Auditing

SOX Accounting Expensive for Fortune 1000 Companies

Sarbanes-Oxley Act (SOX) has increased the auditing costs by $1.4 billion, collectively, for Fortune 1000 firms based on figures reported as of April 27, 2005. Two professors at the University of Nebraska-Omaha (UNO), report that 633 Fortune 1000 firms have paid more than $3.6 billion for 2004 audits so far, compared to $2.2 billion the previous year. To comply with SOX, public firms, including those in the Fortune 1000, were required to complete their first audit of internal controls as well as audits of their historical financial statements, in 2004.
528

Auditors and Terrorism

There were 655 “significant” terrorist attacks in 2004 according to U.S. government figures. Fortunately, none of them happened on American soil. But that doesn’t mean Americans are safe or that they can ignore potential terrorist activity around them.Author Michael C. Kristek, CGFM, explores the roles of financial auditors in helping to prevent terrorist attacks in a dirty bomb case study published in the Spring 2005 issue of the Journal of Government Financial Management.
103
Community News

KPMG Considers Case for Annual Accounts

On the heels of KPMG’s settlement with the Securities and Exchange Commission (SEC) over their auditing of Xerox, Eugene O’Kelly, chief executive of KPMG’s US business, told the Financial Times that he was considering the case for issuing annual accounts, adding that action by lawmakers to limit auditors’ liability could make the move possible.Advertisement
189

PCAOB Cautions Against Over Auditing

At the same time the Public Company Accounting Oversight Board (PCAOB) is warning auditors not to overdo internal controls testing, the government is revamping portions of the law that required the testing in the first place.PCAOB Chairman William McDonough told auditors to expect a “severe conversation” if the board thinks they are gouging clients to run up fees, CFO.com reported.McDonough's comments came as part of a roundtable discussion held by the Securities and Exchange Commission.
219

Lease Accounting: Minor Blip or Major Issue?

Retailers, restaurants, and cellular service providers are changing the way they account for leases, according to accounting analyst Jack Ciesielski, publisher of The Analyst’s Accounting Observer. The majority of restatements are coming from the retail industry and most of those have to do with rent holiday issues.The SEC’s February 7 Letter to the AICPA identifies three types of issues that may arise in lease accounting.
137

SOX Causes Jump In Audit Costs, But Benefits Seen

As companies struggle to meet the demanding mandates of the 2002 Sarbanes-Oxley Act, some executives are griping that the costs outweigh the benefits.But of course not everyone agrees, and some business leaders say the benefits of increased transparency are worth the costs.Not only are companies watching their audit bills rise – 45 percent was the average increase at the 100 largest U.S.
281
Tax

Financial Services Companies More Likely to Escape IRS Scrutiny

Big banks, insurance companies and brokerage firms are far less likely to face an audit by the Internal Revenue Service than industrial companies, according to a new study.The study, conducted by Syracuse University researchers and reported by the New York Times, said the IRS audits nearly all large companies in the manufacturing, transportation, mining, heavy construction and agriculture industries, but less than one in five financial services companies.
89
A&A

Five Ways to Improve Due Diligence

Due diligence is most commonly performed during the sale of a business. It can, however, be a useful tool for gaining a truer picture of the current state of a company whether it is up for sale or not. Here are 5 hints from TheStreet.com, for making the most of a due diligence audit:Double-check everything. This includes financials, the customer database, tax returns and filings, copyright and patent filings, employment contracts, vendor lists, and leases for equipment or property.
612
A&A

FASB Options Rules Also Affect Private Firms

Late in 2004, the Financial Accounting Standards Board (FASB) issued a controversial ruling regarding how companies list outstanding options as expenses on their books. The impact of the new guidelines on public companies, which goes into effect in June, has attracted most of the attention.
254

Improper Accounting for Leases Triggers New Restatements

Changes in how companies account for real estate leases is forcing a wave of corrections in earnings reports.Accounting for leases came under scrutiny as part of the tough reforms of the 2002 Sarbanes-Oxley Act.
230
Tax

Treasury, IRS Issue Regulations on the Reduction of Consolidated Attributes

Earlier this week the Treasury Department and the Internal Revenue Service issued final regulations that provide rules for reducing tax attributes (e.g., net operating losses, tax credit carryovers) when the debt of a member of a consolidated group is forgiven. The final regulations are similar to temporary regulations that were issued in August of 2003.
72
A&A

Family Partnerships are Under the Microscope

Tread carefully if you are thinking of moving family estate assets into a partnership to reduce your tax burden. A U.S.
257

