PI: Reason for concern in Halliburton's books

[133724]

Anthony Menendez, who was Halliburton's director of technical accounting research and training, has accused the world's second-largest oilfield-services company of using so-called bill-and-hold accounting and other undisclosed practices to "distort the timing of billions of dollars in revenue." In short, Menendez says this allowed Halliburton to book product sales improperly, before they occurred.

The allegations are part of a 54-page complaint Menendez filed against Halliburton with a Labor Department administrative law judge in Covington, La., who released the records in response to a Freedom of Information Act request. Menendez, who resigned last year and is seeking unspecified damages, says Halliburton retaliated against him in violation of the Sarbanes-Oxley Act's whistle-blower provisions after he reported his concerns to the Securities and Exchange Commission and the company's audit committee.

...

Here's how Menendez, who reported to Halliburton's chief accounting officer, summed up the bill-and-hold issue in his complaint:

"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.

...

"The policy in the chart is clearly at odds with generally accepted accounting principles," says Charles Mulford, a Georgia Institute of Technology accounting professor, who reviewed the court records. "It's very clear cut. It's not gray."

Bill-and-hold was at the heart of Sunbeam Corp.'s collapse in the late '90s, and later blowups at Qwest Communications International Inc. and Nortel Networks Corp.

http://seattlepi.nwsource.com/opinion/320954_halliburton24.html

Cooking the books again Dicko....

[The Backlash Cometh]

1. Can Halliburton be subject to an SEC investigation?

[conscious evolution]

3. They already are

This is from haliburtons own SEC filings.

Securities and related litigation
In June 2002, a class action lawsuit was filed against us in federal court alleging violations of the federal securities laws in connection with the SEC investigation related to a change in accounting for revenue on long-term construction projects and related disclosures, which we settled with the SEC in the second quarter of 2004. In the weeks that followed, approximately twenty similar class actions were filed against us. Several of those lawsuits also named as defendants several of our present or former officers and directors. The class action cases were later consolidated, and the amended consolidated class action complaint, styled Richard Moore, et al. v. Halliburton Company, et al., was filed and served upon us in April 2003 (the “Moore class action”). As a result of a substitution of lead plaintiffs, the case is now styled Archdiocese of Milwaukee Supporting Fund (“AMSF”) v. Halliburton Company, et al.
In early May 2003, we entered into a written memorandum of understanding setting forth the terms upon which the Moore class action would be settled. In June 2003, the lead plaintiffs in the Moore class action filed a motion for leave to file a second amended consolidated complaint, which was granted by the court. In addition to restating the original accounting and disclosure claims, the second amended consolidated complaint included claims arising out of the 1998 acquisition of Dresser Industries, Inc. by Halliburton, including that we failed to timely disclose the resulting asbestos liability exposure (the “Dresser claims”). The memorandum of understanding contemplated settlement of the Dresser claims as well as the original claims.
In June 2004, the court entered an order preliminarily approving the settlement. Following the transfer of the case to another district judge, the court held that evidence of the settlement’s fairness was inadequate, denied the motion for final approval of the settlement, and ordered the parties to mediate. The mediation was unsuccessful.
In April 2005, the court appointed new co-lead counsel and named AMSF the new lead plaintiff, directing that they file a third consolidated amended complaint and that we file our motion to dismiss. The court held oral arguments on that motion in August 2005, at which time the court took the motion under advisement. In March 2006, the court entered an order in which it granted the motion to dismiss with respect to claims arising prior to June 1999 and granted the motion with respect to certain other claims while permitting the plaintiffs to replead those claims to correct deficiencies in their earlier complaint. In April 2006, the plaintiffs filed their fourth amended consolidated complaint. We filed a motion to dismiss those portions of the complaint that had been repled. A hearing was held on that motion in July 2006, and in March 2007 the court ordered dismissal of the claims against all individual defendants other than our CEO. The court ordered that the case proceed against our CEO and Halliburton. In response to a motion by the lead plaintiff, on February 26, 2007 the court ordered the removal and replacement of their co-lead counsel. As of March 31, 2007, we had not accrued any amounts related to this matter.

[rainman99]

2. A friend of mine has an ex-boyfriend who became rich

by going to Iraq with Kellogg, Brown and Root. He told her he'd be 'set for life'.
Two soldiers guarded him at all times. He was just a regular old project manager.
What a slime ball. Our soldiers didn't get rich off this, that's for sure.

[aquart]

4. Halliburton dishonest? How could that be?