Word: secs
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...their once spectacular growth partly by immediately recognizing revenue from long-term contracts, analysts say. Qwest has received the most attention because its merger with US West opened the door to other accounting issues. Qwest has denied that it did anything wrong. "Think about a bottle of wine," former SEC chairman Arthur Levitt said in a speech two years ago. "You wouldn't pop the cork on that wine before it was ready. But some companies are doing this with their revenue, recognizing it before a sale is complete, before the product is delivered to a customer...
...Street Journal and the man who was Bill Clinton's chairman of the Securities and Exchange Commission use the same sweeping adjective to describe a situation, you know they're talking about something serious. Testifying before the Senate Governmental Affairs Committee last week, Arthur Levitt, former head of the SEC, identified the Enron affair with "an emerging crisis of systemic confidence in our markets." Three days earlier, Robert L. Bartley had written in the Journal of the "systemic failure" at the root of the matter, one that touched "Directors suspending their ethical guidelines... Accountants and lawyers studiously looking the other...
Kozlowski insists that "Tyco has better disclosure in its financial statements than anybody out there." Almost two years ago, the company emerged from an informal Securities and Exchange Commission inquiry with no action against it, and in an unusual step, the SEC has put out word that no new inquiry is under way at Tyco. But while there appears to be nothing illegal about Tyco's bookkeeping, jumpy investors are suddenly setting a higher standard. They want to see clearly how a company earns, spends and invests. And Tyco--despite its planned reorganization--remains a complex conglomerate, with headquarters...
REVENUE RECOGNITION The SEC says its No. 1 line of inquiry is into the ways that companies book their sales. The most glaring example of revenue fraud occurred at Sunbeam five years ago. (The company's infamous former CEO, "Chainsaw" Al Dunlap, just last month settled a shareholder suit stemming from his stint at the small-appliance maker.) Sunbeam recorded the sale of gas grills and other goods well before they left the warehouse. Many of the items never did get shipped. By offering retailers deep discounts to place orders months before they normally would and by booking those sales...
...SEC warned Xerox three weeks ago about booking sales of copiers that, technically, are leased, not sold. Revenue from a lease is generally reported over the life of the lease, not up front. Xerox has said it will contest the SEC on this issue...