Accountants Reaping the Benefit of Corporate Reform

Poor-and sometimes fraudulent-accounting may have led to the fall of corporate giants in recent years, but now the accountants themselves are cleaning up from corporate reform work.With fewer and fewer accountants graduating each year, the firms are desperate to attract experienced accountants to handle Sarbanes-Oxley Act work, the Wall Street Journal reported.Citing figures from the American Institute of Certified Public Accountants, the Journal reported that more than a decade ago, accounting began losing popularity with undergraduate students.
184
Community News

Deloitte Announces First of What May be Many Mergers in China

Deloitte Touche Tohmatsu International has announced a merger with one of China's largest accounting firms, and said it hopes to employ 8,000 people in China by the end of the year.The rapid growth of China's economy - at more than 9 percent each year - and the desire of Chinese companies to expand globally is creating huge potential for Deloitte, Peter Bowie, Deloitte China's chief executive, told Dow Jones Newswires.Deloitte has quadrupled its presence in China over the last two and a half years, and plans to invest $150 million in China during the next few years.
193
Tax

IRS Offers Tips for Accurate Schedule K-1 Filing

The Internal Revenue Service this week provided its annual list of tips to businesses, individuals and tax professionals to avoid errors on Schedules K-1. The Schedule K-1 is used to report income and other distributions from partnerships, S corporations and some estates and trusts.Accurate filing of the forms is important because the IRS matches income from Schedules K-1 to other tax returns. For tax year 2003, more than 25 million Schedule K-1 forms were filed reporting approximately $1 trillion in income to partners, shareholders and some estate and trust beneficiaries.
298
Tax

Smaller Accounting Firms Reap the Benefits of New Mandates

Midsize firms are more than happy to scoop up the audit clients being rapidly discarded by the larger accounting firms, the East Bay (CA) Business Times reported.With the large firms focused on the more lucrative consulting work-which limits their ability to audit the same clients under Sarbanes-Oxley Act rules-midsize firms are filling the gaps in audit and other areas.Advertisemen
187
Tax

SEC Charges Time Warner with Fraud

The Securities and Exchange Commission this week charged Time Warner Inc. (formerly known as AOL Time Warner) with materially overstating online advertising revenue and the number of its Internet subscribers, and with aiding and abetting three other securities frauds. The Commission also charged that the company violated a Commission cease-and-desist order issued against America Online, Inc. on May 15, 2000. In a separate administrative proceeding, the Commission charged Time Warner CFO Wayne H. Pace, Controller James W.
176
Tax

Board Members Pay to Settle WorldCom Suit

In a settlement that has sent shock waves through corporate boardrooms, 11 former WorldCom Inc. board members have agreed to pay $20.2 million of their own money to settle a lawsuit tied to the company's $11 billion accounting fraud.The Wall Street Journal reported that the settlement, once sidelined by a legal technicality, was reached on Friday.It is highly unusual for board members to have to tap into their own resources to pay settlements such as this, and the WorldCom settlement, first announced in January, shocked many corporate boards.
170
Community News

Arizona Accounting Firm Rebrands, Plans Expansion

Nelson Lambson and Co., an accounting firm established in Arizona in 1968, has changed its name to Schmidt Westergard & Company, PLLC. The new identity reflects the firm's desire to grow and expand. Managing Partner James A. Schmidt explained, "The name change is part of a wider strategy to build awareness of our services throughout the greater Phoenix metropolitan area. Our new brand name implies a promise that we will carry on our founders' tradition of outstanding client service, performed with the highest ethical standards.
188
Community News

Deloitte & Touche Unveils Corporate Director Education Program

Responding to the increasing demands, responsibilities, and heightened scrutiny of corporate board members, Deloitte & Touche LLP today announced the creation of a unique alliance with the University of Michigan Ross School of Business and The Directors' Network Inc. to develop and deliver customized, consultative education programs for corporate directors.This alliance with The Directors' Network and the University of Michigan aims to provide tailored corporate director education," said Greg Weaver, Deloitte & Touche U.S. national managing partner, Audit and Enterprise Risk Services.
533

Pages

Voice of the Editor

What would you do if one of your clients won the lottery? We asked several accountants to weigh in with their advice for the lucky Powerball winner, and the tips we received are useful for anyone who receives a windfall, whether it's a lottery win, an inheritance, a big bonus on the job, or a killing in the stock market.
Read more
Gail Perry, CPA
Publisher/Editor-in-Chief, AccountingWEB
editor@accountingweb.com
ADVERTISEMENT

Weekly video update

ADVERTISEMENT
ADVERTISEMENT

accountingweb.co.uk

More

Most read

Show more
ADVERTISEMENT