In three previous blog posts, I detailed how Overstock.com (NASDAQ: OSTK) violated Generally Accepted Accounting Principles (GAAP) and SEC disclosure rules by improperly deferring the recognition of an accounting error to create a cookie jar reserve to inflate future profits. On October 24, 2008, Overstock.com revealed that it underbilled fulfillment partners in periods prior to Q3 2008 because of customer refund and credit errors. The company improperly chose to recognize future recoveries from underbilling its fulfillment partners on a cash basis (non-GAAP) rather than restating previously issued financial reports to correct the material accounting error (GAAP). Note: Details of my previous blog posts here, here, and here).
More recently, I provided Overstock.com with a series of questions to answer about its accounting errors during its Q2 2009 earnings call (Details here). Rather than answer each of my questions, CEO Patrick Byrne went on a ranting diatribe as described by investigative journalist Gary Weiss in his blog (Details here).
The reason for avoiding any meaningful discussion of Overstock.com’s questionable financial disclosures is clear. Overstock.com and Patrick Byrne are desperately trying to avoid restating the company’s financial reports due to accounting errors for the third time in three years.
Please read more in my blog: http://whitecollarfraud.blogspot.com/2009/07/how-to-issue-phony-financial-reports.html
Sam E. Antar