Proper Recognition

On February 28, the day investors expected NCO Group Inc. to release earnings results for fourth-quarter 2004, the provider of business-process outsourcing services instead issued some bad news: it was delaying the release of its financials and changing one of its revenue-recognition policies. In...

By Kate O'Sullivan • April 4, 2005

FBI Probes Delphi’s Accounting

The FBI is investigating the accounting practices of Delphi Corp., the world’s largest supplier of auto parts. This, according to the Detroit News.“The FBI is involved in the investigation and we are coordinating with the Securities and Exchange Commission, Department of Justice, and the United S...

By Stephen Taub • April 1, 2005

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

The Coming Tax Hike

The U.S. tax code, as any politician will tell you, has some problems. First, it’s long: the code now weighs in at an impressive 60,000 pages, almost twice the length of the Encyclopaedia Britannica. It is also intricate. Completing tax forms consumes 6 billion hours of taxpayer time each year an...

By Don Durfee • April 1, 2005

Get in Line: E&Y Sues HealthSouth

Ernst & Young LLP is suing HealthSouth Corp. for alleged damages stemming from the medical rehabilitation chain’s huge accounting fraud. This, according to the Associated Press.The accounting firm, which served as HealthSouth’s auditor from 1996 through 2002, claims the scandal exposed it to ...

By Stephen Taub • March 31, 2005

Greenberg to Step Down at AIG

Officials at American Insurance Group Inc. announced the retirement of Chairman Maurice “Hank” Greenberg, effective either March 30 or 31. Greenberg, 79, is generally credited with building AIG into a global insurance powerhouse during his 37 years at the company. But he leaves amid a hornet’s ne...

By Marie Leone • March 29, 2005

Audit Fees Surged in 2004

Thank you, Sarbanes-Oxley.While it’s unlikely that auditors would express such gratitude in public, that’s what a good many of them might be thinking these days when they bill their clients.In an early look at 2004 audit fees, The Wall Street Journal reported that 23 of the 30 companies used to ...

By Stephen Taub • March 28, 2005

ConAgra to Restate Results

ConAgra Foods Inc. announced that it will restate its financials for the past year and a half to correct errors in its accounting for income taxes.The company, known for brands such as Armour, Butterball, and Chef Boyardee said it discovered the errors as part of its Sarbanes-Oxley 404 certificat...

By Stephen Taub • March 25, 2005

New SEC Questions for TXU

Dallas-based electric utility TXU Corp. announced that it received a subpoena from the Securities and Exchange Commission to produce documents relating to its European operations, whose difficulties caused TXU to cut its dividend and led to a sharp drop in its share price. The subpoena covers doc...

By Stephen Taub • March 24, 2005

PCAOB Prepares to Ramp Up Inspections

The Public Company Accounting Oversight Board is preparing to inspect hundreds of small accounting firms this year, compared with fewer than 100 inspections in 2004, according to the Securities Regulation and Law Report.The board, created by the Sarbanes-Oxley Act of 2002, is required under that ...

By Craig Schneider • March 22, 2005

Time Warner Settles with SEC for $300M

Time Warner Inc. has agreed to pay $300 million in civil penalties to settle Securities and Exchange Commission charges that it overstated Internet subscribers and Internet advertising revenue.Last November, the company set aside $500 million in litigation reserves in connection with a government...

By Stephen Taub • March 22, 2005

For Auditors’ Eyes Only

A federal law that enables auditors to keep clients in the dark about the audit firms’ quality-control deficiencies for as much as a year leaves public companies open to the risk of financial restatement, audit-committee activists contend.The statute, Section 104 of the Sarbanes-Oxley Act, says t...

By Craig Schneider • March 21, 2005

Accounting Woes Prompt Kodak Restatement

Eastman Kodak Co. announced that it will report revised results for the fourth quarter of 2004 and will restate results for the first three quarters of 2004 and all of 2003.The restatements reflect “inadvertent” accounting errors, according to a statement by chief financial officer Robert H. Brus...

