Capital Ideas: A Little Cash’ll Do Ya

Growth is hard on small companies, particularly when it comes to financing inventory. “When I first started,” recounts Jordan Lederman, “I would wait for my first customer to pay before I could buy products to sell to my second customer.”Lederman is president and chief executive officer of The Ko...

By Marie Leone • March 3, 2005

Automakers Steered Toward New Accounting

The Securities and Exchange Commission has asked automakers to change their accounting for cash flow from dealer financing and leases, according to wire-service reports. The requested changes could eventually affect other industries where finance units are widely used.In January, reported Dow Jon...

By Stephen Taub • March 2, 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

Tapping the Auditor to Avoid Taxes

More than 12 percent of the Fortune 500 — 61 companies in all — obtained tax-shelter services from their external auditor from 1998 through 2003, according to a General Accounting Office report citing data from the Internal Revenue Service.This resulted in a loss of potential tax revenue of about...

By Stephen Taub • March 2, 2005

Gannett Dismisses PwC after 28 Years

Gannett Co. Inc. announced that it has dismissed PricewaterhouseCoopers LLP as its independent accountant, ending a 28-year relationship, according to a Securities and Exchange Commission filing.A Gannett representative told Reuters there was no reason behind the decision other than to make a swi...

By Stephen Taub • March 1, 2005

Viacom Takes $18 Billion Goodwill Charge

Viacom is the latest media company to report a huge write-off under accounting rules requiring companies to conduct annual goodwill-impairment tests. The company said its analysis resulted in a non-cash impairment charge of $18 billion. The charge involved a reduction of the carrying amount of go...

By Stephen Taub • March 1, 2005

WorldCom Witnesses Back Ebbers

Testifying for the defense in the trial of former WorldCom chief Bernard Ebbers, a one-time WorldCom chairman said late last week that former CFO Scott Sullivan told him that Ebbers was in the dark about the accounting fraud that brought down the once high-flying telecom giant.The former WorldCo...

By Lisa Yoon • Feb. 28, 2005

Cingular to Take Hit on Lease Accounting

Another shelfful of retailers last week announced they would join scores of other companies that are changing their accounting for operating leases. The group included drugstore chain CVS, supermarket giant Albertson’s, and specialty retailers Dress Barn and Pacific Sunwear of California. But one...

By Stephen Taub • Feb. 28, 2005

IBM Eyes $8 Billion Repatriation

IBM Corp. announced late last week that it might repatriate $8 billion in undistributed overseas profits as part of a one-year U.S. tax holiday. In an 8-K filing, the computer company said the repatriation would result in an income tax expense of up to $550 million, which it would take as a charg...

By Lisa Yoon • Feb. 28, 2005

New Krispy Kreme Probe Begins

For a second time, Krispy Kreme Doughnuts Inc. is the subject of a federal investigation concerning its accounting practices for repurchasing its franchises.The Winston-Salem, N.C. -based doughnut maker announced Thursday that the U.S. Attorney’s Office for the Southern District of New York will ...

By Lisa Yoon • Feb. 25, 2005

Ex-Assistant-Controller Fingers Scrushy

A former assistant controller of HealthSouth Corp. testified yesterday that senior executives told him that Richard Scrushy, its one-time chief executive, was aware of accounting fraud being perpetrated by company executives, the Associated Press reported.The accounting manager, Ken Livesay, was ...

By Marie Leone • Feb. 24, 2005

Judge Keeps E&Y Papers Private

A bankruptcy court judge ruled last week to keep documents that could be damaging to Ernst & Young from becoming part of the public record in a securities class-action lawsuit, the Associated Press reported.The decision, handed down by U.S. Bankruptcy Court Judge Patricia Williams stems from...

By Craig Schneider • Feb. 24, 2005

A New Loophole

What’s in a name? Not much, apparently, when it comes to the American Jobs Creation Act, which features a provision that may actually encourage layoffs.Signed into law in October 2004 by President Bush, the goal of the legislation was to create jobs by offering tax breaks to U.S.-based companies....

By Kate O'Sullivan • Feb. 24, 2005

IRS Unveils Amnesty for Tax-Shelter Abuse

The Internal Revenue Service yesterday announced an amnesty program for executives and companies that used “abusive tax shelters” to hide gains related to stock options. Corporate executives who engaged in the scheme will have until May 23 to accept an IRS settlement offer to resolve their tax is...

