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Accounting Sites

Articles, Research Reports & Studies

[ Accounting Standards | Cash Flow Reporting | Mergers and Acquisitions | Pension Plans | Revenue Recognition | Special Purpose Entities | Stock Options | Structure Finance ]
 

Accounting Sites

Financial Accounting Standards Board (FASB):  Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports.

Governmental Accounting Standards Board: The mission of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.

International Accounting Standards Board (ISAB):  The International Accounting Standards Board is an independent, privately-funded accounting standard setter based in London, UK. Board Members come from nine countries and have a variety of functional backgrounds. The Board is committed to developing, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general purpose financial statements.

Deloitte Touche Tohmatsu:  Deloitte Touche Tohmatsu, a leading global professional services organization, delivers world-class assurance and advisory, tax, and consulting services through its national practices.  (Audit, Tax, Consulting and Financial Advisory Services)

Ernst & Young:  Ernst & Young helps companies in businesses across all industries—from emerging growth companies to global powerhouses—identify and capitalize on business opportunities.   (Audit, Tax, Consulting and Financial Advisory Services)

KPMG:  In a global marketplace distinguished by remarkable growth and consolidation, companies face a host of new challenges in today's economy. KPMG helps clients successfully respond to changing opportunities by providing professional services, wherever and whenever they're needed.   (Audit, Tax, Consulting and Financial Advisory Services)

PricewaterhouseCoopers:  At PricewaterhouseCoopers, we measure our success by yours. Everyday our 150,000 people in more than 150 countries go to work to help our clients succeed.   (Audit, Tax, Consulting and Financial Advisory Services)

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

( Symbol Guide )

 [ A ]

Accounting Ace Charles Mulford Answers Accounting Questions, Discussion Group, The Wall Street Journal, June 2002.  "A company uses the statement of cash flows to report the reasons for changes in the cash balance during a reporting period. The cash flows are separated into operating, investing, and financing activities."  (Accounting (Solid Primer on Cash Flow, Financing and Revenue Recognition))

Addicted to Acquisitions, David Henry, with Frederick F. Jespersen, BusinessWeek Magazine, October 14, 2002.  (Accounting (Mergers and Acquisitions (Tyco's 169 Deals)))

A.I.G. Disclosures Give a Hint of How Accounting Inflated Results, Gretchen Morgenson and Jenny Anderson, The New York Times, May 3, 2005.  “Maurice R. Greenberg, former chief executive of American International Group, was a guru to many. To investors and employees, he was the genius who presided over a company that produced consistent growth in a volatile business. Within the insurance industry, Mr. Greenberg was an icon for generating fewer losses than peer companies on the insurance A.I.G. wrote.  Now that performance appears to have been a mirage." (Accounting (Insurance: AIG))

An Idea Gone Haywire: Linking Executive Pay to Sales, Gretchen Morgenson, The New York Times, July 14, 2002.  "Why would Bristol-Myers Squibb use incentives to induce its wholesale customers to buy more products than they needed last year, a practice that may have resulted in overstated revenue at the company? The Securities and Exchange Commission is investigating the company, which has said that its sales practices are proper. "  (Accounting | Sales (Revenue Recognition) | Bristol-Myers Squibb)

As The Bubble Neared Its End, Bogus Swaps Padded The Books, Dennis K. Berman, Julia Angwin and Chip Cummins, The Wall Street Journal, December 23, 2002.  "But the swaps rage turned out to be no bargain for investors. The bad deals contributed to an epidemic of artificially inflated revenue. In many cases, swaps slipped through legal loopholes left in place by regulators who had failed to keep pace with the ever changing deal making of ever-changing industries. The unraveling of those back-scratching arrangements helped usher in the market collapse and led to the realization by investors that the highest-flying industries of the boom era -- telecom, energy, the Internet -- were built in part on a combustible mix of wishful thinking and deceit."  (Accounting (Swaps) | Market History | Telecom (Qwest Communications, America Online, CMS Energy, Global Crossings))

