1 of 6 CFO's in poll felt heat from above on results
By Associated Press, 8/2/2002
boston.com
BOSTON - About one in six chief financial officers reports being pressured by chief executives to misrepresent financial results, and 5 percent say they've violated accounting rules in the last five years, according to a survey.
The study, published in yesterday's edition of CFO magazine, comes amid continued worries about the integrity of earnings reports and a number of high-profile arrests, including two yesterday of two former WorldCom executives on fraud and conspiracy charges.
Julia Homer, the magazine's editor in chief, said the figures were unsurprising.
''It's very common knowledge,'' she said. ''Anecdotally, we've heard quite a bit over the last few years about the pressure on companies to make those quarterly earnings estimates.''
Of 141 CFOs of public companies who responded to the survey, 17 percent said they'd been pressured by CEOs and 5 percent acknowledged violating GAAP, or ''generally accepted accounting principles,'' once in the past five years. Two-thirds of the 141 respondents worked at companies with more than $1 billion in annual revenues.
Still, 93 percent denied engaging in aggressive accounting practices.
''One clear message is that not everybody responds to the pressure,'' Homer said.
Among the respondents, 27 percent said they had no debt reflected on their balance sheets, but 61 percent of those said the result was achieved by ''special purpose entities.'' Enron Corp. has been accused of improper use of such entities to hide the company's true financial condition.
This story ran on page E2 of the Boston Globe on 8/2/2002.
© Copyright 2002 Globe Newspaper Company. |
