AccountingWEB Weekly News Wrap-Up - Issue 133
February 15, 2002
This News Wrap-Up Sponsored By:
NEWS FOR ACCOUNTINGWEB MEMBERS
1. Patriots' Day Gives Certain Taxpayers Extra Day to File Return
2. SEC Announces "Quick Fix" Disclosure Reforms
3. NCCPAP Wants Special Rules for Smaller CPA Firms
4. LLP Structure Will Be Put to the Test
5. Former SEC Chairmen Urge Congress to Free FASB
6. Congress Learns How Accountants Can Tag Future Enrons
7. H&R Block Wants to Do More Than Taxes
8. AICPA Provides Help with Troublesome GAO Rules
9. Baruch Lev Testifies on Accounting's "Axis of Evil"
10.Andersen Loses Biggest Banking Client, SunTrust
There seems no doubt that the Enron situation will force significant changes on the profession of accounting. This week alone, a congressional committee heard testimony recommending removing pressures from the Financial Accounting Standards Board so that the group can concentrate on "getting the standards right and avoiding the delays and compromises that ill serve investors," the SEC announced disclosure reforms that it plans to push through the system quickly, Congress got a lesson on how to spot Enron situations before they get out of hand, and concerns arose suggesting that the LLP structure may not be strong enough to protect partners from sharing in the liabilities of their own company.
The changes that we witness in the months and years to come will provide additional protection to investors. It's a shame this protection wasn't put in place in time for the Enron employees to keep their life savings.
Michael Platt, CEO
NEWS FOR ACCOUNTINGWEB MEMBERS
Taxpayers in Maine, Massachusetts, Michigan, Rhode Island, and upstate New York are given a tax holiday this year on April 15. Taxpayers who used to enjoy this holiday in Connecticut, New Hampshire and Vermont are no longer entitled to participate. Find out who is affected and how the IRS has gotten involved with a patriotic state holiday.
As the first step in a comprehensive program of accounting reforms, the Securities and Exchange Commission has announced it intends to release proposed rules for expanded disclosures. Find out how these rules will affect you and your clients.
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In testimony presented on February 11, 2002 at the New York State Senate Public Hearing on Independence in the Post-Enron Era, the National Conference of CPA Practitioners called upon state legislators to consider special rules for small and regional CPA firms.
The Limited Liability Partnership - LLP - is a rather new entity, created in the last decade as an alternative to traditional partnerships, offering the protection of a corporate structure by limiting the personal liability of partners in an organization. But when partners act irresponsibly, shouldn't they be held personally liable, in the same way that corporate officers are accountable to their corporation? And how far should this personal liability permeate the LLP entity? The courts will look at Andersen and its involvement in the Enron engagement with an eye toward explaining exactly what protection an LLP affords.
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Five former chairmen of the Securities and Exchange Commission testified before the Senate Committee on Banking, Housing, and Urban Affairs on February 12, 2002 on the issues that have arisen as a result of the Enron collapse. A key topic was their shared frustration with the process for setting accounting principles. They urged Congress to find a way to free the Financial Accounting Standards Board from the business pressures of constituencies and funding dilemmas.
Many people were surprised by the Enron collapse and lost money as a result. But James Chanos, head of a short-sell investment boutique, was not one of them. His firm profited from anticipating the company's demise. So Congress asked him to testify as to how he knew what no one else did.
Hoping to build on the large client base that brings one in seven of the nation's taxpayers to H&R Block each spring, the company has announced plans to market year-round financial services to its clients. With more than 9,000 offices around the country, H&R Block has expanded its services to include financial planning, home mortgages, brokerage services, and private wealth management.
LIVE ONLINE DISCUSSION
NCCPAP Leaders Speak Out On Enron &
Please join us on Wednesday, February 20 at 3:00 pm EST for an online discussion sponsored and hosted by the National Conference of CPA Practitioners (NCCPAP). The leadership of NCCPAP announced its concerns regarding the fallout from the events surrounding Enron. The leadership of the organization believes that this situation has the potential to permanently tarnish the reputation of this country's Certified Public Accounting community. The leadership of NCCPAP pledges to continue to speak out about issues that adversely affect the public and the accounting profession. Mark your calendars and join us for this informative open session live on AccountingWEB.
A Web site notice from the American Institute of CPAs on February 8 cautioned members about the auditor independence rules recently released by the General Accounting Office. The notice said the GAO's rules impose tighter restrictions on nonaudit services than the current AICPA's audit standards. It also said the GAO's final rules have changed significantly from an earlier exposure draft, and it is concerned these rules might lead to confusion and compliance problems.
In Congressional hearings on the Enron collapse, Professor Baruch Lev of New York University's Stern School of Business gave the House Committee on Energy and Commerce a short but insightful lesson on the "axis of evil" confronting the accounting profession today. When introducing Professor Lev, Committee Chaiman W. J. "Billy" Tauzin said, "If there were a Nobel Prize for Accounting, it would surely have been awarded to Baruch Lev." If his testimony helps lawmakers navigate through this crisis, he may still get that prize.
The board of directors of SunTrust Banks, Inc. voted this week to end its 60-year-old relationship with Big Five firm Andersen and has agreed to hire PricewaterhouseCoopers to perform the company's audit work in the future. The bank claims its decision had nothing to do with Andersen's recent problems stemming from its controversial Enron audit. SunTrust was Andersen's largest banking client, responsible for more than $3 million in annual fees.
ACCOUNTINGWEB Q&A FORUM
Visit our Q&A Forum to post your questions and share your ideas with the members of AccountingWEB! Simply click on the "Add Comments" option at the bottom of any question to add your response and comments.
Here is a sample of the questions that have been posted this week. Check out all the questions at our Q&A Forum and see if you can lend a hand.
1. IRA Early Withdrawal 72T Election: How and when is the 10% early withdrawal penalty calculated, and once a 72T election has been made, can the election be revoked?
2. Warrants: What are the rules for amortizing warrants?
3. Non-Profit Association: What are the filing requirements for a non-profit, unincorporated association with annual revenue under $25,000?
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