That agency concluded in September that company executives had manipulated expenses to smooth earnings and meet financial targets that would permit them to win maximum bonuses.

He said the commission wanted to examine the records to see if there was any connection between the application of pension accounting standards and efforts to smooth earnings.

The balance of any monies that are not distributed are held as retained earnings, which are then used to smooth earnings and distributions in future years.

"They're not running the firm to smooth earnings," she said.

Regulators are increasingly concerned that finite reinsurance is being used to smooth earnings and misrepresent a company's financial position.

Adding to the appeal of finite insurance was its effect of smoothing volatile earnings, which many investors find distressing.

The report strongly suggests that the board knew about the efforts to smooth earnings.

Insurance generally helps to smooth earnings because it provides for a cushion against financial jolts as sources as diverse as lawsuits or explosions at factories.

To smooth earnings however, management (in a good quarter) can say that they believe that the amount of returns will be high.

The report criticized the current state of pension accounting rules, which allow companies to smooth earnings and thereby distort the value of their pension plans.