes-Oxley’s internal control provision, they saw their audit and audit-related fees soar by a whopping 66 percent, according to a new study. But the research also suggests that a big part of the cost spike...

By David Katz • Feb. 15, 2007

Fraud Detection: The New 404?

In December 2005, the first time the Public Company Accounting Oversight Board released a special report based on its audit inspections, the topic was internal controls over financial reporting.After that, all hell broke loose. When the Securities and Exchange Commission learned about how inept a...

By David Katz • Feb. 15, 2007

Merck Swallows $2.3B Tax Pill

Merck announced that it will pay $2.3 billion to settle a tax dispute with the Internal Revenue Service.The settlement — which covers federal tax, net interest after deductions, and penalties — concludes an IRS examination for 1993 through 2001, the company added.Merck stressed that for the previ...

By Stephen Taub • Feb. 14, 2007

Study: Sarbox Curbs Fraud Whistleblowing

Contrary to its intentions, the Sarbanes-Oxley Act has discouraged employees from coming forward and blowing the whistle on corporate fraud, a new study finds.Despite the 2002 law’s whistleblower protection provision, employees have been less likely to come forward with fraud concerns, according ...

By Sarah Johnson • Feb. 13, 2007

Flir Backdating Costs May Triple: CEO

The chief executive officer of Flir Systems conceded that the company’s costs associated with backdating stock options will come in about three times higher than previously estimated, according to The Oregonian.Speaking to analysts on a regularly scheduled conference call, Earl Lewis reportedly p...

By Stephen Taub • Feb. 12, 2007

CFO Pleads Guilty to Tax Evasion

John E. Brownell, the chief financial officer of Washington, D.C.-based real estate company Douglas Development, pleaded guilty late last week to tax evasion.According to the U.S. Attorney’s Office for the District of Columbia, Brownell is the fifth individual convicted of a felony arising from a...

By Stephen Taub • Feb. 12, 2007

IRS Offers Rank-and-file Options Relief

The Internal Revenue Service has proposed relief for rank-and-file employees who exercised backdated or otherwise mispriced stock options, provided their companies get with the program.As it stands, notes the IRS, an employee who exercised properly priced options in 2006 would be liable simply fo...

By Stephen Taub • Feb. 9, 2007

Apollo Options Lead to “Material” Impact

Apollo Group disclosed that accounting revisions, including adjustments for non-cash equity-based compensation charges, will have “a material adverse impact” on its previously reported financial results.Other potential adjustments may reflect revisions to bad debt reserves, accruals for Title IV ...

By Stephen Taub • Feb. 8, 2007

SEC Asks Adobe for More Options Info

Adobe Systems disclosed in a regulatory filing that the Securities and Exchange Commission has requested more information about the company’s stock-option practices.In October, Adobe — best known for its Acrobat software — disclosed that a special committee found that adjustments had been made to...

By Stephen Taub • Feb. 7, 2007