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THIS WEEK'S TOP NEWS
- PCAOB Votes to Require Int'l Accounting Firm Registration
- E&Y Faces $2.2 Billion Swiss Lawsuit
- Former Andersen Ethics Consultant Pens Exposé
- Treasury Finalizes Anti-Tax Shelter Regulations
- Crusader Ralph Nader Takes on Accounting Profession
- Jock Tax: Big Bucks For States, Bigger Headaches For Accountants
- IRS Increases Criminal Investigations of Tax Return Preparers
- PwC Hit by $400 Million Lawsuit
- Deloitte Sued in Ahold Matter
- FASB Chairman is Bullish on Fair Value
- Busy Season Stress Busters Part Three!
"To inform, to enrich, to enlighten, to entertain."
It's been a grand slam week for lawyers looking to take a bite out of the deep-pocketed Big Four accounting firms. The headlines just kept rolling in: "Deloitte Sued in Ahold Matter," "KPMG is First of Big Four to Face Chinese Court," "PwC Hit With $400 Million Lawsuit," and "E&Y Faces $2.2 Billion Swiss Lawsuit."
Headlines like this should send shivers down everyone's spine. Accounting groups are lobbying for caps on professional liability lawsuits but regulatory bodies are unlikely to budge because they face political pressure to show resolve in their dedication to real accounting reform.
Professional pundits believe that of the 900 CPA firms who perform audits of public companies today, fewer than 200 will be left in that business in two years. I'm not concerned about those 200 firms - they understand and recognize the risks they are facing. It is the owners of many of the other tens of thousands of practice units in the US today who feel invulnerable and complacent about reforms that may affect them. Lawyers and regulators are focusing on the big fish for now, but who's next?
Michael Platt, CEO
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THIS WEEK'S TOP NEWS
The newly formed Public Company Accounting Oversight Board met this week and issued its first order. With a unanimous decision, the Board voted to go forward with proposed rules that require both U.S. and foreign audit firms to register with the Board if they perform audits of U.S.-listed corporations.
The trend of suing accounting firms continues, this time in Switzerland. Aided by the results of a year-long study performed by PricewaterhouseCoopers, the Swiss state of Geneva has demanded 3 billion Swiss francs (US$2.2 billion) from Big Four firm Ernst & Young for damages from audits stemming from 1994 to the present.
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Barbara Ley Toffler, former Andersen partner-in-charge of Andersen's Ethics & Responsible Business Practices consulting services, reveals in a new book that the symptoms of Andersen's fatal disease were evident long before Enron.
"By issuing final regulations, we are putting the promoters that sell questionable transactions and the taxpayers that participate in them on notice." These words, spoken by Pam Olson, assistant secretary for tax policy at the U.S. treasury, mark the start of a new hunting season on tax shelters.
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Since 1965, activist Ralph Nader has addressed a range of issues, including consumer safety and product liability protection. Now, in the wake of recent corporate scandals, Mr. Nader has turned his attention to the accounting profession, which he says has been hijacked by overwhelming corporate pressures.
Budget deficits have forced some states to get very creative in pursuit of tax revenue. In January, AccountingWEB described some unusual use tax collection initiatives being pursued by some states. This month we focus on the "Jock Tax," usually reserved for highly paid athletes but recently extended to target lawyers, professional speakers, consultants, and yes, even accountants.
TAX TIP: Retirement Savings Contribution Credit
This tax credit, which will be available only from 2002 through 2006, could help you offset the cost of the first $2,000 contributed to IRAs, 401(k)s and certain other retirement plans, says the IRS. Find out more.
The Internal Revenue Service more than doubled the number of criminal investigations of preparers of federal tax returns in 2002 compared to the previous fiscal year, according to figures released by IRS Criminal Investigation.
Last week VTech Holdings Ltd filed a $400 million lawsuit against PricewaterhouseCoopers stemming from VTech's acquisition of a business unit of Lucent Technologies in 2000. VTech alleges that PwC concealed information about the unit's financial condition.
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The New York law firm of Wolf Haldenstein Adler Freeman & Herz has filed a lawsuit against Deloitte Touche Tohmatsu claiming that the Big Four firm violated federal securities laws by aiding in the issuance of false and misleading financial statements for Dutch consumer giant, Royal Ahold, the world's third largest retailer.
If U.S. accounting practices swing to fair value, it will be in large part due to the efforts of Robert Herz, chairman of the Financial Accounting Standards Board (FASB), according to an article in the February issue of CFO magazine.
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TAX TIP: Reservists, New Enlistees May Get Deferral for Back Taxes
Reservists called to active duty and new enlistees in the armed forces might qualify for a deferral of taxes owed if they can show that their ability to pay taxes was impaired because of their military service. Find out more.
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2003 TAX CALENDAR
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"To inform, to enrich, to enlighten, to entertain."