Fannie Takes a Load Off

Fannie Mae finally announced its long-awaited restatement of financial results for 2002, 2003, and the first two quarters of 2004, noting that it will reduce retained earnings by $6.3 billion. The mortgage giant also said that its previous estimate that errors in accounting for derivative instrum...

By Stephen Taub • Dec. 7, 2006

Two Ex-Homestore Finance Execs Sentenced

Three former Homestore executives—including an ex-CFO and a former vice president of finance—were sentenced for their role in the company’s financial fraud scheme.The executives sentenced were: Joseph Shew, Homestore’s former finance chief, to six months in prison followed by six months of home d...

By Stephen Taub • Dec. 6, 2006

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

PCAOB to Scrap AS2, Start Over

In its clearest acknowledgement yet that the controversial Auditing Standard No. 2 is flawed, the Public Company Accounting Oversight Board said it will consider whether to propose a new auditing standard to “supersede” it. The matter will be discussed at an open meeting on Tuesday, December 19. ...

By Sarah Johnson • Dec. 5, 2006

Dell’s Warranty Accounting Questioned

Since Dell’s announcement three weeks ago that it was under formal investigation by the Securities and Exchange Commission, the company has been mum about what accounting issues are being scrutinized. In the meantime, a Virginia research firm is criticizing how the computer giant accounts for war...

By Sarah Johnson • Dec. 4, 2006

Wanted: Accounting Help for PCAOB

In an effort to compete with the private sector for more accounting help, the Securities and Exchange Commission unanimously approved a 4 percent budget boost for the Public Company Accounting Oversight Board on Monday, increasing the group’s funding to $136.4 million for 2007.Most of the board’s...

By Marie Leone • Dec. 4, 2006

A Vision Problem at Top Audit Firms

The story, at first, seemed startling. In early November, The Financial Times reported that the chief executives of the six biggest accounting firms were set to come out with a plan for a completely new model for reporting corporate financial information.The Big Four-plus-Two’s idea would be to r...

By David Katz • Dec. 1, 2006

Management or Manipulation?

The next time a competitor reports surprisingly strong earnings, consider this: more than half of CFOs say they can (legally) influence reported earnings by 3 percent or more.According to a survey of CFO readers, finance executives say they can use “allowable discretion” to boost or lower earning...

By Don Durfee • Dec. 1, 2006

Scrushy, HealthSouth Settle Claims

Former HealthSouth Corp. CEO Richard Scrushy and the health-care company that fired him have settled separate claims against each other stemming from the company’s $2.7 billion accounting fraud, according to published reports.HealthSouth wanted Scrushy to return his $48 million in bonuses, while ...

By Stephen Taub • Nov. 30, 2006

Ashland Settles Dirty Reserves Case

The Securities and Exchange Commission has settled charges against Ashland Inc. and a former employee for understating the chemical company’s environmental reserves.In its order, the Commission found that William C. Olasin, the company’s former director of environmental remediation, improperly re...

By Stephen Taub • Nov. 30, 2006

Former Tyco Tax Man Gets Three Years

The former head of Tyco International’s tax department is headed to prison for tax evasion.Raymond Stevenson was sentenced to three years in prison after pleading guilty to intentionally failing to report more than $170 million in income on Tyco’s 1999 corporate tax return, which would have resul...

By Stephen Taub • Nov. 30, 2006

Another To-Do Item: Expense Options

Heads up, private companies—an accounting standard compliance deadline looms. January 1, 2007, is the deadline for compliance with FAS 123R, the Financial Accounting Standards Board rule that mandates companies with calendar year ends to expense their stock options. Private companies have been gr...

By Helen Shaw • Nov. 29, 2006

Q&A: Microsoft’s Laux on Finance Reports

The biggest barrier to full-blown change in financial reporting is the widespread boredom CFOs seem to display about XBRL and the issuing of non-financial business information along with the financials, many think.The lack of enthusiasm may stem from the double-whammy of the increased costs and a...

By David Katz • Nov. 29, 2006

Missing: Audit Committee Accountants

Accountants are steadily infiltrating audit committees. However, the majority of companies polled did not have an accountant on their audit committee as recently as 2005. These are among the most significant findings of a new study that surveyed 700 audit committee members at 178 public companies...

