In the wake of Nortel’s third restatement in three years, you have to ask why it happpened. What prompted Nortel to convince itself that yet another review of how it recognizes sales was required just as it was starting to regain some of its credibility with investors? You have to know this is not what CEO Mike Zafirovski wanted to do as he tries to “transform” Nortel in the wake of an embarassing accounting scandal. Sure, Nortel’s financial systems are far from perfect, which is why it’s spending $200 million on a new system from SAP, but you get the feeling parts of the Nortel empire are doing their financial results using a combination of paper and an abacus. Maybe Mike Z. and CFO Peter Currie are adamant about not having anything inaccurate come to light for regulatory and credibility reasons. Nevertheless, the restatement is just another example of Nortel taking one step forward and two steps back.
“Peter Currie, Nortel’s chief financial officer, said the restatement was launched due to a “misapplication of accounting practices.” The review, he said, is part of a broader process that uses a “more conservative and more appropriate” approach to revenue recognition.”
The question is why, after the previous restatements, the CFO did not have the right “accounting practices” in place. Whose mistake was it, and what is Z going to do to make sure that the mistake is not made again?
The “broader process” line is cover; merely an effort to downplay the mistake by suggesting that all they’re trying to do is be even more conservative (“oh, conservative, that’s good, right?”).
Someone screwed up. Who, and why?
http://nortel.wordpress.com/ nortel
good questions – i wonder what went wrong because you know this wasn’t part of the New Nortel plan.
Another Restatement: Why?
In the wake of Nortel’s third restatement in three years, you have to ask why it happpened. What prompted Nortel to convince itself that yet another review of how it recognizes sales was required just as it was starting to regain some of its credibility with investors? You have to know this is not what CEO Mike Zafirovski wanted to do as he tries to “transform” Nortel in the wake of an embarassing accounting scandal. Sure, Nortel’s financial systems are far from perfect, which is why it’s spending $200 million on a new system from SAP, but you get the feeling parts of the Nortel empire are doing their financial results using a combination of paper and an abacus. Maybe Mike Z. and CFO Peter Currie are adamant about not having anything inaccurate come to light for regulatory and credibility reasons. Nevertheless, the restatement is just another example of Nortel taking one step forward and two steps back.