Halliburton Accused of Accounting Irregularities
By Spencer Ackerman - June 21, 2007, 4:35 PM
Last year, Halliburton lost billions of dollars of revenue with the U.S. Army discontinued a worldwide supply contract with the oil-and-defense-services company. Yet Halliburton continues to report massive profits. What gives? A new reported column by Bloomberg's Jonathan Weil proposes an answer: Halliburton may be cooking its books.
Through a Freedom of Information Act request, Weil got ahold of court papers filed by Halliburton's former director of technical accounting research and training, Anthony Menendez, who alleges that Halliburton reported "billions" of revenue from sales before the sales ever happened. For good measure, according to Menendez's court filings with an administrative-law judge for the Department of Labor in Louisiana, Halliburton retaliated against him after he went to the Security and Exchange Commission with his concerns last year.
Menendez described Halliburton's "bill and sale" practices like this:
"For example, the company recognizes revenue when the goods are parked in company warehouses, rather than delivered to the customer. Typically, these goods are not even assembled and ready for the customer. Furthermore, it is unknown as to when the goods will be ultimately assembled, tested, delivered to the customer and, finally, used by the company to perform the required oilfield services for the customer.''
If true, that would violate generally accepted accounting principles. For companies to recognize revenue before delivery, ``the risks of ownership must have passed to the buyer,'' the SEC's staff wrote in a 2003 accounting bulletin. There also ``must be a fixed schedule for delivery of the goods,'' and the product ``must be complete and ready for shipment,'' among other things.
more at:
http://www.tpmmuckraker.com/archives/003500.php
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