'Audit-Related Fees' to Ernst Were for Janitorial Inspections, Hal R. Varian, The Wall Street Journal, June 11, 2003.  "Ernst & Young LLP collected $2.6 million from Health South Corp. for conducting janitorial inspections of the health-services company's facilities in 2000 and 2001 and advised it to classify the payments as "audit-related fees," leading Health South to make inaccurate public disclosures about Ernst & Young's fees for nonaudit services.  The brainchild of former Health South Chairman and Chief Executive Richard Scrushy, the inspections were part of a program HealthSouth called "Pristine Audits." Despite the name, these reviews had nothing to do with Ernst's audits of the company's financial statements. Rather, the primary purpose of the inspections was to check the cleanliness and physical appearance of Health South's approximately 1,800 surgical and rehabilitation facilities." (Accounting (Expense Accounting) | Ernst & Young, Health South)

 [ B ]

Behind Wave of Corporate Fraud:  A Change in How Auditors Work:  'Risk Based' Model Narrowed Focus of Their Procedures, Leaving Room for Trouble, Jonathon Weil, The Wall Street Journal, March 25, 2004.  “The recent wave of corporate fraud is raising a harsh question about the auditors who review and bless companies' financial results: How could they have missed all the wrongdoing? One little-discussed answer: a big change in the way audits are performed."  (Accounting | Risk Based Audit Models)

Brick Stood Up Before. But Now?, Diana B. Henriques, The New York Times March 10, 2002.  "Home mortgages, car loans, credit card debt, student loans, equipment leases — all these assets, and more exotic ones like future receipts from British pubs and the box-office take for Steven Spielberg's future movies, have been remodeled into asset-backed securities."  (Accounting | Structured Finance (Asset-Backed Securities) and Credit Markets)

Bristol-Myers Agrees to Settle Accounting Case, Eric Dash, The New York Times, August 4, 2004.  “The drug giant Bristol-Myers Squibb said yesterday that it would pay $150 million to settle Securities and Exchange Commission accusations that the company improperly inflated its sales and earnings in a series of accounting frauds.  The amount is one of the largest penalties ever exacted by federal regulators in an accounting fraud case - and it comes just days after Bristol-Myers agreed to pay $300 million to settle a shareholder class-action lawsuit over similar claims."  (Accounting (Bristol-Myers Squibb Follow-Up))

 [ C ]

Confused About Earnings, Nanette Byrnes and David Henry, Businessweek, November 26, 2001.  "In an age when giant earnings write-offs have become commonplace, it's hard to shock Wall Street. But on Nov. 8, Enron Corp. managed to do it."  (Accounting | Managed and Quality of Earnings)

 [ D ]

Deal That Toppled A.I.G.'s Boss, Gretchen Morgenson, The New York Times , March 27, 2005.  “Maurice R. Greenberg famously irascible executive. When he got a call on March 13 from Frank G. Zarb, American International Group's lead director, telling him that his 38 years as the company's chief executive were over, he was, well, enraged.  You can only imagine what he was thinking: Who were these directors to jettison the head of a triple-A-rated insurance company, one that had just reported $100 billion in revenues? Who were they to dump an executive who met regularly on equal footing with world leaders, who was revered not only on Wall Street but around the world for producing predictable, steady earnings growth through years of insurance industry ups and downs?" (Accounting (AIG & Gen Re (Berkshire Hathaway) )

Decline and Fall of Corporate Advice, Mathew R. Simmons, President.  The Simmons and Company International, April 2002.  "These days, every CEO and CFO worth his or her salt should be asking themselves the same question, "What is the quality of advice my firm is paying for?"  Whether they know it or not, the answer is grim."  (Accounting (Audit and Consulting) | Financial Firms | Investment Banking (Wall Street))

 [ E ]

Earnings Hocus Pocus, Nanette Byrnes, Richard A. Melcher with Debra Sparks, BusinessWeek, October 5, 1998.  "When America Online's management put together its quarterly financials early this summer, it was with some measure of pride, says new Chief Financial Officer J. Michael Kelly. Indeed, the results were remarkable. AOL would be posting a 900% rise in operating profits, to $57 million. At 23 cents per share, earnings would handily beat Wall Street's estimate of 19 cents. " (Accounting | Managed Earnings)

