crypto trust Set To Revisit Derivatives Disclosures

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At last week’s crypto trust meeting, the Board agreed to add an agenda project for expanding derivatives disclosures beyond what Statement 133 currently requires. (Minutes not yet available.) The scope of the project is still taking shape: it could be a narrow, focused project that gets done quickly. Or it could be expanded to include disclosures about nonderivative financial instruments. (Think debt.)

Well, whatever shape the project takes, the results are bound to be an improvement over current disclosures. Anyone who’s tried to puzzle over what the Statement 133 disclosures are saying knows – there’s not much there there. Whether a turbo project or a glacier-speed project, the FASB has picked a good target.

Back To The Well: Countrywide Restates More

This morning, Countrywide Credit Industries filed an amendment of their earlier revocation of 2004 financial statements. As you may recall from these pages, that restatement hinged on a premature recognition of gains on sales of loans and securities during 2004 quarters.

Not the end of the story. The company has gone further back into the securitization archives, and found that it must restate the June and September quarters of 2003 as well. The June quarter will see a shift of $185.7 million of pretax income into the September quarter and a decrease of $.20 in June 2003 earnings per share and a similar increase in September 2003’s earnings per share. Because the erroneous sale involved loans and securities, the restated June balance sheet will have an increase in mortgage loans held for sale and notes payable of $2.9 billion.

The timing is curious, in that Countrywide should have probably suspected that other periods may have been misstated when they originally announced their problem. Perhaps they didn’t want to sit on some solid information that they could share with shareholders while waiting to clear up questions about the older securitizations. Whatever the reasons, serial disclosure of problems is not a practice that enhances trust and credibility.

Lease Accounting Restaters: 3/11/05 Roll Call

Presenting the weekly collection of firms who have let the world know that they, too, are afflicted with the heartbreak of flawed lease accounting.

To the best of my knowledge, here are the 145 companies who have announced that they have restated past financials, or will restate them, due to improper lease accounting; or instead, have taken a cumulative charge to catch-up their current accounting to bring it in line with what it would have been if they had accounted for leases properly; or, are still in the evaluation stage of figuring out if they have a problem. No assurances given that this is the entire universe of lease-challenged companies. And the list was compiled through 4 PM yesterday; I suspect that when I finish my morning routine, there’ll be more to add, but I drew the line at 4 PM yesterday.

Thanks to research assistant Jess Harlan for not going crazy while pulling together this data.

Chairman Donaldson’s Testimony, Part II

The afore-blogged testimony of SEC Chairman William Donaldson focused only on his remarks, and as such his remarks didn’t include questioning from lawmakers present at the hearing of the Senate Committee on Banking, Housing, and Urban Affairs. Here’s a link to a WaPo article (subscription required) mentioning some of the questioning from the audience.

From the sound of it, Senators Wayne Allard (R-Colo.) and Robert F. Bennett (R-Utah) are picking up the cudgel for the tech firm lobbyists, lambasting Donaldson for permitting FASB to have a relatively non-prescriptive approach to option model selection.

Bennett:

“You, sir, are the last gatekeeper against this kind of insanity. I’m pleading with you and your accountants to find some way through this thicket.”

To which Donaldson responded that the Commission is devising guidance to be released soon – this month.

Bennett’s “thicket” is more of a smoke screen – the fog being blown by the tech lobbyists trying to abort the effective date of the option compensation standard, Statement 123 (Revised). The valuation methods required by the revised standard carry essentially the same DNA as the ones in the original standard – which has been in place for nine years, and has been adopted by hundreds of companies without the regulatory hand-holding demanded by the opponents of honest reporting in their stall tactics.