CHAINSAW HITS ACCOUNTING BUZZSAW

As Oxford Health Plans Inc., Cendant Corp., Sunbeam Corp., “Ragtime” producer Livent Corp. et al fessed up to bookkeeping shenanigans that cost shareholders millions, fingers were pointed at those charged with preventing balance sheet baloney: accounting firms and corporate audit committees.

In April, Cendant – the hotel, car rental, real estate, financial services and software company formed in late 1997 in a stock swap between CUC International Inc. and HFS Inc. – chopped its reported ’97 earnings by $100 million. The company alleged that top CUC executives had booked $500 million in bogus income from 1995 to 1997 to match analysts’ earnings expectations.

In June, Sunbeam’s board fired chairman and CEO Albert “Chainsaw Al” Dunlap, who, incidentally, had made a name for himself by slashing the work force at his former outfit, Scott Paper Co. Sunbeam later “restated” its 1997 profit from $123 million to $6.8 million, partly as a result of inflated barbecue-grill sales.

The financial follies prompted the Securities and Exchange Commission’s chief accountant to call in the Big Five accounting firms – Andersen Worldwide, Deloitte & Touche, PricewaterhouseCoopers, Ernst & Young and KPMG Peat Marwick – and major corporations to discuss the issue.

Under-accounting and other gimmickry has reached epidemic proportions, producing a smorgasbord of cooked books, say accounting experts.

With so-called one-time “big bath” restructuring charges – now a near annual event for some companies – spiking to 641 in 1998 from 96 in 1995, according to First Call Corp. in Boston, and other accounting abuses aimed at enhancing future earnings, the SEC has promised to crack down.