EDS Bet on Its Stock Price, And Ended Up Losing Big, Ken Brown, The Wall Street Journal, September 26, 2002.  "Most investors long ago stopped believing that stocks only go up. But two years after the Nasdaq Stock Market collapsed, Electronic Data Systems Corp. apparently still hadn't gotten that message. "  (Accounting | Use of Stock Options to boost Earnings | EDS)

Ex-Executives Tell How Bristol Burnished Its Financial Results, Gardiner Harris, The Wall Street Journal, December 12, 2002.  “Bristol Myers Squibb Co. is in one of its worst slumps in its 144-year history, facing weak sales and barren new-drug laboratories.  The pharmaceutical giant is also preparing to restate two years of its financial reports, owing to its confessed habit of “channel-stuffing” – jamming products into distribution channels to pump up sales.”  (Accounting (Bristol-Myers Squibb Follow-Up) | Managed Earnings)

Expanding Without Managing, Jerry Sonnefield, The New York Times, June 12, 2002.  "Executives who build their businesses primarily on acquisitions are perhaps most susceptible to another pitfall: They tend to fly solo. Their near total control in setting strategic plans for their companies makes it difficult for subordinates or the board to critique the direction of the company. And yet, acquirers generally lack a strategic logic that can survive market changes; as a result their empires of hype can be undone very swiftly by market discipline. None of this is really new. The fall of the most recent corporate acquirers provides spectacular reminders of lessons we've seen decade after decade."  (Accounting (Goodwill) | Investment Banking | Mergers & Acquisitions)

Eye Financial Statements for Signs of Future Woes, Art Berkowitz and Richard Rampell, The Wall Street Journal, September 26, 2002.  "Improper revenue recognition has been identified in numerous studies to be at the core of many of the accounting frauds.  But in today's world of heightened expectations, the mere risk of restatements may be just as perilous."  (Accounting | Cash Flow | Financial Statements | Revenue Recognition)

 [ F ]

Fannie Mae's Accounting Finds Critics of Its Own, Alex Berenson, The New York Times, June 23, 2003.  “Regulators, lawmakers and investors have battered Freddie Mac, the country's second-largest mortgage financier, since it fired its president two weeks ago, after the company said he failed to cooperate with an internal inquiry into its accounting.  Now some money managers and independent accounting experts are raising questions about the profits reported by Fannie Mae, Freddie Mac's even larger corporate cousin.”  (Accounting | Government Sponsored Entity (GSE) | Fannie Mae and Freddie Mac)

For WorldCom, Acquisitions Were Behind Its Rise and Fall, Kurt Eichenwald, The New York Times, August 8, 2002.  "But even as Mr. Ebbers boasted of WorldCom's successes and even as enraptured investors drove up the company's stock price, behind the scenes the company was already a financial and operational shambles, according to interviews with current and former executives, lawyers and government officials, as well as internal documents and court and government records."  (Accounting (Goodwill) | Investment Banking | Mergers & Acquisitions | WorldCom)

Freddie Restatement May Be Big, Patrick Barta and John D. McKinnon, The Wall Street Journal, June 17, 2003.  “Earnings Could Rise by $1 Billion to $3 Billion, But Future Net Would Decline by Same Amount - Freddie Mac, facing government and investor scrutiny over its accounting, could restate its earnings by between $1 billion and $3 billion, according to people familiar with the matter.  The move, mortgage specialists say, would boost Freddie Mac's bottom line for the past two or three years, but reduce net income by the same amount during the next several years.”  (Accounting (Follow Up))

 [ G ]

 [ H ]

Help For Investors, Nanette Byrnes and Jeffrey M. Laderman, BusinessWeek, October 5, 1998.  "Scott W. Schoelzel is a very successful investor. As manager of the Janus Twenty Fund, he boasts a three-year average annual return of 28%. Even with this year's rocky market, he has managed to post an impressive 21% gain through August. One reason for his success: The $9.3 billion fund is limited to holding about 30 stocks, so he has time to carefully monitor each one. As a result, he managed to dodge such bullets as Sunbeam Corp., selling his shares long before the collapse that lopped off 86% of its value."  (Accounting | Managed Earnings)

