The CotoBuzz Journal, Community Journalism

The CotoBuzz Journal

Community Journalism, Newsletters and Blogs Covering South Orange County, CA

The CotoBuzz Journal is a member of Investigative Reporters and Editors (IRE) and NAHJ

August 2007 Issue

We do not make jokes, we simply watch the LA Times, the Orange County Register and the Coto de Caza Board of directors and report the facts!

Good News Coto – Accounting Scandals, No Problem!

July 7, 2007

Face it: Nobody cares much about accounting scandals anymore. Proof is the stock market’s reaction (or lack thereof) to the continuing saga surrounding “accounting irregularities: at International Rectifier, a Wall Street favorite and stalwart among technology companies, so writes Herb Greenberg in the July 7, 2007 WSJ’s column Weekend Investor.

He goes on to detail International Rectifier’s filings with the Securities and Exchange Commission (SEC), including Greenberg’s favorite: “The practice included routing certain product shipments to warehouses not on the company’s Logistical systems”. He then writes, “Did they say warehouses not in the company’s logistical system? In the world of accounting, those are better known as phantom warehouses”. Similarly, we have asked Steven Schnowit, the CZ Master Association financial auditor, for clarification on certain of the 2005 CZ financial audits. His response?……..Zilch, Nada

In the case of International Rectifier, “the market indifference to possible fraud, no matter the size is astounding, especially since at times aggressive behavior reflects a company’s culture”, writes Greenberg. Likewise in the CZ Master Association: Accounting irregularities? No Problem

Note: We included this note in our letter to Steve Schonwit: For contextual reasons, we include a definition of the term “generally accepted accounting principles” as defined by the Federal Accounting Standards Advisory Board: The term "generally accepted accounting principles" has a specific meaning for accountants and auditors. The AICPA Code of Professional Conduct prohibits members from expressing an opinion or stating affirmatively that financial statements or other financial data "present fairly... in conformity with generally accepted accounting principles," if such information contains any departures from accounting principles promulgated by a body designated by the AICPA Council to establish such principles”