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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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March 4, 2009 4:24 PM ET
One third of public companies are failing to comply with new accounting rules designed to provide investors with a clearer picture of what they owe to the Internal Revenue Service, according to a recent study. The accounting rule, known as FIN 48, requires companies to disclose more information about their tax liabilities, starting with fiscal years beginning after Dec. 15, 2007. But the study of 790 companies with at least $2 billion in revenues found that 257 failed to comply with at least some of the rule’s requirements during 2008. On a scale of 100, the study by Seigel & Associates, a consulting firm founded by former IRS chief counsel Stuart Seigel, rated the group’s overall compliance at 90. On the other hand, over two-thirds of the companies studied were rated at 100 or better in FIN 48 compliance. The greatest area of noncompliance was the failure to disclose the total amount of interest and penalties expensed in the current year, as the rule requires. One of every eight companies failed to do so. In the fourth quarter alone, Seigel found that 42% of companies didn’t provide this information. In previous quarterly studies by Seigel, the greatest area of noncompliance was related to the “12-month look-forward” requirement of FIN 48, under which companies must disclose tax positions that could result in a significant change in their liability in the following 12 months. Yet more than 10% still failed to meet this requirement during all of 2008, the second greatest area of failure to meet FIN 48 requirements. Overall, lack compliance with FIN 48 worsened during the course of the year, rising from 28% in the first quarter to 43% in the second, dipping to 40% in the third, and then jumping to 55% in the fourth. Seigel noted that it had expected to find that overall compliance would improve over the course of the year as companies became more familiar with the requirements and with how other companies dealt with them in their disclosures. The firm did not venture an explanation as to why this didn’t pan out. Not coincidentally, Seigel found little overall change in tax reserves or shareholder equity as a result of FIN 48.
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