Hidden Loans May Be Common Practice In Insurance Industry, Theo Francis and Christopher Oster, The Wall Street Journal, October 29, 2004.  “Insurance companies for years have been buying insurance policies for themselves that are akin to the product at the center of a criminal investigation into whether American International Group Inc. helped a cellphone distributor manipulate its earnings.  Critics say the policies are sometimes insurance in name only. That is because the premiums or other payments are so big that the seller assumes little or no risk, making them like loans that help buyers smooth their earnings and shore up their stock price. The reason: Insurance proceeds count as income and offset losses, while a loan must be counted as a liability -- a debt that must be paid off over time.” (Accounting (Windows Dressing Insurance) | Insurance | AIG)

How Leases Play A Shadowy Role In Accounting, Jonathon Weill, The Wall Street Journal, September 22, 2004.  “Despite the post-Enron drive to improve accounting standards, U.S. companies are still allowed to keep off their balance sheets billions of dollars of lease obligations that are just as real as financial commitments originating from bank loans and other borrowings.  The practice spans the entire spectrum of American business and industry, relegating a key gauge of corporate health to obscure financial-statement footnotes, and leaving investors and analysts to do the math themselves. The scale of these off-balance-sheet obligations -- stemming from leases on everything from aircraft to retail stores to factory equipment -- can be huge.” (Accounting | Leases (Off-Balance: “Capital Lease” versus “Operating Lease” and Synthetic Leasing))

How Lucent's Retiree Programs Cost It Zero, Even Yielded Profit, Ellen E. Schultz and Theo Francis, The Wall Street Journal, March 29, 2004.  “Henry Schacht, Lucent Technologies Inc.'s former chief executive and still a director, met with retirees in 10 states last fall to explain why Lucent was cutting their medical and life-insurance benefits.  In Buckhead, Ga., the retirees, some propped on canes and walkers, tottered into a meeting at the Sheraton hotel. Then, according to a handout from Mr. Schacht's presentation, he explained the burden Lucent faced from growing medical costs and rising numbers of retirees. There are now five retirees for every U.S. worker, the handout said. "Unfortunately, the numbers just don't work."  Many retirees say they resigned themselves to that conclusion. A high ratio of retirees and older workers, they figured, must be a burden that forced the company to cut benefits if it hoped to be competitive.”   (Accounting | Retirement Planning (Pension Plans))

 [ I ]

Increase in Share Buybacks Sends Investors Mixed Signs, Ken Brown, The Wall Street Journal. July 23, 2002.  "As the stock market has tumbled these past two weeks, dozens of companies have shouted to the world that they believe their stocks are cheap by announcing share buybacks. But investors desperate for signs that the market has hit bottom should view these announcements with caution."  (Accounting (Buybacks and Dilution))

 [ J ]

"Just Say No:" End The Tyranny Of The Earnings Estimate, Christopher Whalen, Barron's (Editorial), February 24, 2003.  "The Chief Executive of a semiconductor-equipment manufacturer recently declared: "I have 50% confidence in three sets of projections for 2003." Like many of his peers in the semiconductor capital-equipment sector, this CEO has no clear idea what sales or profitability will be next year-or next quarter. But almost a dozen Wall Street analysts have managed to publish specific revenue and earnings estimates for the company going out two years.  (Accounting | Managed Earnings)

 [ K ]

Krispy Kreme Franchise Buybacks May Spur New Concerns, Mark Maremont and Rick Brooks, The Wall Street Journal, May 25, 2004.  "Since going public in 2000, Krispy Kreme Doughnuts Inc. has faced questions about its accounting transparency and potential for conflicts of interest in investments that its executives made in its franchises. Investors bought the sugar-fueled stock anyway.  But two recent deals in which Krispy Kreme bought back franchisees could spark new concerns. Some independent accounting experts say the Winston-Salem, N.C., company may have used aggressive bookkeeping to boost its earnings when it acquired its Michigan franchise last year. In the other buyout, completed in January, Krispy Kreme didn't disclose that one of the sellers was Chief Executive Scott Livengood's ex-wife, whose share was valued at about $1.5 million."  (Accounting | Corporate Governance | Krispy Kreme)

 [ L ]

