Disclose Now, Don’t Pay Later

As part of its ongoing effort to crack down on tax shelters, the Internal Revenue Service has agreed to waive penalties for companies that voluntarily disclose questionable items in their returns before April 23.Companies that spill the beans about a tax shelter–and about the person who promoted ...

By Tim Reason • Feb. 8, 2002

Big Investors Want Big Changes

With the Enron accounting scandal now a full-fledged stock market contagion, institutional investors are getting a little concerned. Yesterday, the Council of Institutional Investors — a group of 250 pension funds and investment-related firms — sent a letter to SEC Chairman Harvey Pitt calling fo...

By John Goff • Feb. 8, 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

Report: Enron Withheld Info for Four Years

In a blockbuster story, the Los Angeles Times claims that Enron executives withheld critical financial documents from auditor Andersen for four years. The withholding of information allegedly led the auditor into approving inaccurate financial reports, according to the story, which is based on an...

By CFO Editorial Staff • Feb. 7, 2002

Expenses as Earnings Management?

The Financial Accounting Standards Board’s (FASB) recent effort to clarify accounting for out-of-pocket expenses has left many CFOs scratching their heads. Such expenses, which are reimbursed by clients, typically are a wash for companies. But remarkably, FASB’s Emerging Issues Task Force conclud...

By Alix Stuart • Feb. 6, 2002

No Relief in Sight, say Washington Watchers

Pining for tax relief from Congress? Don’t get your hopes up. Granted, with Congress back in session optimists still have their fingers crossed, even though such juicy tax provisions as the repeal of the alternative minimum tax (AMT) were scuttled when the economic stimulus package went down in D...

By Alix Stuart • Feb. 4, 2002

Pro (& Con) Forma

In December, the Securities and Exchange Commission sent a shot across the bow of Corporate America when it issued a formal warning regarding the release of misleading pro forma numbers. “Expect enforcement action to follow in short order,” says Christian Bartholomew, a former senior trial counse...

By Marie Leone • Feb. 1, 2002

Chain Reaction

If you think supply-chain management is a boring topic, listen to one of Hau Lee’s talks. Within minutes, the professor of engineering and management science at Silicon Valley’s Stanford University has the audience roaring with laughter. When it comes to anecdotes illustrating the pitfalls of tod...

By Ludwig Siegele • Feb. 1, 2002

There’s No Taste for Accounting

For a group not known for dramatic flair, it was a bold step.On January 14, the Financial Accounting Standards Board (FASB) announced it was launching a new program to codify and simplify U.S. accounting literature. As part of the ambitious project, officials at FASB said the board would “seek to...

By Craig Schneider • Jan. 28, 2002

The Next Great Controversey: Pro Forma Earnings

The Enron fiasco has clearly raised the awareness of creative accounting maneuvers such as off-balance-sheet financing and special purpose entities (SPEs). But the growing corporate reliance on pro forma earnings may well be the next accounting issue to blossom into a full-fledged controversy.In ...

By Stephen Taub • Jan. 23, 2002

Enron: The Plot Sickens

Tell us this isn’t starting to sound a lot like Watergate.Today’s Enron revelation: Sherron Watkins, the Enron executive who reportedly sent a letter to chairman Ken Lay warning him about Enron’s questionable accounting practices, also sent a similar warning to Enron’s auditor, Andersen.According...

By Stephen Taub • Jan. 17, 2002

SEC Chairman Wants a New Accounting

In what may have wide-reaching ramifications for CFOs and other finance managers, Securities and Exchange Commission Chairman Harvey Pitt today called for substantial reform of corporate disclosure, as well as the accounting profession itself. In a statement released this afternoon, Pitt addresse...

By John Goff • Jan. 17, 2002

Andersen Fires Lead Enron Auditor

Another day, another Andersen stunner.On Tuesday, the accounting firm fired partner David B. Duncan, who was in charge of the Enron audit. Andersen claims Duncan led a group of employees to dispose of Enron-related documents shortly after learning that the SEC requested information about Enron’s ...

By Stephen Taub • Jan. 16, 2002

Manassas Mauler: Bull Run Sues Ernst & Young

This has the makings of an uncivil war.Management at Bull Run Corp., a sports affinity marketing and management company, said it has filed a lawsuit against Ernst & Young LLP. Bull Run is charging the accounting firm with negligent misrepresentation.Ernst & Young audited the financial sta...

