”Hitting the Numbers” at WorldCom

Former WorldCom chief financial officer Scott Sullivan spent the past three days blaming former chief executive officer Bernard Ebbers for encouraging the finance department — both tacitly and overtly — to fudge the financials at the former telecom giant. Sullivan also insisted he warned his form...

By Stephen Taub • Feb. 10, 2005

Marsh’s Settlement: Tax Deductible?

Last week, Marsh & McLennan Cos. agreed to pay $850 million to settle charges of fraud and anti-competitive practices stemming from an investigation by New York State Attorney General Eliot Spitzer. The world’s largest insurance broker stressed that none of the payment is a fine or penalty.At...

By Stephen Taub • Feb. 8, 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

PwC Violated Independence Rules

PricewaterhouseCoopers LLP has acknowledged violating auditor-independence rules, according to The Wall Street Journal.PwC spokesman David Nestor told the newspaper that the auditing firm discovered the issues as part of a broad-based internal review of its independence policies. Nestor added tha...

By Stephen Taub • Feb. 8, 2005

SEC Improves Its Won-Lost Record

These days, more executives are challenging charges of securities fraud in court, only to lose at trial.Indeed, an increasing number of individual directors and officers are choosing to litigate instead of settling claims with the Securities and Exchange Commission. In the SEC’s fiscal year 2004,...

By Craig Schneider • Feb. 7, 2005

Toyota U.S. Unit Finds Accounting Errors

Toyota Motor Credit Corp. announced it found errors primarily relating to its accounting for certain currency-related derivative transactions. Toyota has not determined whether it will need to restate its financial results.“The company believes that the errors primarily involve the timing of reve...

By Stephen Taub • Feb. 4, 2005

Ceridian Warns of ‘Material Weakness’

Ceridian Corp., a human-resources outsourcing company, warned that its accounting firm will not be able to issue a positive opinion on Ceridian’s internal controls in the company’s 2004 annual report because it may have identical a “material weakness” during the Sarbanes-Oxley Section 404 complia...

By Stephen Taub • Feb. 2, 2005

Leases Prompt Pep Boys Restatement

Pep Boys announced that following a review of lease-related accounting policies, the company will restate its financials for the three-year period ended January 2004 and for the first three quarters of fiscal 2004 to correct its computation of depreciation, straight-line rent expense, and the rel...

By Stephen Taub • Feb. 2, 2005

SEC Upgrades Interstate Bakeries Probe

Interstate Bakeries Corp. announced that the Securities and Exchange Commission has upgraded its informal probe to a formal order of investigation.The company, best known for its Drake’s, Wonder, and Hostess brands, added that the investigation appears to concern matters related to the company’s ...

By Stephen Taub • Feb. 1, 2005

Former E&Y Partner Gets Jail Time

A former partner of Ernst & Young was sentenced under the expanded powers of the Sarbanes-Oxley Act for tampering with financial documents.The ex-partner, Thomas Trauger, received a year in prison, two years of supervised release, and a $5,000 fine, according to the Associated Press, which re...

By Stephen Taub • Jan. 31, 2005

Lease Accounting Spurs Restatement

An assisted-living company’s announcement that it will restate previous results has focused attention on complex lease-accounting rules for other companies within its industry and elsewhere.Emeritus Assisted Living, which provides assisted-living and related services to senior citizens, filed rev...

By Stephen Taub • Jan. 31, 2005

In the Same Language

There’s no turning back now. This month, some 7,000 listed European companies are scheduled to start using a single set of international financial-reporting standards—whether they are ready or not. The new IFRS rules must be adopted by year-end, including those related to hedge accounting and fai...

By Lori Calabro • Jan. 28, 2005

Former Charter CFO Pleads Guilty

Kent Kalkwarf, the former chief financial officer of Charter Communications Inc., pleaded guilty to federal fraud charges for his role in a scheme to boost subscriber numbers and financial results, according to the Associated Press. He is the fourth former executive of the cable company controll...

By Stephen Taub • Jan. 28, 2005

PwC Chief Cites Sarbox 404 Delays

Samuel DiPiazza, the chief executive of PricewaterhouseCoopers, warned that about one in 10 companies will either be unable to meet the deadline for complying with Section 404 of the Sarbanes-Oxley Act or will have discovered weaknesses in their internal controls over financial reporting, accord...