Lingering Losses on Bonds Are Haunting Insurers, Norm Alster, The New York Times, June 15, 2003.  "In the wake of multibillion-dollar accounting scandals in American business, companies are under heightened pressure to make sure that their financial results do not paint a misleadingly rosy picture.  That pressure figures to be especially intense on the insurance industry.  Insurers are swimming in billions of dollars of losses on corporate bonds that they bought years ago, but whose value has since plummeted. With the leeway afforded by vague accounting rules, many insurers are still carrying these securities on their books as if nothing had happened. An effect is the deceptive appearance of financial strength." (Accounting | Market History)

 [ M ]

Measures of Corporate Earnings, David M. Blitzer, PhD, Robert  E. Friedman, CPA and Howard J. Silverblatt, Standard & Poor's, May 14, 2002.  "Over the last decade, intensifying pressure to meet Wall Street earnings expectations led more and more companies to introduce new and different earnings measurement and reporting approaches.  At the same time, many members of the investment community expressed concern that earnings reports are becoming harder to understand, more difficult to compare across companies, and less useful to analysts and investors."  (Market History (Earnings and Standard and Poor's Research Report)

Mergers: Why Most Big Deals Don't Pay Off, David Henry, with Frederick F. Jespersen, BusinessWeek, October 14, 2002.  “The spring of 1998 was a fast and furious time for dealmakers. As stocks soared in one of the most exuberant phases of the decade's great bull market, multibillion-dollar mergers poured forth. Two and even three companies unveiled major deals in a single morning. At times, business in the ballrooms of New York's Waldorf-Astoria Hotel--a favorite spot for press conferences--was so brisk that as one CEO tangoed out, he risked colliding with the next one waltzing in.”  (Accounting (Mergers & Acquisitions and the Use of Goodwill) | Investment Banking)

 [ N ]

Nortel Board Finds Accounting Tricks Behind '03 Profits, Ken Brown and Mark Henzel, The Wall Street Journal, July 2, 2004.  “Frank Dunn, the chief executive of Nortel Networks Corp., pledged in 2002 to end the giant telecom-equipment maker's years of red ink. At the start of 2003, the company was no closer to that goal. In January, Nortel's executives told its board that the company would lose $112 million in the year's first quarter.  Then the outlook suddenly improved. In mid-February, Nortel's expected quarterly loss -- based on the company's own definition of the term -- shrank to $32 million, according to people familiar with the matter. A week later, the projected loss was revised to $20 million. By March 30, when the quarter ended, Nortel had a profit of $40 million, its first positive quarterly result in four years. Based on a bonus plan dubbed "Return to Profitability," nearly every employee received a cash award. After two more profitable quarters, senior executives were given millions of dollars in bonuses.”  (Accounting (Cookie Jar) | Corporate Governance and Executive Compensation | Nortel Networks)

No Wonder C.E.O.'s Love Those Mergers, Gretchen Morgenson, The New York Times, July 18, 2004.  “The like it when their companies are acquired, because their stocks rise in value. Chief executives like it, too, because their severance agreements kick in. And that means they can become truly, titanically, stupefyingly rich.  Wallace R. Barr, the chief executive of Caesars Entertainment, is the latest to line up for his barrel of bucks. Last week, Harrah's announced it would acquire Caesars for $5.2 billion. Thanks to accelerated vesting of options and stock awards, Mr. Barr stands to receive almost $20 million under so-called change-of-control provisions in his contract. And if Mr. Barr resigns from Caesars "for good reason," the contract says, he is entitled to an additional $6.6 million after the two companies merge.  A spokesman for Caesars did not return a phone call seeking comment.”  (Accounting (Mergers and Acquisitions))

Numbers Game, Chairman Arthur Levitt, Securities and Exchange Commission, Delivered at the NYU Center for Law and Business, New York, NY, September 28, 1998."Seven months ago, I expressed concerns about selective disclosure. Through conference calls or embargoed press releases, analysts and institutional investors often hear about material news before it is made public. In the interval, there is a great deal of unusual trading. The practice had been going on for a long time. And, while everyone was aware of it, and most were extremely uncomfortable with it, few spoke out. As the investor's advocate, the SEC did and we will continue to do so." (Accounting)

