Accounting Investigation Adds to Challenges Facing G.E.
- 6 years ago
Accounting Investigation Adds to Challenges Facing G.E.
that they are investigating the process leading to the insurance reserve increase
and the fourth-quarter charge as well as GE’s revenue recognition and controls for long-term service agreements.”
It’s not easy to slip an investigation of potential accounting issues past analysts,
and the stock price dropped another 2.7 percent that day after the disclosure.
On a conference call last week discussing the company’s $9.8 billion loss in its most recent quarter, Jamie
S. Miller, the chief financial officer, dropped a little tidbit that “we have been notified by the S. E.C.
He asks each candidate: “What is one plus one?” The winner answers: “What do you want it to be?”
General Electric disclosed on Jan. 24 that the Securities and Exchange Commission had begun an investigation of the company’s accounting practices.
With the company’s stock down more than 40 percent the last 12 months, the uncertainty of an accounting investigation will
only exacerbate the challenges facing John L. Flannery, the new chief executive, as he seeks to reorganize the company.
The S. E.C.’s efforts to aggressively stop accounting problems stems from the history of companies like Enron and WorldCom, where small steps to burnish the financial statements burgeoned into frauds
that took down the companies, ended in thousands of job losses and cost shareholders billions.
that they are investigating the process leading to the insurance reserve increase
and the fourth-quarter charge as well as GE’s revenue recognition and controls for long-term service agreements.”
It’s not easy to slip an investigation of potential accounting issues past analysts,
and the stock price dropped another 2.7 percent that day after the disclosure.
On a conference call last week discussing the company’s $9.8 billion loss in its most recent quarter, Jamie
S. Miller, the chief financial officer, dropped a little tidbit that “we have been notified by the S. E.C.
He asks each candidate: “What is one plus one?” The winner answers: “What do you want it to be?”
General Electric disclosed on Jan. 24 that the Securities and Exchange Commission had begun an investigation of the company’s accounting practices.
With the company’s stock down more than 40 percent the last 12 months, the uncertainty of an accounting investigation will
only exacerbate the challenges facing John L. Flannery, the new chief executive, as he seeks to reorganize the company.
The S. E.C.’s efforts to aggressively stop accounting problems stems from the history of companies like Enron and WorldCom, where small steps to burnish the financial statements burgeoned into frauds
that took down the companies, ended in thousands of job losses and cost shareholders billions.