After a year-long campaign against accounting abuses that inflate earnings, the US Securities&Exchange Commission (SEC) has issued its long-awaited directives concerning these “earnings management” practices.
Companies may now feel these decrees provide them with guidelines to avoid the kind of SEC prosecutions that have earned brand-name companies unwanted publicity – not to mention attacks from the plaintiff bar.
They may be wrong.
One of the “hot buttons” for SEC chairman Arthur Levitt has been a company’s audit committee, which is responsible for policing Financial statements.
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