[A-List] Financial regulatory crisis

["Keaney Michael" <Michael.Keaney@xxxxxx>]

GE joins accountancy converts

David Teather in New York
Thursday February 21, 2002
The Guardian

General Electric, the world's largest company, yesterday said it would
provide further transparency in its accounting as another firm, Computer
Associates, found itself under unwanted scrutiny.

A sprawling conglomerate, General Electric has come under pressure to
provide better disclosure in its financial reporting since the collapse
of energy firm Enron. The company intends to break out revenue and
operating details for 26 businesses, including more detailed information
on the financial division, GE Capital, which provides 40% of profits.

Wall Street has long held concerns about General Elec tric's opaque
accounting but the issue has become more pressing in the present market,
which has also seen questions raised about accounting practices at
Global Crossing and Tyco. Shares in General Electric have been under
pressure, falling 9% this year.

IBM this week also bowed to investor pressure for better levels of
disclosure.

General Electric, with businesses ranging from broadcasting to jet
engines, intends to holdquarterly conference calls for analysts for the
first time.

The wave of accounting scandals that has shaken Wall Street yesterday
swept over Computer Associates, the third-largest software group in the
world. Shares in the company fell by as much as 23% in early trading
after reports in the US said the company was the focus of an
investigation by the US attorney's office and federal bureau of
investigation.

New York-based Computer Associates attempted to calm investors and said
it was not aware of any investigations. "We have not been contacted by
the authorities regarding any investigation and do not know what, if
anything, is being investigated," the company said.

In the present tinderbox of a market, analysts expressed little surprise
that Computer Associates was the latest victim of the rumour mill. The
company has faced down repeated criticism of its accounting in the past
few years. Since October 2000 it has reported its results on a pro-forma
basis instead of using standard accounting rules, drawing complaints
that they are difficult to understand. Texas tycoon Sam Wyley attempted
a takeover of the firm last year and accused it of "phoney accounting".

The reports said the FBI and attorney's office were trying to establish
whether Computer Associates had overstated its profits.The reports said
the inquiry was at the preliminary stage and no evidence of wrongdoing
had yet been found.

Neither the FBI nor the US attorney's office would comment.

Full article at:
http://www.guardian.co.uk/business/story/0,3604,653519,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx