Coming: Auditor Cataclysm?

In the wake of the year’s many accounting scandals, CFOs at some publicly traded companies have been seeking auditors from outside the shrinking ranks of the top-tier accounting firms. But finance chiefs may soon find that the ranks of non-Big Four firms is thinning as well — thanks to the very r...

By Joseph Radigan • Oct. 2, 2002

A Good Year for Outsiders

Lee Graul says he’s starting to see the door open. Open slightly, mind you, but open nonetheless. And that, he says, is better than having his nose pressed up against the glass.As director of the SEC practice for accountancy BDO Seidman (SEED-man), Graul helps court new audit clients for the Chic...

By Joseph Radigan • Oct. 2, 2002

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

Sussing Out the Second Six

Every CFO knows the Big Four firms. Less familiar are the scores of accountancies that rank below the top four in revenues — but well above the sales of much smaller regional firms.Like the Big Four, this band of second-tier accountancies, known in the industry as Group B firms, provide auditing ...

By Joseph Radigan • Oct. 2, 2002

How Did We Get Here?

Scott Sullivan in handcuffs. Jokes about how “CFO” stands for Chief Fraud Officer. How did we get here?The fact is, we’ve been here before, and not all that long ago. It just feels worse this time because the recent boom lasted so long and the CFOs are doing the “perp walk” instead of the bankers...

By Julia Homer • Oct. 1, 2002

Stock Options

With each company that announces plans to start expensing options, the griping about figuring out what they’re worth grows louder. “Current valuation methods available for expensing stock options are not ideal,” complained General Motors CFO John Devine at the time he announced GM’s decision to e...

By Tim Reason • Oct. 1, 2002

Audit Fees on the Rise

Better usually means more expensive. So it’s no surprise that audit bills have gotten a whole lot bigger, thanks to a raft of new projects — such as internal control certifications — that the Sarbanes-Oxley Act of 2002 handed to auditors.“Audit committees are asking us to do more work, visit more...

By Alix Stuart • Oct. 1, 2002

Reform: How the Corporate Landscape Is Changing

Although congressional enactment of a law designed to improve corporate governance, Securities and Exchange Commission-­mandated certification of financial statements, and companies’ voluntary adoption of new practices seem to have gone some way to relieve investors’ concerns about the integrity ...

By CFO Editorial Staff • Oct. 1, 2002

Employers: Expensing Options Coming

Most U.S. employers — 87 percent — believe that option expensing will be mandated within five years. But only 37 percent have formally considered the issue at the executive or board level. This, according to a new survey from Mercer Human Resource Consulting.The majority of the respondents (56 pe...

By Stephen Taub • Sept. 16, 2002

Actual Surrender of Shares Is Meaningless

Experience tells us that when a share distribution by a corporation qualifies as a distribution in a partial liquidation, the shares are treated as a distribution “in full payment in exchange” for a portion of the shareholders’ stock. Of course, this is true for shareholders other than the ones t...

By Robert Willens • Sept. 4, 2002

Stock Options

For years, only two companies on the S&P 500 recorded their option grants as expenses: The Boeing Co., since 1998, and Winn-Dixie Stores Inc., since 1990. But in recent weeks, a stampede of companies has joined them.“We saw this as one way to demonstrate that we are an open-book kind of compa...

By Tim Reason • Sept. 1, 2002

Working on the Chain

Slumping capital markets. Fears of a double-dip recession. September 11. These are reasons enough for companies to start taking more slack out of their supply chains. But new technologies, the continuing evolution of Internet-based commerce, and a much-hyped concept — the “real-time enterprise” —...

By Edward Teach • Sept. 1, 2002

The Insiders

The latest rash of high-profile accounting scandals is adding fuel to the debate over reporting relationships in the finance department.No longer satisfied with financial audits controlled exclusively by senior corporate executives and accounting firms, regulators and institutional investors are ...

By David Katz • Sept. 1, 2002

No More Mr. Nice Guy

Remember back last summer, when Harvey Pitt vowed to run a kinder, gentler Securities and Exchange Commission than his predecessor, Arthur Levitt?With Enron and all that has come after, last summer might as well be a lifetime ago. The audit firms are finding little sympathy at the SEC or even on ...

