"While it's aggressive, Halliburton's switch is supported by a 1981 accounting rule because it helps meet accountants' goal of matching revenues with associated costs as they occur, says Douglas R. Carmichael, an accounting professor at Baruch College. Ten of the 15 largest construction companies use the method Halliburton adopted in 1998, says Halliburton CFO Douglas L. Foshee."
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Halliburton must prove to the SEC that its collection estimates were reasonable. "If it looks like they were just fabricating the numbers, that verges on fraud," says J. Edward Ketz, professor of accounting at Penn State University. Foshee says the company has an "extremely sophisticated model" for estimates and that projections were sound.