Bosses sweat to hit clean-up deadline

Corporate America needs to win back investor trust

Hours remain for bosses at firms including AOL Time Warner and Lucent to swear to the accuracy of their companies' accounts, or risk the wrath of watchdogs and investors.

Top executives at 947 firms have until 1700 in New York (2100 GMT) to certify their companies' accounts, as part of the crackdown on corporate scams following the accounting scandals to hit businesses such as Enron.

I don't think in my 30-plus years in business that I have seen such scrutiny in any area of any business in the United States

William Wise, El Paso

But by late Wednesday morning, chiefs at only about 410 of the targeted firms had delivered sworn statements to the Securities and Exchange Commission (SEC), the US stock exchange watchdog.

Firms with accounts outstanding included brewer Adolph Coors, foods firm Kellogg and AOL Time Warner - although sources told the Wall Street Journal that the media giant would meet the deadline.

'Fancy financial footwork'

Failure to submit sworn statements could leave a firm's shares shunned by investors, over concerns that accounts may hide the kind of scandals identified at telecom giant WorldCom, which has admitted improperly reporting $7bn in earnings.

"Any company that didn't work overtime to meet that deadline is a fool," said Duane Grubert, financial analyst at Bernstein

Delay would also incur the displeasure of the SEC and a US administration which has pledged to crack down on accounting fraud.

"There needs to be better disclosure so that people feel confident that they're not being led down the primrose path of fancy financial footwork," US President George W Bush told an economic summit on Tuesday.

Delayed deadlines

But it is as yet unclear what penalties await executives failing to meet Wednesday's deadline.

Chiefs at many firms have already negotiated delayed deadlines, often due to factors concerning the financial year dates.

Heads at Microsoft, for instance, are not required to swear off the firm's accounts until 30 September, with Bausch & Lomb's statement is not due until 12 November.

Confusion also surrounds reporting restrictions governing foreign firms with US stock market listings, such as Unilever and BP.

Further guidance is expected on 29 August.

'Severe scrutiny'

Some executives have already admitted they will be unable to meet the deadline, with Alan Wright, the outgoing chief financial officer of embattled power firm CMS Energy, among those admitting he would be unable to swear to the accuracy of his firm's results.

"Under these circumstances, we feel it imprudent to certify [the books] at this time," said Mr Wright, retiring from CMS Energy later this month after more than a decade in his post.

In question are more than $4bn of possible sham trades.

Energy firms are among those most under the spotlight, following the accounting debacle at fallen sector darling Enron.

"Investors in the sector are craving certainty and the inability to certify only creates uncertainty," said Paul Patterson, an independent energy analyst.

William Wise, chairman and chief executive at energy firm El Paso, who has put his name to the firm's accounts, said: "I don't think in my 30-plus years in business that I have seen such scrutiny in any area of any business in the United States."

Only one firm has so far, retailer The Pantry, has admitted the need to restate its finances, saying it had found an "inadvertent" $8m accounting error, which would not affect profits.