- August 2002 - Business Finance Magazine
Corporate Red Flags
by Eric Krell
Lax accounting, neglect of cash needs, supply-chain inadequacies,
dirty data, faulty HR policies, weak governance and lack of contingency
planning before a crisis can sabotage a business. Proactive CFOs head off
such problems before they cause damage.
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- Planning a
Positive Cash Flow
by Isabel M. Isidro
Managing Editor
Cash flow is the lifeblood of small businesses. Adequate cash ensures
that the business can meet all its legal obligations. Here are ways
your small business can increase cash reserves.
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- May 17, 2002 - Smart Money
The Data Mine
A
Better P/E Ratio
By Stacey L. Bradford
THERE ARE MANY ways to look for value in a stock. The most popular
is probably the price-to-earnings ratio. But this measure can be a bit
misleading. As the accounting scandals of the past few months have shown,
a company's earnings figures aren't always reliable, even with a stamp of
approval from a Big Five accounting firm.
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- February 2002 - Strategic Finance
Fast track to
direct cash flow reporting
By Paul B.W. Miller, CPA, and Paul R. Bahnson, CPA
It’s easier than you think to provide the information financial statement
users want. Even though good reasons
abound for using the direct method of reporting operating cash flow,
almost all managers choose the indirect method. We, and others
whose opinions we respect, consider the direct
method to be far superior to the indirect because it generates information
that’s
more useful to the capital markets for assessing the amounts, timing, and
uncertainty of a company’s future cash flows.
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- February 01, 2001 - CFO Magazine
Shadow of a Doubt
By Stephen Barr
A former division controller has accused AlliedSignal of wrongful discharge. Was Douglas
Boe fired for exposing earnings management--or was his manic depression out of control?
In the spring of 1999, when the Securities and Exchange Commission needed a staff
accountant in its enforcement division, Douglas Boe figured he was the man.
Then 37 and an assistant controller in a division of Hughes Electronics Corp., Boe had an
impeccable finance pedigree: a BS and an MS in accounting from the University of Virginia,
an MBA from Indiana University, auditing experience at Arthur Andersen & Co., and
wide- ranging assignments at Motorola Inc., AlliedSignal Inc., and Hughes. What's more, he
had a keen interest in the ongoing earnings- management crusade of SEC chairman Arthur
Levitt, who in a 1998 speech had fretted that "managing may be giving way to
manipulation, integrity may be losing out to illusion." Boe said as much in his
E-mail application to the SEC, stating that he had "experienced first-handed [sic]
financial improprieties about which Mr. Levitt has so eloquently spoken."
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- February 27, 2001 - The Wall Street Journal
Broadcom
Prompts Questions With Warrants Linked to Sales
By MOLLY WILLIAMS
Broadcom Corp. has been gobbling up small start-up companies for the past two years to
help fuel its sizzling growth. But the way the maker of communications chips is accounting
for some aspects of certain transactions is raising concern among some analysts, investors
and accountants.
The questions surround Broadcom's accounting for warrants -- or rights to buy stock --
issued to customers of companies that it acquires as an incentive to buy products.
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- February 15, 2001 - CFO Magazine
Measuring the ROI of Training
By: Ben Worthen
NO ONE WOULD OPEN A NEW OFFICE, roll out a new application or even hire a new employee
without knowing—not thinking, not guessing, not wishing and hoping, but
knowing—they were getting something back. To do otherwise would be bad business. But
in the area of IT training, it happens all the time.
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- February 8, 2001 - The Wall Street Journal
Lawsuit
Provides Fresh Details Of Rite Aid's Accounting Woes
By MARK MAREMONT
What went wrong at Rite Aid?
In the 16 months since news broke of a major accounting scandal at the drugstore chain,
Rite Aid Corp. has been reluctant to reveal details of how the company overstated profits
by more than $1 billion from 1997 to 1999, leaving investors in the dark about the
debacle.
Now, an amended class-action lawsuit filed last week provides fresh clues to what may have
happened at Rite Aid, which already has admitted to violating a host of accounting
policies, from manipulating costs to hiding depreciation expenses.
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- February 6, 2001 - The Wall Street Journal
Fired
Executive Questioned Xerox's Accounting Practices
By JAMES BANDLER and JOHN HECHINGER
At noon last Aug. 28, James F. Bingham, an assistant treasurer at Xerox Corp., strode into
a ground-floor conference room at the copier giant's headquarters in Stamford, Conn., and
committed corporate suicide.
As Barry Romeril, Xerox's chief financial officer, and two other senior executives
listened mostly in silence, Mr. Bingham says he delivered an hourlong critique of Xerox's
financial practices in the wake of an accounting scandal in the company's Mexico
operations.
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- January 18, 2001 - The Wall Street Journal
L&H
Investors May Strike Back At Auditor KPMG in a Lawsuit
By MARK MAREMONT
Now the blame game begins.
In the aftermath of the accounting scandal at Lernout & Hauspie Speech Products NV,
angry investors are looking for somebody on whom to pin legal responsibility -- preferably
somebody with deep pockets. They are starting to turn their gaze on KPMG International,
the giant accounting firm that audited L&H's books and consistently gave the software
firm a clean bill of health.
