Man, I hope executives at Hertz got shitfaced on New Year’s Eve, because being told the company has to pay a $16 million civil penalty to the Securities and Exchange Commission to settle a case involving numerous accounting violations is not a stellar way to end 2018/begin 2019. An SEC cease-and-desist order filed on Dec. […]
Crappy car rental company Hertz's accounting problems are worse than they thought. The total errors found are up to $183 million, an additional $30 million more than previously reported. On top of that, the company says it's, "still reviewing the figures," that more changes are NOT out of the question, and those "changes may be significant." […]
The Street had an interesting piece about Fannie Mae's most recent "out-of-period adjustments," which is Fannie's casual way of explaining away a $4 billion error over five consecutive quarters from Q4 2011 through Q4 2012, as well as Q2 2010. While Fannie Mae did disclose the errors, one reason they did not attract more scrutiny […]
Officials in cash-strapped Los Angeles have uncovered almost $43 million that was just sitting in a Department of Transportation account unbeknownst to the city, prompting them to wonder if there's more magic money stashed away: The discovery of $42.6 million will be a welcome one-time infusion into next year's budget, officials said, but has left […]
In yesterday's Footnotes, we mentioned that the Reading, Pennsylvania School District sorta overstated the amount of a subsidy that it received from the Keystone State. An unfortunate error that will likely result in cutbacks for another struggling school district. Because the children are being wronged here, there is plenty of outrage and blamestorming going around. […]
Bloomberg's Jonathan Weil likes digging through dirty laundry. If you're an auditor, the PCAOB, a TBTF bank or in today's case, a natural gas producer, playing games that just so happen to cross his radar and it insults his intelligence, you can expect JW to open up your ringer of dirty undies for all of […]
Sorry that we’re a little tardy on this news but you just knew someone was going down for this.
Apparently the mortification suffered by Weatherford International CFO Andrew Becnel was enough for him to keep his job. Principal Accounting Officer Charles Geer, on the other hand, wasn’t so lucky:
The Geneva-based company also disclosed the departure of Principal Accounting Officer Charles E. Geer, whose resignation comes two weeks after Weatherford disclosed tax-accounting errors that forced it to revise previous results by $500 million.
Weatherford said in a securities filings that Mr. Geer, whose resignation is effective Friday, is leaving to “pursue another career opportunity.”
It’s awfully nice of the company to keep things so professional after the material weaknesses under Geer’s watch will result in restatements for three years of filings.
Because Jonathan Weil is wondering.
He noticed that Audit Analytics found that 699 SEC-registered companies filed restatements last year which was slightly higher than ’09. This was considerably less than the 1,566 restatements in ’06 but when it came to the number of banks that had restatements, he noticed something strange:
The figures for banks, in particular, look unnaturally low. Forty-four banks restated last year, one fewer than in 2009. Even more curious, there were 133 banks that issued corrections from 2008 through 2010. That was down from 169 banks during the previous three-year period, before the financial crisis took off in earnest, which makes no sense.
Here we had the greatest banking industry meltdown since the Great Depression. Hundreds of lenders failed. And yet the number of banks correcting accounting errors declined while the collapse was unfolding. There were no restatements by the likes of IndyMac, Washington Mutual or Lehman Brothers, for example. The obvious conclusion is the government has been giving lots of banks a free pass, as have their auditors.
Honesty for Banks Is Still Such a Lonely Word [Bloomberg]
WTF WFT CFO Andrew Becnel needs a hug:
Weatherford International Ltd. Chief Financial Officer Andrew Becnel called a $500 million accounting error disclosed by the oilfield-service company late Tuesday an “embarrassment,” the damage of which is “impossible to quantify.”
But you know who’s taking this whole snafu in stride? CEO Bernard Duroc-Danner that’s who! BDD told investors on a conference call today that nothing is fucked and that this will all be yesterday’s news in no time:
Chief Executive Bernard Duroc-Danner said there is no risk of a U.S. government investigation or of any tax penalties or fines related to what he characterized as a mistake in calculating the tax rates on dividends moved from one subsidiary to another.
Geez. Give the SEC some credit wouldja? Just because they missed a few things here and there doesn’t mean they won’t ask any questions about your material weaknesses.
It’s bad enough that 3% of Weatherford International’s revenues come from Libya, Egypt, Tunisia, Yemen and Bahrain but the company also revealed in a their NT 10-K filed yesterday that they aren’t so good at staying top of their taxes:
The Company’s Annual Report on Form 10-K (the “Form 10-K”) for the year ended December 31, 2010 cannot be filed within the prescribed time period because the Company has identified a material weakness in internal controls over financial reporting for income taxes and requires additional time to perform additional testing on, and reconciliation, of the tax accounts to be included in the annual financial statements to be presented in the Form 10-K. The Company expects to file the Form 10-K on or before the 15th calendar day following the prescribed due date.
FuelFix has the gory details:
Oil field services firm Weatherford International goes by the stock ticker is WFT, but analyst reaction to the company reporting more than $500 million in tax errors is more likely drawing the reaction of “WTF?” from investors.
The company said it will have to restate its earnings going back to 2007 due to “material weaknesses” in its internal controls, namely:
1. inadequate staffing and technical expertise within the company related to taxes,
2. ineffective review and approval practices relating to taxes,
3. inadequate processes to effectively reconcile income tax accounts and
4. inadequate controls over the preparation of quarterly tax provisions.
So in other words, Weatherford has no tax experts in their accounting department, no one to supervise or review the work of those experts and no checks or balances over the tax provision process as a whole. Was the Ernst & Young audit team aware of this? Last year’s 10-K had a clean opinion, in case you were wondering. Oh, and Weatherford moved its HQ to Switzerland back in ’08. So there’s that.
Back in September, Vermont-based Green Mountain Coffee Roasters put the world on notice that the SEC was asking some questions about their revenue recognitions policies. Despite the SEC Q&A, analysts we’re cool with the company and the GAAP the crunchy accounting group was putting out.
Also at that time, the company disclosed that there were some immaterial accounting errors that were NBD. That was until they dropped a little 8-K on everyone last Friday!