A Houston investment fund, which started as a promising money-maker for a group of wealthy, well-connected acquaintances, has ended in a Texas district court with accounting firm KPMG on the hot seat.Investors include the Staley family, founders of the Chicago Bears, the man who brought Nintendo to America, the Cullen family and a former Harris County (Texas) District Attorney, who have all made wise investments in the past.

By Peter J. Wallison, resident fellow at the American Enterprise Institute - The Public Company Accounting Oversight Board is a not-for-profit corporation established by the Sarbanes-Oxley Act to regulate the business of auditing public companies. Although industry self-regulatory organizations are not unusual, this one has the extraordinary power to tax all public companies to support its operations. Its freedom from the ordinary mechanisms of accountability for quasi-governmental functions is already having an effect, shown in its rapidly growing budget.

KPMG LLP, the U.S. audit, tax and advisory firm, last week announced revenues of $4.1 billion for its most recent fiscal year ended September 30, 2004, an 8 percent increase over the prior year's revenues of $3.8 billion. KPMG Americas' combined revenues, representing member firms of KPMG International in Latin America, Mexico, the Caribbean, the United States, and Canada, also rose 8 percent for the same period to $4.9 billion."The U.S. firm achieved strong performance in a challenging environment, recording its 10th consecutive year of revenue growth," said Eugene D.

By J. Stephen McNally, CPA - For many companies, the deadline to comply with Sarbanes-Oxley Section 404 is literally weeks away. There is, however, another hurdle on the road to compliance, one often overlooked or consciously not addressed until the final phase of a company's overall Section 404 compliance efforts. This hurdle is the assessment of an entity's company-level controls.

Recent events have made auditors skittish about using their judgment in their work, as they fear challenges by lawyers, the media and regulators, Robert Herz, chairman of the Financial Accounting Standards Board (FASB) said in a statement reported by Financial Times.This reluctance to use judgment is in spite of a Securities and Exchange Commission (SEC) call for a principles-based approach to accounting.

Reznick Group Managing Principal Kenneth E. Baggett announced this week that Friduss, Lukee, Schiff & Co. (FLS) and Reznick Group will merge.

Crain & Company, PLC, a leading local accounting firm, joined Horne LLP, CPAs and Business Advisors, a large Southeast regional accounting firm effective January 1, 2005. The merger follows a management agreement that began in July 2004. As one of the largest accounting firms in the West Tennessee area, Crain & Company, PLC, is increasing its range of services with the merger. Horne has eleven offices throughout the Southeast including offices in Tennessee, Mississippi, Louisiana and Alabama. "Our goal is to increase services for our clients," said Katherine G.

At a time when U.S. firms are more reliant than ever on quality accounting and auditing services, the influential Business Roundtable is supporting liability caps for auditors.The Roundtable is worried that the Big Four accounting firms could soon shrink to three or fewer firms if Congress doesn't act to stem the liabilities the firms face when things go wrong.

A federal magistrate judge in Ohio has concluded that PricewaterhouseCoopers withheld evidence in an accounting fraud trial brought by an audit client.According to The New York Times, United States Magistrate Judge Patricia A. Hemann recommended a default judgment against the accounting firm for failing to turn over evidence sought by Telxon Corporation, which makes bar code readers.