After Enron, Tech Sector Accounting Under Scrutiny

While the Enron debacle puts the spotlight on accounting practices at other companies, a technology industry notorious for tweaked profit reports still has a few tricks up its sleeve.

Pricey payments for stock options that show up nowhere on income statements. Massive asset write-downs that help inflate future earnings. Specially designed profit reports that mask the ugly details.

These methods and more are hallmarks of a sector facing new demands for a return to the hefty revenue and profit gains that tech companies bragged about before the bust.

"I don't think there is an Enron type of story, but there are certainly a variety of very commonly used techniques in technology companies that exaggerate a company's profits," said Howard Schilit, director of a Maryland-based accounting watchdog, the Center for Financial Research & Analysis.

In some cases, investigations have already begun.

On Friday, telecommunications company Global Crossing Ltd. found itself the focus of two separate federal investigations after allegations of improper accounting. The company has denied improper accounting.

News source: Reuters - After Enron, Tech Sector Accounting Under Scrutiny

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