Auditing

A&A

Small Accounting Firms Shop for 'Safe' Companies

Smaller accounting firms are scrutinizing potential clients like never before.Accounting firms of all sizes and their clients are approaching each other far differently than they did in the pre-Enron business environment. Firms are looking for “safer” companies, and higher-risk companies are searching long and hard to find the right firms, the American City Business Journal Wire Service reported."The client-acceptance standards clearly have been raised, certainly by Grant Thornton, and, I believe, by all the firms," said Richard D.

SEC Announces Members of Advisory Committee on Small Public Cos

Securities and Exchange Commission (SEC) Chairman William H. Donaldson this week announced the appointment of 19 additional members of the SEC Advisory Committee on Smaller Public Companies. The additional appointments bring the total number of members of the advisory committee to 21. Chairman Donaldson previously had announced the appointment of Herbert S. Wander, a prominent Chicago securities lawyer, and James C. Thyen, President and CEO of Kimball International, Inc., as Co-Chairs of the advisory committee.

Delphi Accounting Errors Lead to CFO's Departure

The U.S. auto industry, previously untouched by scandals that have rocked other sectors, was brought into the fray on Friday when Delphi Corp., the nation's largest auto-parts company, disclosed accounting errors that led to the resignation of its chief financial officer.The Detroit Free Press reported that an investigation showed accounting errors have occurred in every year since Delphi spun off from General Motors Corp. in 1999.
Community News

New York Accounting Firms Strengthen Presence

In a strategic move to expand its foreign client base, increase its international profile and provide clients with access to legal and accounting firms around the globe, Prager and Fenton LLP, an 11-partner New York City CPA firm, has joined MSI Legal & Accounting Network Worldwide (MSI). The firm will represent the clients of member firms in 95 countries when accounting and tax services are needed in the New York City territory.

SEC Approves PCAOB's $137 Million 2005 Budget

The Public Company Accounting Oversight Board's (PCAOB) 2005 budget grew from $103 million in 2004 to $137 million when the Securities and Exchange Commission unanimously approved the budget Thursday.The PCAOB, created by the 2002 Sarbanes-Oxley Act to police and discipline public company accountants, is a private, nonprofit agency that relies mostly on public company fees for support.

SEC Grants One-Year Extension for SOX Compliance

The Commission has further extended the compliance dates for non-accelerated filers and foreign private issuers regarding amendments to its rules under the Securities Exchange Act of 1934 that were adopted on June 5, 2003, pursuant to Section 404 of the Sarbanes-Oxley Act. The amendments require a company to include in its annual reports a report by management on the company's internal control over financial reporting and an accompanying auditor's report. The Commission extended the original Section 404 compliance dates for all issuers in February 2004 (see Release No. 33-8392).

International Board Created to Set Auditing Standards

A group of international regulators is seeking to restore investor confidence by forming the Public Interest Oversight Board to set auditing standards, the New York Times reported.The new body was established by the International Organization of Securities Commissions, the Basel Committee of Banking Supervisors, the International Association of Insurance Supervisors, the World Bank and the Financial Stability Forum.

AICPA Seeks Comments on Proposed Practice Aid for Mortgage Bankers

The American Institute of Certified Public Accountants (AICPA) has issued a proposed practice aid for entities engaged in mortgage banking activities and is seeking comments on the draft document. The practice aid is entitled Derivative Loan Commitments Task Force Illustrative Disclosures on Derivative Loan Commitments and is intended to be used by both U.S. Securities and Exchange Commission (SEC) registrants and non-registrants. The practice aid includes examples of illustrative disclosures for each of the requirements cited in SEC Staff Accounting Bulletin (SAB) No.
Tax

Enron Trial Set to Begin in January 2006

Claiming they need more time to prepare, defense attorneys have convinced a federal judge to postpone the start of the main Enron trial until January 2006. The case against Enron founder Kenneth Lay, former CEO Jeffrey Skilling and chief accounting officer Richard Causey is now scheduled to begin on Jan. 17, 2006 with Judge Sim Lake presiding. The three defendants had sought a Dec.
Community News

PCAOB Announces Leaders of Chicago, Denver Offices

The Chicago office is led by Deputy Director of Inspections, Greg Wilson. Mr. Wilson retired in December 2003 as an audit partner from Ernst & Young. He began his auditing career in 1969, specializing in the audits of publicly held retail, consumer and industrial products clients. He also served in various management and administrative positions including Director of the Chicago office audit practice and Regional Director of Human Resources. Mr. Wilson, a CPA, graduated from the University of Illinois with a Bachelor of Science degree in Accountancy.
Community News