By Stephen Taub • Jan. 28, 2005

Go Directly to Cash

Of all the recent financial-reporting reforms, Securities and Exchange Commission chief accountant Donald Nicolaisen thinks the most important has yet to be proposed: requiring companies to use the direct method to report their cash flow.At a November conference hosted by Financial Executives Int...

By Tim Reason • Jan. 27, 2005

Kodak Restatement Looms

In the fourth quarter of 2004, Eastman Kodak Co. reported that revenue for its digital business rose 40 percent, more than offsetting a 16 percent decline in traditional revenue. The good news was welcomed—considering that for the past two decades, Kodak has been trying to reinvent itself, often ...

By Stephen Taub • Jan. 27, 2005

Penthouse’s Guccione Settles with SEC

The Securities and Exchange Commission settled charges against Penthouse magazine’s founder, Robert Guccione, who, without admitting or denying guilt, consented to the SEC’s findings. The charge was filed against Penthouse, now known as PHSL Worldwide Inc., in the U.S. District Court for the Sout...

By Stephen Taub • Jan. 26, 2005

Why GE Pays Little in Taxes

Despite a heavily profitable year, General Electric Company’s tax bill was relatively light in 2004.Last week, the company reported an 18 percent increase in earnings for 2004. One of the reasons for that impressive metric was GE’s low tax rate.Consider that in the fourth quarter, the conglomerat...

By Stephen Taub • Jan. 26, 2005

Fannie Moves Controller, Drops Bonuses

Officials at Fannie Mae announced that principal accounting officer Leanne Spencer will resign as senior vice president and controller, effective Jan. 31 and that the company will not award 2004 bonuses to top management.Spencer will continue working at Fannie Mae, however, taking what reportedly...

By Stephen Taub • Jan. 25, 2005

Wary Auditors, Clients Worry FASB’s Herz

Financial Accounting Standards Board chairman Robert Herz told the Financial Times he is concerned that auditors as well as the companies they audit are acting too conservatively when preparing financial reports—especially given the Securities and Exchange Commission’s (SEC) endorsement of a prin...

By Stephen Taub • Jan. 25, 2005

Court Upholds Ruling Against Tax Breaks

The Sixth Circuit Court of Appeals in Cincinnati affirmed a ruling that Ohio violated the U.S. Constitution’s interstate commerce clause, reported The Wall Street Journal. That ruling could ultimately rein in the tax breaks that municipalities often dole out to companies in exchange for funding m...

By Stephen Taub • Jan. 21, 2005

Record Number of Restatements in 2004

Little more than two years after the passage of the Sarbanes-Oxley Act, a record number of companies are revising their financials.According to a new report by Huron Consulting Group, the number of amended filings for financial restatements surged more than 28 percent, to a record 414 in 2004 fro...

By Stephen Taub • Jan. 21, 2005

Tiptoe Through the New Regs

If corporate tax directors were to adopt a mantra, it might very well be: Tread lightly.In fact, according to a new study by Ernst & Young LLP, 44 percent of tax directors say their companies have become more risk averse in the past two years. Most of the 354 tax directors surveyed reported s...

By Kate O'Sullivan • Jan. 18, 2005

Support for Limiting Auditor Liability

The president of the Business Roundtable is urging regulators to limit the liability accounting firms face from potential negligence claims.In an interview with the Financial Times, John Castellani said he is concerned that litigation could put another major accounting firm out of business and fu...

By Stephen Taub • Jan. 18, 2005

Repatriate Games: Room for Reinvestment

With a special one-year tax break, the Department of the Treasury is giving U.S. companies with overseas operations a lot of leeway in repatriating and spending profits earned abroad.A provision in the 2004 American Jobs Creation Act, signed into law last October, allows companies to deduct 85 pe...

By Stephen Taub • Jan. 17, 2005

Nine Will Plead in Ahold Fraud Probe

Nine individuals have agreed to plead guilty to helping U.S. Foodservice Inc., a subsidiary of Dutch food conglomerate Royal Ahold, engage in an accounting fraud that enabled Ahold to inflate its earnings by more than $800 million, according to wire-service reports.The individuals, who were eithe...

By Stephen Taub • Jan. 14, 2005