Managed
Earnings Bite Executives |
When audit committees
and independent accounting organizations become involved in the earnings statements
of a corporation, they rely on the company to provide up-to-date and correct information.
In the following article, Franklin Lloyd outlines some of the rules and regulations
that guide this process and offers suggestions on how to help audit committees
do the job correctly.
In what was
only the latest in a continuing crackdown on improperly aggressive accounting,
on July 18, 2001, the Securities Exchange Committee announced it had obtained
settlements from American Bank Note Corporation (ABN), one of its subsidiaries,
one of its customers, and executives from all three. In an attempt to meet aggressive
earnings goals, at the end of a quarter, ABN executives arranged to ship product
that was unfinished. They then booked the sales as revenues - a classic "ship
and hold" transaction. In response to audit inquiry letters, the customer,
by pre-arrangement with ABN management, confirmed the finality of the sales. In
fact, the product was shipped back to ABN to be completed and shipped again in
a subsequent quarter. Click here to read more...
|
|
