CFO.com reports that a new accounting rule cost Cisco $567 million in earnings.

Cisco Systems Inc., the world's largest maker of switching and linking equipment for computers, reported a 15 percent rise in second-fiscal-quarter sales, to $5.4 billion, the highest in three years. The company's earnings were penalized by $567 million, however, because the company complied with a new accounting rule that applies to off-balance-sheet assets.

After a one-quarter delay, Financial Accounting Standards Board Interpretation No. 46 (FIN 46) went into effect for companies' first financial reporting period ending after December 15, 2003. FASB issued FIN 46 in January 2003 to prevent companies from using off-balance-sheet partnerships and other special-purpose entities, or SPEs (which the board now calls variable interest entities, or VIEs) to hide debt and inflate profits, as Enron is alleged to have done in particularly aggressive fashion.