The insistence of the lenders on collateral relies on the borrower's present financial and economic conditions.
"All of these mechanisms that were designed to present a company's financial condition in the best possible light are now going to meet a very much higher standard of review and disclosure," said Jonathan Cohen, portfolio manager at JHC Capital in Greenwich, Conn., and former chief of software and Internet research at Merrill Lynch.
This approach is nominally in compliance with the existing accounting rules and it sets the context for the management to argue in any future enforcement actions that it had no reason to know the financial statement doesn't fairly present the company's financial condition.
Its requirement that finance chiefs certify that the periodic report "fairly presents" the company's financial condition makes no mention of American generally accepted accounting principles (GAAP).
What could give the stadium issue traction this year, however, is the city's dire financial condition — presenting a stark contrast between struggling, insecure New Yorkers who don't earn major league salaries, and the hundreds of millions of dollars the new stadium complex is costing them.
Rogers also references section 302 requirements of the Sarbanes-Oxley Act requiring the CEO or CFO to certify the financial statement "fairly presents" the company's financial condition, regardless of whether the financial statement is technically in compliance with generally accepted accounting principles.
So even if Lehman is liable for violating GAAP, concluded Judge Kaplan, the question boils down to whether Ernst "knew enough about Lehman's use of Repo 105s to 'window-dress' its period-end balance sheets to permit a finding that E&Y had no reasonable basis for believing that those balance sheets fairly presented" the company's financial condition.
"As we had said we would, we presented an overview of our business plan and gave presentations on our current financial condition".
The government does present a detailed accounting of its financial condition.
"We do have concern about the fund being able to meet its long-term obligation," Scott F. Porter, an actuary with the firm, Milliman, told trustees of the New Jersey Teachers' Pension and Annuity Fund when he presented his annual update on the financial condition of the fund.
