CORRECTED VERSION OF ORDER AS OF 4/26/99 ---
INCORRECT VERSION OF ORDER APPEARED ON THIS SITE FROM 4/21/99 TO
4/23/99
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 41313 / April 20, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1127 / April 20, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9878
________________________________
:
In the Matter of : ORDER INSTITUTING PROCEEDINGS
: PURSUANT TO SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF :
: 1934, MAKING FINDINGS AND
LARRY L. SKAFF and JOHN F. : IMPOSING A CEASE-AND-
LIECHTY, : DESIST ORDER
:
Respondents. :
:
________________________________:
I
The Securities and Exchange Commission ("Commission") deems
it appropriate to institute public administrative proceedings,
pursuant to Section 21C of the Securities Exchange Act of 1934
("Exchange Act"), against Larry L. Skaff ("Skaff") and John F.
Liechty ("Liechty").
II
In anticipation of the institution of these administrative
proceedings, Skaff and Liechty each have submitted an Offer of
Settlement which the Commission has determined to accept.[1]
Solely for the purpose of these proceedings and any other
proceedings brought by or on behalf of the Commission, or to
which the Commission is a party, and without admitting or denying
the findings herein, except as to the Commission's jurisdiction
over them and the subject matter of the proceeding, which are
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF:
LARRY L. SKAFF and JOHN F.: IMPOSING A CEASE-AND-________________________________:
In anticipation of the institution of these administrative proceedings, Skaff and Liechty
itted, Skaff and Liechty consent to the entry of this Order Instituting Proceedings pursuant to
On the basis of this Order and Respondents Offers of Settlement, the Commission makes the
By improperly applying purchase accounting rules following Terex’s
1989 acquisition of Fruehauf, Skaff and Liechty, among others, caused Fruehauf and Terex to
Fruehauf's financial condition was primarily misstated by improperly excluding losses of
Skaff and Liechty, among others, caused Fruehauf and Terex to misstate purchase accounting
Fruehauf, Skaff and Liechty, among others, mischaracterized positive trends as the result of
In addition, Fruehauf, Skaff and Liechty, among others, failed to disclose or inadequately
On July 14, 1989, Terex, through a subsidiary, acquired the trailer operations and certain
As the acquiring company, Terex assumed control over the assets and operations acquired from
Furthermore, the prior auditor notified Fruehauf that its previously issued unqualified audit
The Restatement focused primarily on the accounting treatment afforded certain businesses
The following is a summary of the Restatement's effects on Fruehauf's net income:
The increase in 1989 net income resulted from a number of adjustments primarily related to
Prior to Fruehauf's June 1991 initial public offering, the misstatements relating to
This concept recognizes all income and expenses, even irregularly occurring losses or costs,
GAAP provide that subsequent earnings or losses from these assets are not to be reflected in
previously unrecorded liabilities should be recorded if they represent obligations at the
To account for an asset pursuant to EITF No. 87-11, the following conditions must be
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