It might have seemed a glint of sunshine last week when auditors combing through the books of beleaguered Beazer Homes said they discovered $27.6 million in additional revenue.

But that bit of good news was soon washed away by $35 million in additional losses found in the first two quarters of fiscal year 2007.

Easy come, easy go.

The short-lived bonus —- coming from overstated "inventory reserves" from the years 1998 to 2006 —- was merely like "finding a shiny penny," said Vicki Bryan, an analyst from Gimme Credit who has studied and criticized the Atlanta-based homebuilder. "It was so small it was immaterial."

Bryan means "small" in that Beazer had nearly $3.5 billion in revenue last year, according to a recent filing to the Securities and Exchange Commission. But that's a gloomy number, considering it had nearly $5.4 billion in revenue the year before. Fiscal year 2007's losses were $411 million and the first half of fiscal 2008's were $368 million.

A search through a company's numbers often finds that what investors thought they knew, they really didn't. There are so many ways to shape balance sheets that those in the game of flogging numbers are first to admit that accounting is not an exact science like math. Instead, it's more like interpretive art.

Independent auditors have dug through a decade's worth of Beazer's records as the company faces lawsuits, criminal and civil investigations and a cratering homebuilding industry. The company last week admitted in SEC filings "accounting errors and/or irregularities" over the years in financial statements. Beazer said it fired its chief accountant last year for attempting to shred documents and is cooperating with all investigations.

Calls to a company spokeswoman were not returned.

Bryan has long been bearish on Beazer, criticizing the company for not being forthcoming in its reporting. "They've been out of sight, out of mind, lurking in the shadows," she said. Last week's audit releases will ensure "we'll be getting better quality numbers from Beazer than we've gotten in a long time," she said.

The term "GAAP" is thrown around a lot while discussing audits —- generally accepted accounting practices, accent on the word "generally."

"It's easier to read and understand IRS regulations than GAAP," said Bert Ely, an accountant himself who is an adjunct scholar with the libertarian Cato Institute. His focus is the regulation of banking and financial institutions. "Accounting is far from a science. There's an enormous amount of judgment."

The scope of professional subjectivity involved makes even the experts contradict themselves when explaining it.

"The big thing is to not take financial statements at face value; dig into the footnotes and make your own judgments," said Ely. "But it's extremely difficult to understand and to make judgments. This is extremely difficult for people making investment decisions. Listen, company's themselves have a problem with it."

"When you're tallying [the value] of raw land and (housing) inventory, valuations becomes very judgmental," he said. "Do you value it at the fire-sale price? It's an incredibly complicated mess."

"Inventory impairments," or a loss in value of Beazer's land and housing stock, has been a huge contributor to the company's red ink —- $611 million last year and $356 million for the first half of fiscal 2008, according to the new audits. The filings paint a picture of inventory sitting around unsold.

"At Sept. 30, 2007, excluding models, we had 2,276 homes at various stages of completion (of which 862 were completed) for which we did not have a sales contract," the company reported. The company also owned an additional 815 model homes.

"Goodwill impairments" —- the loss of the intangible benefits from companies Beazer has purchased over the years —- cost the company $53 million last year and $48 million so far this year.

Beazer's filing said its "accounting errors and/or irregularities" had to do with the "inappropriate accumulation of reserves and/or liabilities associated with land-development costs and the subsequent improper release of such reserves and accrued liabilities."

Also, there were problems with improper "sale-leaseback transactions" of model homes.

Selling assets and continuing to use them while leasing them back is a common way for companies to manage earnings, said Ian Ratner, a CPA and principal with GlassRatner in Atlanta. But in Beazer's case, he said, the leaseback "looked good in the short-run but it wasn't really a sale."

Bryan said she believes Beazer could have "sold" the leaseback homes to raise cash and "get it out of their inventory, to show they're moving, when they're not." She said it is not clear from the filings who the buyers were.

Ratner, who read through Beazer's filings before commenting, said the term "accounting irregularities" stood out because it is "a politically correct term for financial manipulation."

Ratner said he has conducted more than 100 internal investigations of companies. He said bending numbers usually doesn't happen in a vaccum.

"There's a culture of pushing the envelope, of reporting earnings before they are there," he said. The motivations of Beazer's accountants is unknown and if anyone was coaching them.

During 1998 to 2006, Beazer was a growing, profitable company. "They deflated their earnings in those early years," said Ratner. "You take advantage of earnings you can use as reserves later on" when there is a slowdown.

"Managing earnings —- or smoothing —- can become manipulating them," Ratner said. "There's a fine line there."