NEWHALL LAND PROFITS RESTATED FOR QUARTER.Byline: Nicholas Grudin Staff Writer
VALENCIA - Just weeks after The Newhall Land and Farming Company The Newhall Land and Farming Company is a land management company based in Valencia, California, United States. The company is responsible for the master community planning of Valencia, as well as the management of farm land elsewhere in the state. released lackluster third-quarter results, the company has amended its books to include $4 million more in earnings.
The restatement Restatement
A revision in a company's earlier financial statements.
The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. is the result of an accounting rule change at the federal level, and although the effect of the change is considered insignificant by Newhall Land officials - it represents a 10-cent per-unit increase - it demonstrates ``how arbitrary some of these accounting rules are,'' according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Gordon Klein, professor of accounting at UCLA's Anderson School of Management Anderson School of Management may refer to:
``This is an example of the fact that the regulators are still trying to determine all of the appropriate rules and regulations, but they are still changing as evidenced by this particular instance,'' said Marlee Lauffer, spokeswoman for Newhall Land.
A new Financial Accounting Standards Board Financial Accounting Standards Board (FASB)
Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). rule, which was implemented in October, forced Newhall Land to report a potential future payment to one of its Valencia Town Center partners. If the mall is ever sold, Newhall Land will give a percentage of the earnings to the company that manages the property, Lauffer said.
Prior to October, that type of payment would not be reported in financial reports until the transaction was made, but new FASB FASB
See: Financial Accounting Standards Board
See Financial Accounting Standards Board (FASB). regulations changed that, Lauffer said.
However, that requirement was changed back.
On Oct. 29, the new rule's implementation was deferred, and Newhall Land was allowed to claim $4.1 million more cash than was previously reported under the new FASB rule.
``Our company is very rigorous about following the guidelines guidelines,
n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. of our auditors and their rules and regulations,'' Lauffer said.
The result of the restatement came as no surprise to Newhall Land officials. For the three months that ended Sept. 30, Newhall Land's revised net income was $6.9 million, which brings it above the mark of $6.7 million, which it hit in the third quarter of 2002.
``We are back to where we thought we were in early October,'' Lauffer said.
According to Klein, what the $4 million gap proves is how accounting numbers and earnings report are, by nature, vague indicators for a company's health and performance.
``What kind of faith can you have in numbers in numbered parts; as, a book published in numbers.
See also: Number when the accounting profession one day says do it this way, and the next day do it another way,'' Klein said.
Klein's point is proved by the fact that Newhall Land's apparent third- quarter success or failure - based on the numbers - depended on when the FASB decides to implement its new rule.
``There is certainly a need for the public to understand that accounting numbers are not as precise as they appear to be. Accounting earnings involve a lot of judgments and estimates, and unlike arithmetic math, there's a lot of room for interpretation and imprecision im·pre·cise
impre·cisely adv. .''
FASB officials said the rule in question is an effort to clarify the accounting standards for certain limited-liability partnerships.
Nicholas Grudin, (661) 257-5255