Gershon, Pierce, Lissak & Co. Merges with WithumSmith+Brown

The Morristown-based certified public accounting firm of Gershon, Pierce, Lissak & Company, P.C. (GPL) recently merged with the regional firm of WithumSmith+Brown (WS+B), Certified Public Accountants and Consultants. Joining WS+B as shareholders and principals are Barry W. Pierce, CPA; Marietta Bennett, CPA; Robert J. Crigler, CPA; John J. Krystofik, CPA; Timothy A. Brezinsky, CPA; Donald Scheier, EA, and Gary Kollet, CPA, along with 26 staff members.

More Accounting Questions Dog Fannie Mae

Fannie Mae's federal regulator has raised new concerns about the mortgage giant's accounting practices and internal controls.Fannie Mae announced Wednesday that its regulator, the Office of Federal Housing Enterprise Oversight, is raising questions about how it classifies and transfers securities, the Washington Post reported.These concerns are in addition to the accounting problems revealed last year that have already resulted in a $9 billion restatement of earnings and the resignation of two top executives.Specifically, OFHEO is questioning whether Fannie Mae has classified some of
Tax

Andersen Appeal to go Before Justices in April

According to The Houston Chronicle, the United States Supreme Court announced this week it will hear arguments April 27 on whether to overturn the conviction of the Arthur Andersen accounting firm for obstruction of justice in the shredding of Enron documents. The focus of the appeal will be on how the law was presented to the jury. A decision could come as early as June.Last month the Supreme Court agreed to hear the appeal of the company's June 2002 obstruction of justice conviction.
Community News

Nonprofit that Collapsed Amid Scandal Sues Accounting Firm

A San Francisco nonprofit that went out of business after failing to account for $19 million in donations is suing its auditor.The suit, filed by PipeVine's court-appointed receiver, seeks unspecified damages as a "result of the acts, omissions and breach of duty by defendant Grant Thornton,” according to the San Francisco Business Times.
Tax

Settlement Offer Extended for Executive Stock Option Tax Scheme

The Internal Revenue Service announced a settlement initiative for executives and companies that participated in an abusive tax avoidance transaction involving the transfer of stock options or restricted stock to family controlled entities.Under this scheme, executives, often facilitated by their corporate employers, transferred stock options to family controlled partnerships and other related entities typically created for the sole purpose of receiving the options and avoiding taxes on compensation income normally taxed to the executive.

SEC Sets Date for Internal Controls Roundtable

On Feb. 7, 2005, the Commission announced that it would host a roundtable discussion and would solicit written feedback regarding the experiences of registrants, accounting firms and others in implementing the new internal control requirements under Section 404 of the Sarbanes-Oxley Act of 2002. See Press Release 2005-13. Today the Commission announced that the roundtable will be held on Wednesday, April 13, 2005, in the William O.
Community News

Judge Rules E&Y Papers Should Remain Private in Bankruptcy Case

Documents related to Ernst & Young LLP's audit of now-defunct Metropolitan Mortgage & Securities will remain private, a bankruptcy judge in Washington state has ruled.U.S.
Community News

GAO Report: Effective Internal Control is Key to Improving Accountability

Internal control is at the heart of accountability for our nation’s resources and how effectively government uses them.
Tax

Audit: IRS Acted Properly In Probing Nonprofits

The Internal Revenue Service did nothing improper in investigating inappropriate political activity by certain charity groups, although timing the probes so close to the presidential election looked suspicious, a new report says.An external audit randomly selected 40 of the churches, civic groups or charities that were investigated and found that their activities could be characterized as favoring Republicans in 18 cases, Democrats in 12 cases and the Green Party in one case, the Associated Press reported.
Practice

Most Companies Get an 'F' in Fraud Prevention

Enron had a code of conduct. Enron had a hotline. And in the end, Enron had fraud. Today, companies operate with a false sense of security because they either don't have a fraud prevention program or the program they have is a legal, yet ineffective "fig leaf." "One key to fraud prevention is to create an atmosphere where employees feel confident in reporting wrongdoing without being victimized, even if executives appear to be involved," explains Toby Bishop, president & CEO of the Association of Certified Fraud Examiners (ACFE), the largest anti-fraud association in the world.

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