Financial Daily from THE HINDU group of publications
Thursday, Feb 20, 2003
Financial Daily from THE HINDU group of publications Thursday, Feb 20, 2003 |
|
|
|
|
|
Corporate
-
People KPMG asks for CFO's head D. Murali
CHENNAI, Feb. 19 THE world is already too used to CFOs getting fired. But the case of Universal Health Services (UHS) man is different. UHS is one of the US's ``largest and most respected health care management companies, operating behavioural health facilities and acute care hospitals, and ambulatory surgery and radiation centres,'' as its Web site says. Founded in 1978 and employing about 26,000 people, UHS maintains ``one of the strongest balance sheets in the industry.'' But they had to sack their CFO recently quite freakily. Mr Kirk Gorman, CFO, since 1987, lost his job because of a quirk, and not on account of charges of falsification or misappropriation, which are the common grounds where CFOs get spiked. Mr Gorman's fault was that he asked KPMG — his company's auditor that had replaced Arthur Andersen — to provide a representation letter concerning their ongoing review of the company's financial statements and disclosures. As Accounting Web reports, Mr Gorman, who is not an accountant, wrote a letter to KPMG on February 12 stating that since he was relying on the firm's advice on technical accounting issues, he needed assurances from them as part of his due diligence. KPMG responded that Mr Gorman's letter raised reservations about his competence and told the board of directors that they would certify the financial statements only if Mr Gorman were fired. There were no disputes between Mr Gorman and KPMG regarding accounting issues and Mr Gorman had signed a representation letter for KPMG attesting to the accuracy of his company's financial statements. The day after Gorman's dismissal UHS's stock plunged to a 30-month low. A press release from the company announces that the board of directors concluded the management changes were necessary ``as a result of issues raised by KPMG, the company's independent auditors, as a result of a recent communication from Mr Gorman to KPMG regarding his views on their respective responsibilities and the level of expertise required of a chief financial officer with respect to the company's financial statements.'' No issue whatsoever has been raised regarding the integrity of the company's financial statements, but KPMG had concluded that, ``because of Mr Gorman's communication regarding the responsibilities and required expertise of a chief financial officer, it could no longer rely on the representations made by Mr Gorman as the CFO of the company.'' The UHS Chairman and CEO, Mr Alan Miller, however, emphasised, ``the company has the utmost regard for Mr Gorman's integrity and capabilities and is very disappointed that the situation has arisen which caused Mr Gorman's departure.'' Moral of the story: Think twice before you write to your auditor.
Article E-Mail :: Comment :: Syndication
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2003, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|