This week Overstock.com (NASDAQ:OSTK) notified the public that they wouldn’t file their third quarter 10-Q on time. The reason:

The registrant has been unable to complete its financial statements for the quarter ended September 30, 2009, as it is continuing to analyze the proper accounting treatment for $785,000 the registrant received during the first quarter of 2009 as repayment  under a new agreement with the vendor for amounts the registrant overpaid to the vendor in 2008 and early 2009.  The registrant believes the amount is properly recognizable in the first quarter of 2009, when the cash was received.  However, the registrant is continuing to review the issue, and may ultimately conclude that the amount should have been recognized in 2008.

What? They’re saying they think they’re right in how they’ve treated their refund from a vendor, but they might not be right, so let’s wait and see.

Translated…. Overstock wants to treat the item one way, and their auditors won’t sign off on that because it’s not correct.

This made-up accounting treatment by Overstock is nothing new. Sam Antar has detailed many times over how the company manipulates the accounting rules and makes up their own rules depending on how they want their financial statements to look. The most notable examples of this were the cookie jar reserve they inappropriately set up related to customer refunds and a made-up definition of EBITDA.

Sam Antar notes:

GAAP does not allow for the deferral of material accounting errors into future periods and requires the restatement of previously issued financial reports to correct such errors. Overstock.com is trying to avoid restating its Q4 2008 and Q1 2009 financial reports to correct its overpayment to the vendor.

Simply put, Overstock can’t just make up accounting rules to fit their desires for their financial statements. Sure, the company is guilty of never producing a correct financial statement since 2000. They’ve had restatements, re-restatements, and now are potentially facing re-re-restatements. (Yes, third time might be the charm for Byrne and his team of clowns at Overstock.com.)

But never fear! Byrne says his employees are a bunch of Boy Scouts, so we should pay no attention to their accounting fiasco. This is a kind of a “pay no attention to the man behind the curtain” defense. The company has never been able to produce accurate financial statements, their accounting treatment of many items has been questionable at best (and outright fraud at the worst), and Byrne is too busy chasing around an imaginary Sith Lord to actually run his company.

Thankfully the SEC is again investigating Overstock.com. And just this week, the SEC brought the hammer down on SafeNet Inc. for Regulation G violations. Regulation G is a rule that essentially says companies can’t make up the accounting rules and should be following Generally Accepted Accounting Principles (GAAP).

I can’t wait to see if the SEC will finally bring the hammer down on Overstock too. The circus has gone on long enough.