PwC Settles Raytheon Case for $50 Million

PricewaterhouseCoopers LLP agreed to pay $50 million to settle charges that it helped Raytheon Co. hide cost overruns five years ago, according to the Boston Globe.In some ways, PwC took one for its peers, the paper asserted. At trial — pursuant to a class-action securities fraud lawsuit brought ...

By Stephen Taub • June 1, 2004

Dell Shareholders Propose Option Measure

Dell Inc. is the latest tech company to face a shareholder proposal urging it to expense the value of employee stock options.The proposal was made by the AFL-CIO Reserve Fund. Dell’s annual meeting is scheduled for July 16.Shareholders have already approved a similar nonbinding measure at compani...

By Stephen Taub • June 1, 2004

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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 Battle for Iraqi Audits

An investigation into a United Nations oil-for-food program — and attempts to recover funds allegedly diverted by Saddam Hussein into his private coffers — are suffering from the same lack of coordination that have become all too familiar in reports from Iraq.Audit firm KPMG; its investigative pa...

By Marie Leone • May 27, 2004

Computer Associates Offers Settlement

Computer Associates International offered to pay $10 million to settle federal accounting and obstruction investigations, according to published reports. The government has not yet responded.Chief financial officer Jeffrey Clarke revealed the offer at the company’s user conference in Las Vegas. H...

By Stephen Taub • May 27, 2004

E&Y Faces Criminal Probe on Shelters

Ernst & Young LLP reportedly confirmed that it is a target of a federal criminal investigation of its promotion of tax shelters for clients. A spokesman told Reuters the Big Four accounting firm is cooperating with the probe, but would not provide additional details.The investigation was laun...

By Stephen Taub • May 25, 2004

Pitt Would Enhance Financial Reports

Harvey Pitt, former chairman of the Securities and Exchange Commission, thinks that a new layer of information on current business trends should be added to periodic reports to create an enhanced, split-level financial reporting system.Under such a system, “you wouldn’t get rid of periodic report...

By David Katz • May 25, 2004

Groundhog Day for Royal Dutch/Shell

Royal Dutch/Shell has restated its reserve estimates for the fourth time this year. The multi-national energy giant said it is cutting another 112 million barrels of oil from its proven reserve base.The company made the announcement while noting that auditors have finally signed off on its 2003 r...

By Stephen Taub • May 25, 2004

SEC Accountant Strips Auditors of Tax Fees

The Securities and Exchange Commission’s top accountant issued an auditor-independence rules clarification that conflicts with the way accounting firms use the rules to justify charging audit clients contingent fees for tax advice, according to The Wall Street Journal.The newspaper reported that ...

By Stephen Taub • May 25, 2004

Looking under the Hood

If you think audits are tough now, just wait. Section 404 of the Sarbanes-Oxley Act of 2002 requires auditors to certify not just financial results but also the processes by which they are determined. The law mandates a formal audit — including documentation, testing, and certification — of a com...

By Lori Calabro • May 24, 2004

Backlash on Stock-Option Bill

Robert Denham, chairman and president of the Financial Accounting Foundation, lashed out at legislation that would greatly water down the proposed rule by the Financial Accounting Standards Board that would require companies to expense the value of stock options.“Advancing this bill in the legisl...

By Stephen Taub • May 20, 2004

Better Forecasts Mean Tougher Closes

More executives are feeling confident about their financial forecasts, says new research from The Hackett Group. But with more self-assurance have come increased costs and slower closes.Initial findings from Hackett’s 2004 World-Class Performance study of corporate finance departments indicate th...

By Marie Leone • May 20, 2004

SEC Charges Lucent, Executives

The Securities and Exchange Commission fined Lucent Technologies Inc. $25 million for not cooperating with an investigation of its accounting practices and charged 10 executives with securities fraud and helping Lucent violate federal securities laws.This is the largest penalty imposed on a compa...

By Stephen Taub • May 18, 2004

Turmoil in Iraqi Oil-for-Food Audit

A disputed auditor-selection process is widening the rift between Iraq’s Coalition Provisional Authority and the Iraqi Governing Council. As the June 30 deadline approaches for the handover of authority from the CPA to the IGC, the two groups have apparently put out competing requests for proposa...