By Craig Schneider • Feb. 23, 2005

SEC Probes Alcoa, Howard Stern Guest

In a regulatory filing released by Alcoa Inc. on Friday, company officials confirmed that the Securities and Exchange Commission requested documents and other information in connection with an ongoing informal investigation related to “certain trade-payables financing,” involving an intermediary....

By Craig Schneider • Feb. 23, 2005

Courts and Torts: Touching on Intangibles

Like the late Rodney Dangerfield, intellectual property (IP) doesn’t get much respect. Yet the reason is still a bit of a mystery.To be sure, executives at both big and small companies acknowledge that it’s important to handle IP—the intangible assets most often defined as patents, trademarks, co...

By Marie Leone • Feb. 22, 2005

Carry That Weight

Neither HMOs nor HSAs nor 401(k)s nor grand government programs are likely to fix the problem of rising health-care expenses and inadequate retirement plans. But companies that look for every little advantage will fair better than those that chalk these problems up to unmanageable trends. For com...

By CFO Editorial Staff • Feb. 22, 2005

Auditors Rotating at a Dizzying Pace

More than 1,600 companies changed their outside accounting firm in 2004, up a whopping 78 percent from 2003, reported the The Wall Street Journal, citing date from proxy research firm Glass Lewis & Co. The 2,514 changes over the past two years represents more than one-fourth of all U.S. publi...

By Stephen Taub • Feb. 18, 2005

Bally Faces Criminal Investigation

Bally Total Fitness announced that the U.S. Attorney for the District of Columbia has launched a criminal investigation stemming from the results of a company probe that led to the firings of several finance executives.The company stated that it is cooperating fully.In an unusual twist, Bally add...

By Stephen Taub • Feb. 17, 2005

Shareholder Rights Plans and Tax Benefits

Wheeling-Pittsburgh Corp. announced this week that it has instituted a shareholder rights plan, bucking a trend by many companies that are eliminating these provisions. In this case, however, the steelmaker has more at stake than simply protecting management from shareholder pressures.Wheeling-Pi...

By Stephen Taub • Feb. 17, 2005

Ernst & Young Sued for Its Audit of CA

Sam Wyly, who twice launched proxy fights to replace several board member of Computer Associates International Inc., is suing the embattled software giant’s former auditor, Ernst & Young, according to The Wall Street Journal.In a lawsuit filed in Texas District Court in Dallas, Wyly asserted ...

By Stephen Taub • Feb. 16, 2005

Sears, Like Kmart, Will Restate Results

Yesterday we reported that Kmart Holding Corp., which is preparing to merge with Sears, Roebuck & Co., is restating the accounting for a $60 million convertible note that was issued when Kmart emerged from bankruptcy.Now it’s Sears’s turn to clean up the books. The retailer announced that it ...

By Stephen Taub • Feb. 16, 2005

Convertible Note Spurs Kmart Restatement

Kmart Holding Corp., which is preparing to merge with Sears, Roebuck & Co., has restated its results for the year ended January 28, 2004, as well as for last year’s quarterly filings.Unlike a slew of other retailers and restaurant chains, however, the revisions are not related to how the comp...

By Stephen Taub • Feb. 15, 2005

Grant Thornton Signing Big Four Clients

The New York Times recently pointed out that the Big Four accounting firms are shedding clients at almost three times the rate they did in 2002, the year that the Sarbanes-Oxley Act took effect. Citing data from research firm Audit Analytics, the Times added that most of the companies being dropp...

By Stephen Taub • Feb. 14, 2005

Audit Fees Double Due to Sarbox

Sarbanes-Oxley — also known as the “Accountants Full Employment Act” — has led to a doubling of audit fees by the Big Four accounting firms, according to a new study.PricewaterhouseCoopers saw an increase in audit fees averaging 134 percent, thanks in large part to work related to Section 404 of ...

By Stephen Taub • Feb. 11, 2005

No Prison Time for Qwest Convictions

A federal judge refused to hand out prison time to any individual found guilty in connection with a fraud case involving Qwest Communications International Inc.Former senior vice president Thomas Hall, who this week became the first person sentenced in the case, received probation and will pay a ...

By Stephen Taub • Feb. 11, 2005