By Stephen Taub • March 18, 2005

Ebbers’ Conviction: Look to the CFO

When Bernard Ebbers finally sits in his prison cell, perhaps for the next decade or two, the thoughts of WorldCom’s former chief executive officer may well turn to the one person he can thank for his situation — besides himself, of course.That individual is Scott Sullivan, his erstwhile buddy and...

By Stephen Taub • March 17, 2005

Ernst & Young Lawsuit Will Proceed

Creditors of Tower Air Inc. can proceed in their lawsuit against Ernst & Young, which they accuse of costing them hundred of millions of dollars by helping the bankrupt airline misstate its earnings, a judge has ruled, according to the Baltimore Business Journal.Baltimore County Circuit Judge...

By Stephen Taub • March 17, 2005

XBRL: From Tags to Riches?

It’s been a bit of a slog for XBRL, the computer code that “tags” a wide range of financial data so that it can be more easily shared and analyzed. Although proponents of the technology have been banging the drum for years, not much has happened. That may change this month, when a voluntary progr...

By CFO Editorial Staff • March 15, 2005

Ebbers Found Guilty on All Charges

Former WorldCom chief executive officer Bernard Ebbers was convicted on all nine charges for his role in the largest bankruptcy in U.S. history.A federal jury found the 63-year-old Ebbers guilty of one count each of conspiracy and securities fraud and seven counts of making false filings to the S...

By Stephen Taub • March 15, 2005

How Kmart Grew 404 Compliance at Home

Sometimes it pays to skip a step—or a compliance year, for that matter. Just ask Jennifer Montgomery, who, as director of internal controls at Kmart, helped management take charge of internal-controls testing one year earlier than managers at many companies its size are likely to do. Montgomery s...

By Craig Schneider • March 14, 2005

CFOs Prefer the Black-Scholes Option

More than two years of heated debate on how to value employee stock options has brought many companies full circle — right back to Black-Scholes.Of 47 chief financial officers who responded to a new survey, 29 said they will continue using the traditional Black-Scholes valuation model when expens...

By Marie Leone • March 14, 2005

Who Determines International Standards?

A turf battle threatens to undermine efforts to establish one set of accounting rules for companies throughout the world.The Financial Times reported that the European Union has formally requested that it play a larger role in setting international accounting standards, which would diminish the i...

By Stephen Taub • March 11, 2005

KPMG Audit Prompts EchoStar Probe

The audit committee of EchoStar Communications Corp. is investigating whether the company improperly booked transactions with suppliers, according to Bloomberg, citing people familiar with an internal probe of the company’s accounting.In addition, the wire service reported that the nation’s secon...

By Stephen Taub • March 10, 2005

MBIA to Restate Seven Years of Results

MBIA Inc. announced that it will restate its financials for the past seven years as a result of its accounting for two complex reinsurance agreements made in 1998 with Converium Re, previously known as Zurich Reinsurance North America. The restatement could delay the filing of MBIA’s 2004 audited...

By Stephen Taub • March 9, 2005

FASB’s Plans for Expensing M&A Fees

The Financial Accounting Standards Board expects to soon require companies to expense costs and fees associated with mergers and acquisitions, according to The Wall Street Journal.The paper points out that companies can currently account for these fees as part of goodwill — that is, by including ...

By Stephen Taub • March 9, 2005

GE Cuts Billions from Cash Flow

General Electric has revised its operating cash flow downward by more than $1 billion for 2003 and more than $1.2 billion for 2002, according to The Wall Street Journal. The revisions apparently reflect Securities and Exchange Commission concerns that companies are not properly accounting for the...

By Stephen Taub • March 8, 2005

Delphi CFO Resigns Amid Accounting Woes

Delphi Corp., the world’s largest auto-parts maker, announced that Vice Chairman and Chief Financial Officer Alan S. Dawes has resigned. The Troy, Michigan-based company added that it would restate its results after finding accounting errors dating back to 1999, the year Delphi was spun off from ...

By Stephen Taub • March 7, 2005

Markdown Allowances Eyed at Saks

Saks Inc. announced that the Securities and Exchange Commission has launched an informal investigation into vendor markdown allowances collected by one of six merchandising divisions of its Saks Fifth Avenue stores. The probe also is examining the adequacy of a 2002 Saks internal investigation in...

By Stephen Taub • March 7, 2005