Halliburton Cooking the Books? Former Halliburton Accountant Filed Complaint with SECSomervell County Salon-Glen Rose, Rainbow, Nemo, Glass....Texas


 

Halliburton Cooking the Books? Former Halliburton Accountant Filed Complaint with SEC
 


24 June 2007 at 6:21:27 AM
salon

You know, Congress under the Republicans barely batted an eye at all the Halliburton abuses. And Halliburton ran like a mouse to Dubai once the Democrats came into power... and it appears this type of thing is why. Interesting that it will finally take, not stiffing the TAXPAYER, but INVESTORS for Halliburton to perhaps be taken to the woodshed.

INVESTORS have shrugged off almost all the bad news at Halliburton Co the past few years - accusations of overbilling the US Army and bribing foreign officials, along with scrutiny over business dealings in Iran and non-compete bids on government work.
Instead of tanking, the company’s stock has soared.
The same investors might take notice, though, if Halliburton’s financial statements were in doubt, and a former company accounting executive says they are.
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, Louisiana, 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 whistleblower 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 recognises 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 recognise 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.
Shortly after joining Halliburton in March 2005, Menendez says he discovered a “terribly flawed” flow chart on the company’s in-house website, called the Bill and Hold Decision Tree. The flow chart, a copy of which Menendez included in his complaint, walks through what to do in a situation where a “customer has been billed for completed
First, it asks: Based on the contract terms, “has title passed to customer?” If the answer is no - and here’s where it gets strange - the employee is asked: “Does transaction meet all of the `bill and hold’ criteria for revenue recognition?” If the answer to that question is yes, the decision tree says to do this: “Recognise revenue.” The decision tree didn’t specify what the other criteria were.
In other words, Halliburton told employees to recognise revenue even though the company still owned the product.
You don’t have to be an accountant to see the problem.


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