By Stephen Taub • Nov. 28, 2006

Accounting Snags Push Dresser to Restate

Dresser Inc. said it will restate its financial statements for 2001 through 2003 based on a host of accounting errors. In May, the industrial engineering company had warned that it would restate its 2004 annual filing, its 2004 and 2005 quarterly financial statements, and would be evaluating the ...

By Stephen Taub • Nov. 28, 2006

The Known Unknowns

The promises that politicians make to campaign donors and taxpayers are often good only till the next election. By contrast, the commitments they make to public employees—such as firemen, teachers and bureaucrats—are for life. America’s state and local governments are struggling to meet pension a...

By Economist Staff • Nov. 22, 2006

Restatements: Stupid Human Tricks?

Quick quiz: What’s the cause of most of the current wave of corporate financial restatements?The answer from a casual observer is most likely to be stock-option backdating. Or you might think trouble with derivatives accounting might be the source of most of the trouble. Then again, the old stand...

By Helen Shaw • Nov. 22, 2006

Sarbox Rollback Report Due November 30

Treasury Secretary Henry Paulson — who claims the Sarbanes-Oxley Act is having an ill effect on U.S. competitiveness and the nation’s audit firms — could receive documented support for his theory next week from a blue-ribbon committee he formed earlier this year.The Committee on Capital Markets R...

By Sarah Johnson • Nov. 22, 2006

Tenet Settles Tax Dispute with IRS

Tenet Healthcare says it has agreed to pay $80 million to partially settle a dispute with the Internal Revenue Service stemming from the audit of its tax returns for fiscal years 1995 through 1997. The company, which owns and operates acute-care hospitals and related health-care services, says th...

By Stephen Taub • Nov. 22, 2006

Opening the Books

It could be seen as a cry for help: the world’s biggest accounting firms on November 8th unveiled their vision for the auditing business of the future. In their Utopian fantasy, out would go quarterly reports loaded with complex historical figures and rules-dictated footnotes. Instead, readily ac...

By Economist Staff • Nov. 17, 2006

PCAOB: Revised AS2 to Debut by December

The Public Company Accounting Oversight Board will “shortly” propose a new standard to “replace” AS2, its current guide for independent auditor assessments of corporate internal-controls reports, PCAOB chairman Mark Olson said in a speech in New York on Friday.The proposed revision, which could m...

By David Katz and Helen Shaw • Nov. 17, 2006

Starbucks EPS Hurt by Accounting Changes

Eleven cents doesn’t seem like a lot, especially relative to the cost of a grande double mocha latte. But it was material enough to report in Starbucks Corp.’s most recent earnings results. To be sure, Starbucks’s fourth-quarter and full-year earnings were penalized by the adoption of two new acc...

By Stephen Taub • Nov. 17, 2006

Pigou or NoPigou?

Arthur Pigou, an early-20th-century British economist, might well have shuddered at the thought of Facebook.com, a student networking site. A hermetic academic, awkward in the company of women, he surely would have balked at the dating and the picture uploads. But what would he have made of the “...

By Economist Staff • Nov. 17, 2006

GAO Sees Better Controls, Reports at SEC

After citing the Securities and Exchange Commission for material flaws in its financial reporting and information-technology controls last year, the Government Accountability Office bestowed a clean audit on the SEC for this year.In a new report, the GAO concluded that the commission’s fiscal yea...

By Stephen Taub • Nov. 16, 2006

Former CA Sales Exec Gets Seven Years

Stephen Richards, CA’s former head of sales, was sentenced on Tuesday to seven years in prison after pleading guilty to taking part in a scheme to backdate some of the software giant’s sales contracts in order to boost the company’s quarterly revenue figures, according to the Associated Press. He...

By Stephen Taub • Nov. 14, 2006

Report: IRS Has Faulty Internal Controls

Since its first audit of the Internal Revenue Service in 1992, the Government Accountability Office has stressed that the IRS has serious internal control weaknesses, and the GAO’s latest audit of the service was no exception. The IRS’s internal controls are deficient, hindering how its managers...

By Sarah Johnson • Nov. 14, 2006