Numbers Game, Tracy Byrnes, The Wall Street Journal, November 26, 2001.  "In an age when giant earnings write-offs have become commonplace, it's hard to shock Wall Street. But on Nov. 8, Enron Corp. managed to do it."  (Accounting (Off-Balance Sheet))

 [ O ]

Off-Balance-Sheet Deals: C'est la Vie?, Marie Leone, CFO.com, January 1, 2003.  "In the Eyes of the Investing Public, Off-Balance-Sheet Financing has Fallen into Disgrace.  Will It Deserve Another Look After the SEC and FASB Have Their Say."  (Accounting | Structured Finance and Special Purpose Entities)

 [ P ]

Pennies That Aren't From Heaven, Gretchen Morgenson, The New York Times, November 7, 2004.  “Ask any chief executive officer if he or she practices the art of earnings management and you will undoubtedly hear an emphatic "Of course not!" But ask those same executives about their company's recent results, and you may very well hear a proud "we beat the analysts' estimate by a penny."  While almost no one wants to admit to managing company earnings, the fact is, almost everybody does it. How else to explain the miraculous manner in which so many companies meet or beat, by the preposterous penny, the consensus earnings estimates of Wall Street analysts?  After years of such miracles, investors finally seem to be wising up to the fact that an extra penny of profit is not only meaningless but may also be evidence of earnings management and, therefore, bad news. After all, the practice can hide what's genuinely going on in a company's books.” (Accounting | Executive Compensation | Managed Earnings) [ Equity Incentives and Earnings Management ]

'Pro Forma' Earnings Cloud Important Investment Issues, Tracy Byrnes, The Wall Street Journal, February 28^th, 2002.  "You can't pick up a newspaper without seeing some mention of "pro forma" earnings. It may sound confusing, but to better grasp what pro forma can mean, just replace "pro forma" with "here are the pretty numbers" and the concept becomes clearer."  (Accounting | Pro Forma Earnings)

 [ Q ]

 [ R ]

Rise and Fall of Intangible Assets Leads to Shorter Company Life Spans, (The), Greg Ip, The Wall Street Journal, April 4, 2002.  "Federal Reserve Chairman Alan Greenspan noted recently that "a firm is inherently fragile if its value-added emanates more from conceptual as distinct from physical assets." An office building or auto factory can keep producing even if their management is discredited, whereas Enron Corp.'s collapse shows the vulnerability of a company whose value is based on its reputation, he said. "Trust and reputation can vanish overnight. A factory cannot."  (Accounting | Intangible Assets (Valuation))

 [ S ]

SEC Says KPMG Helped Xerox Inflate Profits, Floyd Norris, The New York Times, January 30, 2003.  “The Securities and Exchange Commission filed a civil fraud complaint yesterday against KPMG, one of the four remaining large accounting firms, claiming that it knew for years that Xerox was improperly inflating its profits and helped it do so.”  (Accounting | Corporate Governance | Civil Fraud Complaint | KPMG and Xerox)

Short-Lived Lessons From an Enron Short, Jim Chanos, The Wall Street Journal (Opinion), May 30, 2006.  “I was, to quote Ken Lay's bizarre testimony, one of the "short-sellers that were organized and working together and conspiring together" against Enron -- I feel a need to examine what lessons those of us who slog it out daily in the corporate trenches might gain from Enron's spectacular collapse. I propose to offer the top 10 lessons from Enron that executives, investors and lawyers will soon forget:” (Accounting) Classic

Stock Buybacks Don't Always Signal Smooth Sailing Ahead, Art Berkowitz and Richard Rampell, The Wall Street Journal, November 14, 2002.  “If a company isbuying back its own shares on the open market it's clearly a sign the board thinks the company is poised to do well. Right?  Well, not necessarily. Just because a company starts repurchasing its shares, one shouldn't automatically conclude that their future is bright. There are many reasons for stock buybacks.”  (Accounting | Buybacks (Behavior Finance and Equity Dilution))

