文章基本信息

标题：Rosie Accounting? - grapevine
作者：Joseph McCafferty
期刊名称：CFO
印刷版ISSN：8756-7113
电子版ISSN：1560-3539
出版年度：2003
卷号：Dec 2003
出版社：CFO Publishing Corporation

Rosie Accounting? - grapevine

Joseph McCafferty

ALLEGATIONS OF IMproper accounting are still popping up-and in some unlikely places. The most recent flap stems from Rosie O'Donnell's fight with the publisher of her discontinued Rosie magazine, Gruner + Jahr USA. The former talk-show host alleged in a lawsuit that the publishing company used improper accounting to keep losses at the magazine from hitting a threshold that would allow her to bow out of the joint venture.

If the magazine lost more than $4.2 million in a fiscal year, O'Donnell could walk away without penalty, according to the complaint filed in a New York State Supreme Court. Lawrence Diamond, CFO of G+J, admitted during testimony in the case to recommending "managing the financials" to avoid hitting that figure, says a report in the New York Times. O'Donnell's side argued that the magazine should have set up a reserve account for rebates that would be due to advertisers for missing promised circulation targets. Her lawyers also alleged that G+J reported false circulation numbers to the Audit Bureau of Circulations, which audits the readership figures of publications.

But magazine-industry experts say that setting up reserves for advertising rebates isn't always necessary. "It's not normal practice in the industry to set up an accrual account for rebates in case circulation numbers don't live up to expectation," says P. Andrew Bilbao, general manager of the music and literary group at VNU Business Publications Inc. "Now, if they were reporting false circulation numbers, that's a different story." Another magazine-industry expert, who spoke on condition of anonymity, says it is rare for publishers to return cash to advertisers. "They usually make up for shortfalls with 'make good' ads or other promotions," he says.

G+J sued O'Donnell, seeking $100 million for breach of contract after O'Donnell departed the magazine in September 2002 and it was forced to shut down soon after. O'Donnell countersued for $125 million. A judge ruled in November that neither side should be awarded damages.