Firms resist effort to unveil true costs of doing business

Article Abstract:

The corporate community especially the technology industry is actively lobbying in Congress against the Financial Accounting Standards Board's (FASB) plan to eliminate the practice of 'pooling,' which is widely used by companies that are merging. The FASB seeks to replace pooling with more transparent 'purchase' accounting rules. Pooling was used in 40% of the value of business consolidations between 1997 and 1999. It is a treasured accounting tactic that has enabled firms to mask the true financial benefit of their mergers and conceal their actual costs by accounting for only the hard assets of the companies being acquired and ignoring the more insubstantial things paid for, such as the value of the companies' market position or worker skills.

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'Pooling' is a useful tool

Article Abstract:

The Financial Accounting Standards Board's proposal to eliminate 'pooling' would destroy a legitimate accounting rule which has enormously helped the rapid growth of the high technology industry. It claims that 'pooling' conceals the actual costs of mergers, and that 'purchase' accounting would provide investors with more information. What is really needed is a better method for measuring intangibles, and until 'purchase' accounting can accurately reflect these intangibles, 'pooling' ought to be retained.

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Aurora CEO charged wth accounting fraud

Article Abstract:

Aurora Foods Inc restated its earnings downward after discovering accounting problems in Feb 2000. The company, which markets such brands as Duncan Hines, Van de Kamp's and Mrs Paul's frozen seafood, and Log Cabin syrup, found evidence that its former CEO, Ian Wilson, and three former colleagues, may have hidden $43 million in promotional expenses in 1998 and 1999 that resulted in better earnings annoucements for Aurora. Wilson and the three former executives are facing charges of accounting fraud.

Grocery and Related Product Wholesalers, Groceries & Rel Prods Whsle

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