Wednesday, July 24, 2002
Halliburton's accounting practices (Pt. Deux): Hauser and others claim that there's something funny going on with Halliburton's accounting practices. I disagree. (surprised?)
One commentator on the Halliburton item below pointed out that any cost-overruns on a Halliburton project would likely be contested. Though Halliburton would get paid something for the additional work, since it doesn't have the check in hand, its figure would only be a guesstimate. As a result, when the payment for the overruns is finalized -- possibly at a lower amount than the guesstimate -- Halliburton would be forced to restate its earnings.
Well, that's just fine. As long as the guesstimate is honest, there should be no problems with this practice. Why? Well, my point was that the costs to do that extra work are already on the books -- even though the revenues aren't. For accuracy's sake, you would either need to keep the expenses off the books until you receive the payments for the work, or do what Halliburton was doing -- making a guess at what they would get paid for the extra work.
It really is as simple as that.
Another allegation, this one made by Hauser in one of his rants was that Dick Cheney was using his position as vice president to enable Halliburton to: "profiteering off the US defense budget." Hauser conveniently ignores the fact that when Cheney became vice president he was required to divest himself of his Halliburton stock. What does Cheney gain by Halliburton getting government contracts? Nothing. Apparently Cheney can be guilty because his previous job was in the private sector. Should we prohibit every presidential appointee (Cheney's not even an appointee -- he was elected) from holding a private sector job prior to serving in the government because their former company may get a government contract somewhere down the line?
The whole argument is just so silly.