Suit Says Ernst and UBS Knew of HealthSouth Fraud, Gretchen Morgenson and Reed Ableson, The New York Times, January 9, 2004.  “HealthSouth's outside auditors and investment bankers knew of fraudulent accounting at the company long before financial problems came to light last year, according to a lawsuit filed yesterday on behalf of stock and bond investors.  The suit, filed in United States District Court in the Northern District of Alabama, contends that Ernst & Young, HealthSouth's former accounting firm, and UBS Warburg, its former investment banker, were aware of fraud at the company even as they signed its financial statements and sold HealthSouth securities to the public.”  (Accounting | Follow-Up: HealthSouth and Ernst and Young)

 [ T ]

Ten Months Ago, Questions on Enron Came And Went With Little Notice, Felicity Barringer, Fortune, January 28, 2002.  "Ten months ago, Bethany McLean of Fortune magazine became the first journalist to highlight hard questions about Enron balance sheet. The most startling fact she revealed was the absence of crucial information in the company's financial reports. "How exactly does Enron make its money?" she wrote. "  (Accounting | Corporate "Cronyism" Governance | Enron)

Thirteen Tip-Offs That Earnings May Be Inflated,  John Dorfman, Bloomberg,  November 18, 2002.  “In these post-Enron, post-WorldCom days, investors often wonder if a company's earnings are as good as they seem.  Though you can never be sure, you can tilt the odds in your favor. Here's a checklist of 13 tip-offs that earnings might be inflated.  A company that displays these warning signs may be perfectly okay. I prefer, however, to invest in companies with few or none.."  (Accounting | Managed Earnings)

Top-Down Tolls: The Hefty Bills for Puttable Convertibles Come Due,  Jennifer Ablan, Barron’s,  November 18, 2002.  “It sounded too good to be true, and it turns out it was. In early 2000, when the stock market started to tank and the money market cut off less-than-blue-chip borrowers, companies found they still could raise money by issuing convertible securities. Not only that, they could borrow at interest rates of zero or a mere fraction of a percent. And these deals were structured to reduce the odds that the securities would be converted to common stock and dilute the equity base."  (Accounting (Convertible Securities and Dilution))

 [ U ]

Unconventional Transactions Boosted Sales, Alec Klein, The Washington Post, Thursday, July 18, 2002.  "In October 2000, a critical question confronted America Online Inc. as it sought to clinch the largest merger in U.S. history: Was it feeling the effects of an industry-wide slowdown in advertising?  AOL's president at the time, Robert W. Pittman, offered a resounding answer: "I don't see it, and I don't buy it," he told Wall Street stock analysts and the media.  Other AOL officials were less optimistic."  (Accounting | Corporate Governance (America Online and Time Warner))

 [ V ]

 [ W ]

Wall Street Is Stuck With Fannie Mae, Jerry Knight, The New York Times, February 28, 2005.  “Fannie Mae's stock finally had a good day on Friday -- after a six-day slide that cost its shareholders $6 billion.  As the stock skidded, investors unloaded 35 million shares, driving the stock to its lowest price since the summer of 2000. After a 75-cent gain Friday, the stock closed at $57.70 a share, off almost 19 percent since the first of the year.” (Accounting | Financial Firms | Market History (Fannie Mae))

Wall Street Spin Game, Jeffrey M. Laderman, BusinessWeek, October 5, 1998.  "Meet Thomas K. Brown, 39, a Master of the Universe in bank stocks: 15 years on Wall Street and in eight of the past nine years, the top-ranked analyst of regional banks on the prestigious Institutional Investor All-America Research Team. On Mar. 25, after seven years at Donaldson, Lufkin & Jenrette Inc., Brown was fired."  (Accounting (Analysts and Wall Street) | Managed Earnings)

Wanted: Credit Ratings. Objective Ones, Please., Gretchen Morgenson, The New York Times, February 6, 2005.  “For years, the nation's credit rating agencies have thrived, booking mouth-watering profits from operations that are riddled with conflicts and shielded from competition.  Soon, however, that may finally change. And investors should be better off for it.  Within the next two months, the Securities and Exchange Commission will press a new regulatory framework for the industry to ensure that debt ratings published by the big three - Standard & Poor's, Moody's Investors Service and Fitch Ratings - are a result of thorough analysis, not a desire for fatter profits.” (Accounting (Conflicts of Interest) | Corporate Governance (Credit Rating Agencies))

