Broken Accounting: What Went Wrong and Why

The purpose of this seminar is to provide practical advice on how to distinguish between a company’s reported and true bottom line and how to estimate the real value of assets and liabilities ... in the shortest amount of time ... with proven effectiveness ... using easy to understand techniques.

An annual report may be in perfect compliance with generally accepted accounting principles (GAAP) and SEC requirements, yet it may lack or hide the vital information you need to make correct financial decisions. Learn how to spot this problem.

This entertaining but informative seminar will examine the accounting practices that led to the disappearance of approximately $5 trillion in U.S. market capitalization between March, 2000 and November, 2002. (Market capitalization loss reported by SEC Commissioner Paul S. Atkins, November 14, 2002.)

This seminar is also ideal for the CFO or Controller who needs a practical look at the issues surrounding managed earnings within the framework of GAAP. You will learn eight different, typical GAAP reporting strategies and you will leave with the concepts you must understand to excel at your financial reporting job and stay out of trouble.

• History of trends, excesses and outrageous behavior
• Key provisions of the Sarbanes-Oxley Act of 2002--checklist to ensure compliance
• Six steps companies need to take with their financial reporting and what users should observe
• Eight GAAP reporting strategies companies employ and what users should note
• Where GAAP fails and what users should observe
• AOL case study--what’s important?

• Seven operational earnings management techniques
• How auto manufacturers, Motorola, GE, 3-M, Waste Management, Tyco and United Technologies use managed earnings techniques to control their flow of earnings
• 12 GAAP earnings management techniques
• The significant contingent liabilities with synthetic leases--ADC Telecommunications analysis
• Deferred tax valuation allowance--case study
• Cost overruns on construction jobs--Halliburton case study
• Impairment of investment--case study
• Capitalizing internal labor--case study

• How to identify core repeatable earnings: Why they are so critical?
• "Earnings Purity Index" and company performance
• Quantitative and qualitative databases available to help you with your analysis
• A 16-point approach to reconcile reported and core earnings (case study)
• How Xerox got into trouble over deferred rental income (case study)
• Revenue recognition and SAB#101.
• Eight typical revenue recognition issues
• Revenue recognition--contract acceptance clauses (two case studies)
• Jamming the distribution pipeline--the legal case against Compaq and the SEC probe of Bristol Myers
• The Sunbeam case--channel stuffing and "bill-and-hold" accounting (case study)
• One-time or infrequent revenue streams--Quest and Sunrise Assisted Living
• Bad debts and loan impairments--Boston Market case
• Inventory writedowns--an analysis of Cisco
• Aggressive expense capitalization--Chambers Development, Pre-Paid Legal Services and Fine Host Corporation cases--Case Studies
• Manipulating depreciation--Waste Manage-ment, Kahler Hotels and Cineplex Odeon case
• How companies manage discretionary expenses to manage earnings--Sunbeam case study
• Pension disclosures--Verizon case study
• Restructuring charge variations and implications--Arthur Levitt and Sunbeam case studies
• Standard & Poor’s new definition of operating earnings to rate companies
• Problems with acquisition accounting: FASB 141, 142 and 144
  • Goodwill impairment case study
  • Spring-loaded results--Tyco case study
  • Merger-related costs--AOL case study
  • In process R&D write-off--Cisco case
• 11 questions to consider in assessing whether earnings have been manipulated
• 14 specific considerations when analyzing private companies
• What about international quality of earnings?
• Enron case studies--the obvious, the little known, the numerous red flags that were there ahead of time; summary of problems
• The new special purpose entity (SPE) accounting rules

• Why analysts are turning to "cash flow from operations" (CFFO)
• CFFO and earnings quality
• How CFFO is a measure of risk--Xerox case
• What happens when cash flow and earnings diverge--a recent study
• Case study--How Dynegy manipulated CFFO
• Four problem areas in reporting CFFO--analysis and case studies
• A checklist and case study for calculating "adjusted cash flow from operations"
• Critical failings of EBITDA
• A pro forma earnings update

• The seriousness of the problem -- a 10-year study
• Six reporting issues and what GAAP governs
• Case studies and analysis of Amazon, Priceline.com, Bid.com, 1-800-Flowers, Edgar Online Inc, Global Crossing, Seitel

• What to look for when you find related party debt--Lernout & Hauspie case
• What an "Inventory Component Divergence" analysis can tell you--Hutchinson Technology and Grist Mill cases
• Problems with consolidated financials
• Five other not-so-obvious traps

• Asset and Liability Riskiness Checklist
• SEC Regulation Fair Disclosure
• SAB 99--The newest rules for immateriality
• The new financial reporting vision--a shift to disaggregated data

• Auditors and Financial Statement Users
  This group includes financial analysts, commercial lenders, investment bankers, corporate portfolio managers and institutional investors. Also, any auditor (national or local CPA firms) whose firm expresses an opinion as to whether financial statements are fairly presented in conformance with GAAP should attend.
• Financial Statement Preparers
  This group includes corporate financial professionals such as: CFOs, Controllers, Staff Accountants and also, VPs, Managers and Directors of Accounting or Finance. CPAs in public practice who compile financial statements should also plan to attend this seminar because clients often ask CPAs to manage their earnings.
• Attorneys and Regulators
  Attorneys who have a basic understanding of finance and accounting and practice in the area of SEC law will benefit from this workshop. Also, attorneys who work with their corporation's general counsel staff should attend. Securities regulators will also benefit.

• Tom Vickman, CPA, MMA
• Bruce Clements, CPA, MBA, JD

Some of the organizations who have taken advantage of NCCE’s custom training include Stanley Tools; US Small Business Administration; US Robotics; Aetna; Western Union, FCS and law firms such as Jones, Day, Reavis & Pogue; Weil, Gotshal & Manges; Irell & Manella; and King and Spalding.

For more information or to schedule a custom in-house program, email NCCE at contact@nccetraining.com or telephone 800-635-9615.