If you are a registered user please log in to see more postings.
 

The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

Subscriptions to full posts available for $500 annually.
AutoNation: Improving Cash Flow By Getting It Right
Location: BlogsAAO Weblog (Public)    
Posted by: Jack Ciesielski 2/28/2006 8:34 AM
As mentioned a couple weeks ago, one of the newer types of restatements we're seeing has to do with "floor plan financing" in the cash flow statement. Firms had been showing floor plan financing transactions lumped into the operating cash flows, when these third-party transactions are more accurately displayed in the financing section of the cash flow statement. A December speech by Joel Levine, the SEC's Associate Chief Accountant for the Division of Corporation Finance, at the AICPA SEC/PCAOB "current events conference" has raised awareness of the issue.

This morning, AutoNation filed a non-reliance 8-K indicating that they'll restate the 2004 and 2004 information in the cash flow statement in their 2005 annual report. Apparently, the restatement was prompted by a "customary review letter" (as they put it) sent by the SEC.

Hey, all review letters from the SEC aren't the end of the world. This one had a happy result for AutoNation, in that the restatement makes operating cash flow look better than it did before: for 2004, the revised cash flow from operations increased by $121.8 million; for 2003, it increased by $115.5 million. Maybe virtue is its own reward, after all.
Permalink |  Trackback