By Stephen Taub • Jan. 9, 2002

Wrong Numbers

Roger Oustecky, chief operating officer of Tenet International, a company that audits corporate telecommunications bills, claims that 80 percent of phone-company bills are wrong, accounting for customer overpayments of 7 percent on average. Spokespersons for phone giants Verizon Communications In...

By Joan Urdang • Jan. 1, 2002

Coming into Focus

Around midyear, investors will be getting a better look at corporate balance sheets, thanks to new accounting rules covering goodwill and how to reflect its impairment. The big question is, will they like what they see?Financial Accounting Standards Board Statements Nos. 141 and 142, of course, r...

By Jennifer Caplan and Roy Harris • Jan. 1, 2002

10 X 5: The Big Five’s Ten Biggest Clients

Here are the top ten clients of the Big Five accounting firms, as of 12/31/01. Numbers in parenthesis are 2001 annual sales for each company (in billions of dollars). Arthur Andersen1. Merck & Co.* ($40.3)2. Enron Corp.* ($40.1)3. Costco Companies ($32.2)4. Dynergy Inc. ($29.4)5. UtiliCorp Un...

By John Goff • Jan. 1, 2002

Numbers Game: 40 Percent of Big Five Report Good 2001

Conventional wisdom has it that, in hard times, companies fire their consultants. Apparently, the convention must be changing.How else can you explain recent announcements by PricewaterhouseCoopers and KPMG International. The two accountancies both reported revenue increases for the fiscal years ...

By Stephen Taub • Dec. 26, 2001

Antifraud Regs Apply to Pro Forma Statements, Says SEC

The SEC, led by chairman Harvey Pitt, once again emphasized its determination to crack down on pro forma earnings abuses.This week, the regulatory body issued what it calls “cautionary advice” that companies and their advisors should consider when releasing pro forma financial information. In it,...

By Stephen Taub • Dec. 6, 2001

Goodwill Punting

Most CFOs dismiss the notion that goodwill affects the price they’re willing to pay in an acquisition. After all, goodwill is a noncash item, and most companies value assets based on discounted cash flow.Nevertheless, the Financial Accounting Standards Board’s new rule concerning goodwill in busi...

By Craig Schneider • Dec. 6, 2001

Tax Shelters

The Internal Revenue Service’s crackdown on abusive tax shelters lost some momentum in October when a federal judge reversed a 1996 IRS determination and refunded more than $500 million, including five years’ worth of interest, to Madison, N.J.- based American Home Products Corp.The decision, by ...

By Marie Leone • Dec. 1, 2001

Calling Off the Dogs

As accounting frauds go, the problems at Seaboard Corp.’s Chestnut Hill Farms division amounted to garden-variety book-cooking.Division controller Gisela de Leon-Meredith had been caught overstating deferred-farming-cost assets and understating farming expenses, inflating revenues by a total of $...

By Alix Stuart • Dec. 1, 2001

Numbers Racket

The SEC reiterated its plans to come down hard on companies with questionable accounting practices.In an interview with Reuters, SEC officials noted that the commission filed 112 financial reporting cases so far this year, up from 103 in 2000, 94 in 1999, and 79 in 1998,“It certainly reflects tha...

By Stephen Taub • Nov. 29, 2001

Goodwill Grief

In accounting, ignorance is anything but bliss. Confusion surrounding early adoption of the Financial Accounting Standard Board’s new purchase accounting rules has forced at least one eligible company to put its plans on hold for a year. “We had every intention of being an early adopter” of FAS 1...

By Craig Schneider • Nov. 13, 2001

FASB to Study Financial Performance Reporting

The Financial Accounting Standards Board has added a project on financial performance reporting to its agenda. This comes amid recent criticism that current financial statements don’t provide timely — or truly meaningful — information to investors and creditors. “The project’s objective is to imp...

By Stephen Taub • Nov. 1, 2001

Getting the Martians off the Street

It was back in 1992 when David Tweedie famously declared that extraordinary items in company accounts should become as rare as “Martians walking through the streets.” As the chairman of the Accounting Standards Board in the U.K. at the time — he’s now chairman of the International Accounting Stan...

By Ben McLannahan • Nov. 1, 2001