Auditing

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.
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.

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.
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.
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.

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.
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.
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.
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
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.
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.
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.
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.
Community News

Bankrupt Airline Sues Ernst & Young for Accounting Fraud

Ernst & Young defrauded creditors of bankrupt airline Tower Air by helping the airline inflate profits and understate losses, a lawsuit claims.The creditors, who are seeking more than $380 million in damages, allege that the auditors hid the airline's debts and improper business practices, formed a too-close relationship with the CEO and destroyed evidence in the case, the Baltimore Business Journal reported.The creditors include Fleet Business Credit, General Electric, the Port Authority of New York and New Jersey, and Annapolis-based aviation firm ARINC.
Tax

Auditors Show IRS Workers Too Willing to Cooperate

Fake computer technicians who asked Internal Revenue Service employees to provide login and password information were able to persuade 35 workers to cooperate, according to a new government report.Treasury Department inspectors, posing as staffers from the information technology help desk, called 100 IRS employees and managers and said they were trying to fix a network problem, the Associated Press reported. They asked the employees for their login name and to temporarily change their password to one they provided.
Tax

SEC Charges Former Qwest CEO and Eight Others with Massive Fraud

The Securities and Exchange Commission this week charged Joseph P. Nacchio, former co-chairman and chief executive officer of Qwest Communications International Inc., and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws.

CalPERS to Adopt PCAOB Audit Independence Proposal

The CalPERS Board adopted a three-pronged plan to advocate majority vote election procedures for corporate directors. Currently, a plurality vote system is used in most corporate elections, in which directors can be elected by the vote of a single share unless they are opposed by a dissident candidate. "Majority vote will give shareowners the power to hold directors accountable for their actions and their performance, and elect the best person for the job," said Rob Feckner, CalPERS Board President.
Tax

Settling WorldCom Lawsuit Will Cost J.P. Morgan $2 Billion

J.P. Morgan Chase will pay $2 billion to settle a class-action investor lawsuit that alleges the bank failed to investigate WorldCom's financial health when it sold bonds just before the company imploded amid scandal.J.P. Morgan Chase is the last of 14 bond underwriters to settle the case, led by New York Comptroller Alan Hevesi, who oversees the New York State Common Retirement Fund.

High Compliance Costs Outweigh Benefits Say Investors

Most investors applaud recently instituted reforms intended to prevent corporate abuse, however they express deep reservations about the costs to implement them, according to a poll of institutional investors conducted in February by Broadgate Consultants LLC.In addition, with bonuses soaring for CEOs at the nation's top corporations, investors also believe that transparency surrounding executive compensation is not sufficient and should be improved.An overwhelming majority (83%) of the 105 institutional analysts and portfolio managers from across the U.S.
Tax

Ebbers Found Guilty in Massive WorldCom Fraud Case

In a closing chapter in what has become the nation's largest accounting fraud, former WorldCom chief executive Bernard Ebbers was found guilty today on all counts, the Wall Street Journal reported.The verdicts were a major victory for Justice Department prosecutors who spent nearly three years investigating the $11 billion fraud that pushed the company into bankruptcy and decimated a stock that was once worth $100 billion. The company, now known as MCI, emerged from bankruptcy in 2004 and is courting acquisition offers from Verizon Communications Inc.

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