Haliburton Company: Accounting for Cost Overruns and Recoveries Harvard Case Solution & Analysis

In July 2002, the legal watchdog group, Judicial Watch, announced that it has filed a lawsuit against the company Halliburton for overstating income in the period from 1998 to 2001. Approval of the group was that Halliburton used fraudulent accounting methods to increase revenue and to conceal the deterioration of the financial situation of investors. In particular, the claim about the company recognized the claims recovery to long-term construction projects. Until 1998, the company's policy was to order cost overruns as they occurred, but not in the book claims compensation as income to repay the sum was agreed with customers. In 1998 the company changed its policy to begin evaluating future recovery and acceptance in the same period that the cost overruns have been realized. The company, which has suffered from the recent downturn in business and large losses from lawsuits asbestos, claimed that its accounting practices were permitted in accordance with generally accepted accounting principles (GAAP). Judicial Watch, however, claimed that the policies have inflated earnings for four years by as much as $ 534 million. This event is dedicated to accounting and disclosure policies of the company during 1998 and 2001. If readers are asked to assess whether the policy of the company and the relevant decisions have been in the field of accounting and disclosure. "Hide
by Maureen McNichols, Brian Tayan Source: Stanford Graduate School of Business 18 pages. Publication Date: May 18, 2007. Prod. #: A187-PDF-ENG

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