By Marie Leone • May 18, 2004

Subpoenas for Tyco’s ADT Unit

Tyco International Ltd. announced that the Securities and Exchange Commission has subpoenaed current and former employers in its fire and security business, which includes ADT, according to Reuters.The announcement was made in a filing late Friday, after U.S. markets had closed.Tyco restated five...

By Dave Cook • May 17, 2004

Nortel Probe Turns Criminal

Nortel Networks Corp. announced that it received a federal grand jury subpoena as part of a criminal investigation by the U.S. Attorney’s Office for the Northern District of Texas.The Toronto-based company employs 4,700 workers at its U.S. headquarters in Richardson, Texas, near Dallas, according...

By Stephen Taub • May 17, 2004

Setting Revenue Recognition Standards

Global accounting standard setters are moving closer to crafting one set of comprehensive guidelines for how and when companies should report revenue, and have set the end of this year as a target date for publishing a draft, according to Reuters.The proposals being discussed between the Financia...

By Stephen Taub • May 17, 2004

NASA, We Have a Problem

The National Aeronautics and Space Administration has long been criticized for its inability to manage costs. During the 1990s, faced with flat budgets and ambitious program goals, NASA adopted a management approach of “faster, better, cheaper.” But by the decade’s end, the approach was blamed fo...

By Kris Frieswick • May 17, 2004

House Bill Would Impede FASB

A House of Representatives subcommittee passed a bill that would significantly water down the Financial Accounting Standards Board’s proposal requiring companies to expense stock options.H.R. 3574, the Stock Option Accounting Reform Act, was passed in the House Financial Services Subcommittee on ...

By Stephen Taub • May 14, 2004

Restatement for Checkpoint Systems

Checkpoint Systems Inc., which makes labeling systems, announced that it will restate its financials for fiscal years 2002 and 2003 because it is revising its income tax expense.The restatements result from errors in computing the company’s income-tax expense relating to credits on income from it...

By Stephen Taub • May 14, 2004

HealthSouth Delays Results until 2005

HealthSouth Corp., currently embroiled in a massive accounting scandal, announced that it won’t report its most recent quarterly results or the results of a restatement until 2005.The health-care company, which has already disclosed that it is being investigated by the Securities and Exchange Com...

By Stephen Taub • May 12, 2004

Fannie Mae Will Tighten Accounting Practices

Fannie Mae announced that it will adopt the stiffer accounting standard required by the agency that oversees the mortgage giant’s operations. The company reported in a regulatory filing, however, that it wouldn’t restate prior results, insisting that its accounting practices are “consistent with ...

By Stephen Taub • May 12, 2004

Fresh Ideas on Auditor Independence

While the Sarbanes-Oxley Act set up a broad-gauge attack on auditor-independence abuse, some off-the-wall tactics might be needed to keep audits honest, academics say.One way to assure objective accounting is to encourage insurers to underwrite coverage for financial-statement risks, according to...

By Marie Leone • May 12, 2004

Churchill Downs to Restate Revenues

Chances are, not many people will be sipping mint juleps over this news.Churchill Downs Inc., whose racetrack holdings include the venerable Louisville venue that hosts the Kentucky Derby, announced that it will amend its 10-K to reflect the reclassification of certain simulcast “host fee” expens...

By Stephen Taub • May 11, 2004

Merck Tax Bill May Top $2 Billion

Merck Inc. announced it may owe the Internal Revenue Service more than $2 billion related to a partnership deal the company entered in 1993.The drug maker said in a regulatory filing that the IRS is proposing to disallow certain royalty and other expenses claimed as deductions on its 1993 to 1996...

By Stephen Taub • May 11, 2004

Accounting Change Ordered for Fannie Mae

The federal agency that oversees Fannie Mae has ordered the mortgage finance company to change some of its accounting practices.Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, made public a letter he sent to Fannie Mae chairman and chief executive officer Frank...

By Stephen Taub • May 10, 2004