Auditing | AccountingWEB



Mark Your Calendar: Auditing in a Small Business Environment

The Public Company Accounting Oversight Board (PCAOB) is bringing the Forum on Auditing in the Small Business Environment to Orlando, Florida on August 4 and 5, 2005. The two-day program, hosted by Board Member Kayla J.

PCAOB Releases XBRL Attest Engagement Guidance

The Public Company Accounting Oversight Board (PCAOB) on May 25, 2005 released staff questions and answers related to attest engagements regarding eXtensible Business Reporting Language (XBRL) data furnished under the Securities and Exchange Commission’s (SEC) XBRL Voluntary Financial Reporting Program on the EDGAR System.The questions and answers provide guidance for auditors engaged in reporting on whether the XBRL data accurately reflects the corresponding information in the official EDGAR filings.

AIG Restates Income with $3.9B Adjustment

American International Group (AIG), in a long-delayed regulatory filing, said Tuesday that it overstated net income by $3.9 billion for the past five years.The New York-based insurer also said that it cut its net worth by $2.26 billion through the end of 2004. The figure is less than the $2.7 billion that was previously estimated.The report, which was delayed three times, was filed with the Securities and Exchange Commission.

High Court Overturns Andersen Conviction

Calling jury instructions too vague, the U.S. Supreme Court unanimously overturned the 2002 obstruction of justice conviction of the once-mighty Arthur Andersen LLP.The accounting firm, which shredded documents connected to the fallen Enron Corp., was convicted after jurors were told that Andersen could be found guilty even if they determined that the accounting firm "honestly and sincerely believed that its conduct was lawful,” the New York Times reported.

Reader Perspective: Never Tell Me Less Than the Full Truth

Institutional and general public investors use Auditor's Reports when calculating their buy, sell or hold decisions. I'm not sure auditor's always remember the numbers of people who examine and trust their comments, sometimes basing their decisions on the unknown but trusted professionals who make independent reports.

SEC Finds $48M Shortfall On Its Own Books

The Securities and Exchange Commission is cutting costs to make up for a $48 million budget shortfall blamed on real-estate cost overruns.The SEC is in the process of moving to a new Washington headquarters and recently relocated its offices in Boston and New York. Peter Derby, a senior aide to chairman William Donaldson, told the Associated Press that higher-than-expected security and building costs for the new offices could run up to $50 million over the next two-and-a-half years.Derby said employees have been placed on administrative leave or were reprimanded.

Auto Parts Suppliers Reeling from Accounting Problems

An industry that has been respected for its spotless balance sheets and earnings statements is now finding itself under the microscope, with the nation's two largest suppliers reporting accounting errors that led to inflated earnings.Delphi Corp., Visteon Corp. – the two largest suppliers – and Collins & Aikman Corp. have acknowledged improper bookkeeping practices. "Don't think people got worse," Tim Leuliette, chairman and CEO of Metaldyne Corp. told the Detroit News.

Audit Scolds FEMA While Senators Examine Fraud

Today the Senate’s Committee on Homeland Security and Governmental Affairs will hold hearing on the Federal Emergency Management Agency’s (FEMA) response to hurricanes in Florida during 2004 and the impact of that response on taxpayers. The hearing is part of a four-month investigation sparked by a federal audit questioning millions in storm payouts.The audit looking into payments made in the wake of Hurricane Frances as well as concerns regarding payments attributed to other storms that have not been made, found waste and poor control at every level of FEMA.

PCAOB & SEC Issue Internal Controls Auditing Guidance

The Public Company Accounting Oversight Board (PCAOB) issued additional guidance on the implementation of Auditing Standard No. 2 (AS No. 2) on Monday, May 16, 2005. The new guidance represents the PCAOB’s response to concerns raised during the Roundtable on Implementation of Internal Control Reporting Provisions held on April 13, 2005 and consists of both a Board Policy Statement and a series of staff questions and answers. Both focus on the scope of internal control audits and how much internal control testing is required.

Fannie Mae Sees Market Share Dip in 2004

Just as Fannie Mae announced a drop in its share of the mortgage-related securities market, Federal Reserve Chairman Alan Greenspan renewed calls for limits on the mortgage giant's huge portfolio of mortgage assets.Fannie Mae's market share dropped from 45 percent in 2003 to 29 percent in 2004, according to its filing with the Securities and Exchange Commission.The company said in its filing that the drop was due to the fact that more consumers are turning to adjustable-rate mortgages, the Washington Post reported.
Community News

AIG To Restate Four Years of Earnings, Admits to Derivatives Blunder

One blunder may slightly offset another as American International Group (AIG) sorts out its complicated accounting and derivatives errors. The company issued an 11-page statement that was hammered out by accountants, auditors and attorneys over the weekend, the reported.The company said plans to restate its fiscal 2000, 2001, 2002 and 2003 statements and the March, June and September quarters for 2004.
Community News

Use of "Gray" Accounting Questioned

At a time when accounting scandals are filling our courts all the way to the highest court in the land, the use of questionable accounting practices by a start-up company in order to get funding, may offer clues about how companies with world-class reputations and reach began down the path of wrongdoing.Earthstone International, a private company founded in Santa Fe, New Mexico, in 1993, apparently used questionable accounting principles in an attempt to qualify for the final installment of a funding deal from the State Investment Council.

Accounting For International Differences

The Committee of European Securities Regulators (CESR) recommends that any public company reporting financial statements under U.S. rules to a regulator in the 25-member European Union (EU) merely disclose the differences between the American and international rules, rather than reconciling the two different standards.The recommendation follows last week’s statement from the Securities and Exchange Commission’s (SEC) that European companies following international accounting standards may be allowed to report those figures without reconciling them to the U.S.

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.

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.
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

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, reported.McDonough's comments came as part of a roundtable discussion held by the Securities and Exchange Commission.

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.

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.

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.


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