Michael G. Lange, a partner at Berman, DeValerio & Pease, a Boston law firm that is
leading one of the shareholder lawsuits seeking class-action status against L&H, says
the accounting irregularities at L&H "were so pervasive and included so many
aspects of the business" that "there had to be red flags" that KPMG
auditors missed. "You don't just lose $100 million," Mr. Lange adds, referring
to a mysterious cash shortfall at L&H's South Korean unit. The firm, he says, is
preparing to add one or more units of KPMG International as a defendant in its complaint,
which was filed in U.S. District Court in Boston.
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- December 1, 2000 - CFO Magazine
The Great Debate:
Volcker referees the fight over global accounting standards.
By: Tom Leander
Olli-Pekka Kallasvuo, CFO and executive vice president of Nokia Corp., seems a prince of
transparency as he sits in Nokia House, a steel and glass corporate temple in Helsinki,
Finland. The 47-year-old talks with confidence of Nokia's information disclosure practices
under international accounting standards (IAS), a body of accounting rules now under
consideration by the U.S. Securities and Exchange Commission (SEC). more...
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- January 8th, 2001 - CFO Magazine
Dot-Coms Running Out
of Cash (Updated)
Things will get worse before they improve in cyberspace. That is the conclusion of a study
conducted by Pegasus Research International. The firm estimates that more than one third
of publicly traded Internet firms will probably run out of cash by the end of 2001. In
addition, 335 publicly traded Internet companies used up about $2 billion in cash in the
third quarter of 2000. That is about the same amount used up in the second quarter.
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- December 27th, 2000 - CIO Magazine
The ROI of IT: A resource
package for measuring the return on your technology investment
By Martha Heller
Remember the good old days when your IT budget was limited to a few new PCs a year and as
long as his spreadsheet opened each morning, your CFO
never bothered you about the ROI of IT? Well, with IT spending on a vertical rise, and
technology crucial to the success of the business, your CFO and
the rest of the management team want to know what bang they're gettingfor their buck...or
rather, bucks.
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- December 18th, 2000 - InformationWeek
Enterprises Tailor ROI To
E-Business
By: CHUCK MOOZAKIS and DAVID LEWIS
Strategies for tracking success of e-biz investment vary by company, industry For many
companies, return on investment is a clear way to determine whether they're earning a
profit on their technology investment. But when it comes to calculating online ROI, there
are almost as many paths to take as there are
companies doing business on the Internet. And in the coming year, the picture may get
cloudier as more companies than ever struggle to get their arms around this critical
business measurement.
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- Decmber 15th, 2000 - The Wall Street Journal
Many
Firms Fail to Follow SEC's Revenue Guidelines
When the Securities and Exchange Commission talks, only some people listen, it seems -- at
least when it comes to its pleas for corporate America to give investors plenty of advance
notice about the impact of new revenue-recognition guidelines on financial results.
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- September 28th, 2000 - CFO Magazine
By: Andrew Osterland
Hard Lessons:
In its ongoing war on earnings management, the SEC may have outdone itself with new rules
on revenue recognition.
It's not new GAAP--it just feels like it. When Staff Accounting Bulletin No. 101 was
issued by the Securities and Exchange Commission's office of the Chief Accountant last
December, it came with a disclaimer: "This SAB does not change any of the accounting
profession's existing rules on revenue recognition. Rather, [it] draws upon the existing
rules and explains how the staff applies those rules." And by extension, how
corporations and their auditors will now be expected to apply them. In the past nine
months, corporations have come to realize that the SEC's "guidance" on the
recognition of revenue will force some major changes to their accounting practices. And
along with the changes, there will be one-time charges; in many cases, restatements of
prior financial results. There could be SEC inquiries, volatile reactions in the stock
market, and, of course, shareholder lawsuits. The effects, in fact, are already being
felt. According to research conducted by Bear, Stearns & Co., some 800 companies
mentioned SAB 101 in their 1999 10Ks and 10Qs from the March quarter. Of those, 241
indicated that they had changed their revenue recognition policies or intended to in order
to comply with SAB 101.
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- September 1st, 2000 - CFO Magazine
Accounting Fraud: Jailhouse
Shock - The SEC is referring more accounting-fraud cases to federal prosecutors.
Wrongdoers could face stiff prison sentences--without parole.
By: Tim Reason
Cosmo Corigliano will likely wake up behind bars this month as a result of his role in
inflating the earnings of CUC International Inc.--misstatements that came to light after
CUC merged with HFS Inc. in 1997 to form Cendant Corp. The 40-year-old former CFO pleaded
guilty to two counts of fraud in June. Corigliano, who appears to be cooperating with the
government in its pursuit of his former boss, Walter Forbes, faces as much as a 10-year
sentence without parole. And two of Corigliano's former colleagues, Anne Pember, CUC's
controller, and Casper Sabatino, the CUC accountant in charge of external reporting, each
pleaded guilty to one count of fraud and face 5-year sentences. All three will find out
their fate this month.
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- September 1st, 2000 - CFO Magazine
Share Where? Shared
services centers helped companies eliminate redundancies. Now the web may eliminate the
centers.
By: Tim Reason
What's in a name? Ask Donald Janson, director of the artfully named Common Administrative
Resources (CAR) unit at Ingersoll- Rand. CAR by any other name would be known as
"shared services," but Janson says that given the highly independent nature of
the eight divisions that make up Ingersoll-Rand, and the fact that "shared services
has, for a long time, been associated with centralization," the Woodcliff Lake, New
Jersey, company decided that new terminology was in order. While the
concept--consolidating functions in the name of efficiency--is still valid, Janson says
that "shared services" is hamstrung by too many "bad connotations."
Question: What would be the advantages and disadvantges of centralization?
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