What Do Restatements Suggest?, William R. Kinney, Jr., University of Texas at Austin, Zoe-Vonna Palmrose, University of Southern California and Susan Scholz, University of Kansas, April 17, 2003.  "Do audit firm fees for financial information systems design and implementation, internal audit, and certain other services provided to an audit client lead to lax enforcement of generally accepted accounting principles? The answer is important because the Sarbanes-Oxley Act of 2002 presumes so, banning these audit client services, and some registrants now voluntarily restrict other services (such as tax services) by their audit firm. Using detailed confidential fee data for 432 registrants announcing restatements from 1995-2000 and 512 similar registrants without restatements, we find no consistent evidence of positive association between audit firm fees for FISDI or internal audit services and restatements."  (Accounting | Consulting Fees (Non-Audit Related))

  When a Buyback isn't a Buyback: Open Market Repurchases and Employee Options, Kathleen M. Kahle, Journal of Financial Economics, June 6th 2001.  "Early studies of open market repurchases document positive abnormal returns of 3-4% at the announcement.  The two most commonly accepted interpretations of this reaction are the signaling theory and the free cash flow theory."  (Accounting (Buybacks and Equity Dilution))

Where Are the Accountants?, Richard Melcher, BusinessWeek Magazine, October 5, 1998.  "It read like a primer on how to cook the books. In letters to the board of directors of Aviation Distributors Inc. and the Securities & Exchange Commission a year ago, the company's auditors, Arthur Andersen, wrote of sweeping irregularities. The allegations included falsified shipping documents and purchase orders--problems so great that Andersen could no longer attest to the accuracy of three earlier years of Aviation Distributors' financial reports."  (Accounting (Auditors)  | Managed Earnings)

Where Do Companies Attempt Earnings Management, and When Do Auditors Prevent It?, Mark W. Nelson, John A. Elliot, Robin L. Tarpley, Cornell University and George Washington University, Current Draft: October 22, 2000.  “Research about earnings management (“EM”) is sometimes criticized as insufficiently useful to standard setters.  Because priority studies necessarily focus on those areas of EM that have resulted in SEC enforcement actions or for which empirical tests are most powerful, little is known about EM with respect to many accounts.”  (Accounting Research Report | Managed Earnings)

Why Let the I.R.S. See What the S.E.C. Doesn't?, Anna Bernasek, The New York Times, February 5, 2006.  “Imagine a company that makes a practice of keeping two sets of accounts. One version is revealed to the public through periodic Securities and Exchange Commission filings and public announcements. The other is never made public and conveys a markedly different picture.  Does it sound scandalous? Actually, it's common practice.”  (Accounting)

Why So Cheery About I.B.M., Gretchen Morgenson, The New York Times, June 15, 2003.  "Shares of I.B.M. popped last Wednesday when Steven Milunovich, technology strategist at Merrill Lynch, added the company to the firm's list of most promising stocks. The shares rose 2.8 percent.  Merrill's support for I.B.M. came nine days after the company disclosed that its accounting — specifically how it recognizes revenues — is the subject of a formal investigation by the Securities and Exchange Commission. From the day of that disclosure until the Merrill recommendation, I.B.M. stock was down 6.4 percent." (Accounting | Corporate Governance | Financial Firms (Analysts Accentuate the Positive))

WorldCom Stockholders Owe SEC Thanks for Almost Nothing, Jerry Knight, The Washington Post, May 26, 2003.  "Look at this: $500 million, the toughest penalty ever imposed for corporate wrongdoing, the Securities and Exchange Commission boasted last week when it settled its investigation of accounting fraud at WorldCom Inc., soon to be renamed MCI.  That's not only $490 million more than the second-largest fine ever, the SEC bragged. This time it is going back to the poor investors who lost money because the books were cooked.  That's one way of looking at it." (Accounting | Market History | WorldCom)

Worried About Corporate Numbers? How About the Charts?, Donna Rosato, The New York Times, September 15, 2002.  "Add charts in annual reports to the list of corporate financial information that investors should view with skepticism."  (Accounting (Use of Charts) | Annual Reports | Managed Earnings)

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