By Andrew Osterland • Sept. 1, 2002

So Who Was Arthur Andersen, Anyway?

Today marks the last official day of business for disgraced accounting firm Arthur Andersen LLP. After a June conviction on obstruction of justice charges related to he Enron Corp. bankruptcy, the firm’s U.S. management said it would shutter its operations on Aug. 31. Since that date falls on a S...

By John Goff • Aug. 30, 2002

When Accrued Dividends Become Capital Gains

When a bond is purchased and sold between interest payment dates, the portion of the purchase price attributable to interest that has accrued to the date of purchase is treated as interest income to the seller of the bond.(In these cases, the settlement date, not the trade date is applicable—see ...

By Robert Willens • Aug. 21, 2002

Look-a-Like Rules Diverge

Things are not always what they appear. Witness the seemingly identical tax rule verbage regarding reorganizations and spinoffs.For a transaction—specifically a reorganization or a spinoff—to receive nonrecognition treatment, the deal must be undertaken for a business purpose. Thus, Reg. Sec. 1.3...

By Robert Willens • Aug. 14, 2002

FASB Weighs Options, Slowly

At a meeting on Wednesday, members of the Financial Accounting Standards Board focused on FAS 123, Accounting for Stock Based Compensation. While no long-term solution was arrived at, the standards board is apparently weighing three alternatives for phasing in option costs on corporate income sta...

By Joseph Radigan • Aug. 9, 2002

Slick Business: Did Dynegy Hide Losses?

A former controller of embattled energy company Dynegy Corp. filed a complaint in Texas state court on Friday, charging the company with civil conspiracy, according to both FT.com and The New York Times.The former controller, Bradley Farnsworth, alleges in his complaint that he was pressured to m...

By Joseph Radigan • Aug. 5, 2002

WorldCom

WorldCom’s revelation in June that it improperly allocated $3.9 billion in expenses during the past five quarters, or longer, set a low-water mark in the current tide of accounting scandals. Most likely it’s not the lowest. And identifying the next scandal may simply be a process of wading throug...

By Joseph McCafferty • Aug. 1, 2002

Audit Regulation

Who’s going to stop auditors from pussyfooting around aggressive accounting tactics? If the Securities and Exchange Commission has its way, a new nine-member board will be in place by the end of the year to do just that. The proposed new Public Accountability Board would replace the now-defunct P...

By Alix Stuart • Aug. 1, 2002

Love It and Leave It?

Employees of Ingersoll-Rand Co.’s Bobcat division were deeply moved by a photograph of firefighters gathered around a Bobcat skid-steer loader to pay tribute to a victim of the World Trade Center collapse. Just six days after the terrorist attacks, the firm began manufacturing a special-edition “...

By Tim Reason • July 30, 2002

Are Active Business Requirements for Partnerships Changing?

At first glance, an IRS ruling released July 7, seems to contradict an earlier ruling regarding the active business requirement and partnerships. Ironically, the new ruling cites the earlier statement—Revenue Ruling 92-17—which sits at the crux of the possible controversy.According to Rev. Rul. 9...

By Robert Willens • July 17, 2002

The View from the Inside

In the wake of the Senate’s historic vote to put corporate wrong-doers behind bars for up to ten years, a suggestion to change the reporting line of internal auditors seems sort of minor.The suggestion tends to carry a lot more weight, though, when it comes from an internal auditor who helped unc...

By David Katz • July 16, 2002

Loan Star State?

Last week, President Bush gave an impassioned speech about the need for greater honesty and integrity in corporate boardrooms. In his speech, delivered to 1,000 or so corporate executives in a Wall Street auditorium, the President noted: “At this moment, America’s greatest economic need is higher...

By Ronald Fink and Marie Leone • July 15, 2002

Big Five Get Low Grades for Performance

Sunbeam. Enron. WorldCom.What do these three companies have in common? Well, beyond the stain of accounting scandals, the three corporations were all clients of auditing firm Arthur Andersen.That, of course, has led critics to charge that Andersen auditors were either in cahoots with these compan...

By Stephen Taub • July 12, 2002