EY Thought the Weatherford Audit Could Turn Out Badly; It Turned Out Badly
I'm not sure if there's a pattern or not, but it sure seems like the Big 4 take turns being the poster child of sloppy auditing. Sometimes the stretch is long and sometimes it's short, but it's inevitable that something blows up and one firm will be back on top as the King of Failed […]
Weatherford International Gets in Trouble for Letting Execs Choose Their Own Numbers
Going Concern history buffs will recall a period in 2011-2012 when oil services company Weatherford International had some chronic problems with its tax accounting. Manipulations by two of its former accounting executives — James Hudgins and Daryl Kitay — resulted in a $500 million restatement in 2011. This was followed by two more restatements in […]
ICYMI: WFT’s Tax Accounting Is Still a Giant WTF
By its own admission, Weatherford International has pretty awful internal controls. Back in March 2011, the company's disclosed that controls (and employees) for its tax function were virtually non-existent and it led to a $500 million error. The team in the C-suite was pretty disappointed with this development and the company replaced their Chief Accounting […]
WFT Has Another WTF Moment with Its Tax Accounting
Remember Weatherford International? That's the company whose internal controls (or lack thereof) led to $500 million in tax errors and restatements going back to 2007. Also as a result, the Chief Accounting Officer left the company to "pursue another career opportunity." Not the company's finest hour. After such a harrowing financial reporting experience, one might […]
WFT Names New Chief Accounting Officer Who Will Hopefully Avoid Any More Giant Tax WTFs
Remember Weatherford International? That’s the oil services company that had a ton of material weakness around their tax accounting that led to $500 million error. This resulted in restatements, a humiliated CFO and the Chief Accounting Officer resigning “to pursue other opportunities.”
But now, four months later, everyone has moved on and the company has some new blood:
Weatherford International Ltd. […] announced today that John H. Briscoe has agreed to join the company as Vice President –Chief Accounting Officer. Mr. Briscoe will report to the company’s Chief Financial Officer.
Mr. Briscoe served as Vice President and Controller of Transocean Ltd. from October 2007 to present. He also fulfilled additional roles in internal audit, investor relations and field finance. Prior to joining Transocean in 2005, Mr. Briscoe served as Ferrellgas Inc.’s Vice President of Accounting and served in other senior roles during his eight years with the company. Mr. Briscoe also served as Controller for Latin America for Dresser Industries Inc. Mr. Briscoe started his career with seven years in public accounting beginning with the firm of KPMG and ending with Ernst & Young as an Audit Manager. Mr. Briscoe is a certified public accountant.
Yes, that Transocean.
WFT’s Material Weaknesses Led to Giant Tax WTF
It’s bad enough that 3% of Weatherford International’s revenues come from Libya, Egypt, Tunisia, Yemen and Bahrain but the company also revealed in a their NT 10-K filed yesterday that they aren’t so good at staying top of their taxes:
The Company’s Annual Report on Form 10-K (the “Form 10-K”) for the year ended December 31, 2010 cannot be filed within the prescribed time period because the Company has identified a material weakness in internal controls over financial reporting for income taxes and requires additional time to perform additional testing on, and reconciliation, of the tax accounts to be included in the annual financial statements to be presented in the Form 10-K. The Company expects to file the Form 10-K on or before the 15th calendar day following the prescribed due date.
FuelFix has the gory details:
Oil field services firm Weatherford International goes by the stock ticker is WFT, but analyst reaction to the company reporting more than $500 million in tax errors is more likely drawing the reaction of “WTF?” from investors.
The company said it will have to restate its earnings going back to 2007 due to “material weaknesses” in its internal controls, namely:
1. inadequate staffing and technical expertise within the company related to taxes,
2. ineffective review and approval practices relating to taxes,
3. inadequate processes to effectively reconcile income tax accounts and
4. inadequate controls over the preparation of quarterly tax provisions.
So in other words, Weatherford has no tax experts in their accounting department, no one to supervise or review the work of those experts and no checks or balances over the tax provision process as a whole. Was the Ernst & Young audit team aware of this? Last year’s 10-K had a clean opinion, in case you were wondering. Oh, and Weatherford moved its HQ to Switzerland back in ’08. So there’s that.