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Accounting News Roundup: SEC Probes Navistar’s Accounting; Knight’s Trading Glitches; Horses As Tax Deductions | 08.02.12

Navistar says SEC probes accounting practices [Reuters]
Truck and engine maker Navistar International Corp. said Thursday that it is the target of a formal U.S. Securities and Exchange Commission inquiry into accounting and disclosure matters and withdrew its full-year earnings forecast until it releases third-quarter results. The company said it expects to post an adjusted third-quarter pre-tax loss of $80 million to $115 million but expects to return to profitability in the fourth quarter. 

Knight Says Glitch Costs It $440 Million [WSJ]

Knight Capital Group Inc. said electronic-trading glitches in its system that caused price swings in dozens of stocks this week are likely to cost the brokerage firm $440 million. Knight said it is pursuing alternatives, such as financing or strategic business moves, to "strengthen its capital base." The announcement came a day after Knight's shares dropped 33% amid worries the fallout from technology problems would destabilize the firm by spooking customers that pay it to handle billions of dollars in trades each day. Knight's shares were down 43% in premarket trading on Thursday.
AIG Pushing Plan for Independence [WSJ]
American International Group Inc. is looking to buy back a large amount of its shares from the government, according to people familiar with the company's thinking, in a push that could make the U.S. a minority shareholder by the fall and enable the insurer to fully repay its bailout sooner than expected. Bringing the government's current 61% stake to below 50% would be a victory for AIG and its management team. But it could bring the additional headache of tough oversight from the Federal Reserve, which is expected to regulate the company when the U.S. is no longer a majority owner.

It's Crunch Time for Loan Accounting – and Convergence [Accounting Onion]
Once one chooses to ignore market values and to account for loans on the basis of "amortized cost" – as the IASB has "tentatively" concluded and the FASB may now be starting to question once again – the inevitable and ineffable question then becomes how and when to recognize losses on bad loans. Let's examine the alternatives. The current rules constitute what is known as the 'incurred loss model.' Its only defender in the U.S. is the American Bankers Association, and that should be sufficient to put it to bed.

Why Am I Paying for a Prancing Horse? [Christopher Bergin]
CB: "So, what's my problem with using horses in the Olympics and using horses as tax deductions? Well, I don't like horses."
Italy rules 'no balls' insult for men is a crime [AFP]

The case was brought to the supreme court by a lawyer named only as Vittorio against his cousin Alberto, a justice of the peace, for the phrase uttered during a heated courtroom exchange in the southern Italian city of Potenza. "Apart from the vulgarity of the term used, the expression definitely also has an injurious quality," the male judge, Maurizio Fumo, said in his ruling as quoted by Italian news agency ANSA. "It refers not only to the target's lack of virility but also to his weakness of character, lack of determination, competence and coherence — virtues that, rightly or wrongly, are still identified as pertaining to the male gender." The court also found that because the insult was uttered at the workplace with third parties present it could be seen as damaging Vittorio's reputation


Posted in ANR