Auditing

Community News

Companies Pushing For Lower Audit Fees for 2005

U.S. public companies are looking for a price break from their auditors this year.The internal control requirements of the Sarbanes-Oxley Act forced many companies to spend more than twice what they budgeted last year, so they're looking to pay far less this year, according to a study given to Reuters by CFO Executive Board, a division of Washington research group Corporate Executive Board Co.Section 404 of SOX requires that the companies' external auditors produce details of their internal controls and how those controls will combat fraud by next month.
Community News

U.S. Public Companies Changing Audit Firms at Record Pace

The Sarbanes-Oxley Act of 2002 did not require public companies to regularly change audit firms, but it seems many of them are doing so anyway.The Wall Street Journal reported on a study released Wednesday by proxy-advisory firm Glass Lewis & Co. that showed more than 1,600 public companies left their audit firm last year, which represents a 78 percent increase over 2003.Over the two-year period, 2,514 companies switched audit firms, which is nearly a quarter of all U.S.
Community News

Ernst & Young Sued For Its Computer Associates Audit

Dallas investor Sam Wyly has filed a lawsuit against Ernst & Young LLP, claiming that the firm's audit influenced him to sell his software company in exchange for stock in Computer Associates International Inc.Ernst & Young was the auditor for both companies when Sterling Software Inc., which Wyly headed, was sold to Computer Associates for $4 billion in March 2000, the Wall Street Journal reported.
Tax

AICPA to Comment on PCAOB Proposal on Auditor Independence, Tax Services

The AICPA’s reaction was generally favorable to the rule proposed by the Public Company Accounting Oversight Board concerning tax services that can be offered to public company audit clients, but the Institute will submit a comment letter. Four circumstances are identified in the proposal that would be considered as impairing an auditor’s independence.
Community News

'America Counts on CPAs' — New Tagline for the Profession

The AICPA has officially rolled out the new approved tagline that accompanies the CPA logo: "America Counts on CPAs." This tagline will be used exclusively with the CPA logo, making "Never Underestimate the Value" obsolete. Members should note that there will be a transition phase during which existing inventory (i.e., AICPA stationery, brochures, etc.) that includes the old tagline will be used for cost efficiency purposes.
Community News

The Evolution of Accounting – Part 1

By Charles F. Benton, CPA, CEOStephen Hawking, when asked how he could still work with complex mathematical equations while confined to his immobile body, responded that numbers were nothing more than a way to portray reality. Since he no longer had the ability to physically work with numbers and equations, he must rely on his ability to mentally work with them—in other words, to think in reality.We accountants use numbers to portray the reality of an entity in financial terms. The portrayal to some is not understandable.
Community News

Internal Control Compliance Cost Could Top $35 Billion

The high-tech trade group AeA has made several recommendations concerning internal controls requirements, with the group projecting compliance will cost companies $35 billion this year, Dow Jones Newswires reported.The $35 billion pricetag is signifcantly higher than expected, with the Securities and Exchange Commission anticipating in 2003 that costs would average around $1.24 billion per year, with higher costs in initial years.The SEC has already acted to suspend compliance for small- and medium-sized companies because of the higher costs."Smaller companies neither require, nor can
Community News

Bally Fires Two Execs, Will Restate Financial Results

Bally Total Fitness has blamed its former top two executives for making multiple accounting errors in recognizing revenue, which will result in a restatement of its financial results from 2000 through the first quarter of last year.The Chicago Tribune reported that the fitness-center operator concluded a five-month internal investigation and issued a statement Tuesday that pointed to former Chief Executive Officer Lee Hillman and former Chief Financial Officer John Dwyer for fostering “a culture of aggressive accounting.” Two mid-level executives were also fired.The review determined
Community News

Grant Thornton Posts 31% Rise in 2004 Revenues

Grant Thornton LLP, the U.S. member firm of Grant Thornton International, this week reported that revenues climbed 31% in the calendar year ending Dec.
Tax

Back-to-Basics Approach Works in Michigan CPA Firm

Maddox Ungar PLLC, a small suburban Detroit CPA firm, is at the forefront of a new trend: providing accounting services to its clients.
Community News

PwC Takes Responsibility for Auditor Independence Violations

PricewaterhouseCoopers is publicly stating that it violated certain auditor independence rules. The announcement comes on the tails of the issuance of quarterly reports by multi-billion dollar engineering firm Parker Hannifin Corp. The report issued by Parker Hannifin last week disclosed irregularities in cash-handling services performed by a PwC affiliate in China.The next day, PwC spokesman David Nestor announced that the issue had come to light in an internal review at the Big Four firm, and that a number of other clients besides Parker Hannifin are affected.
Tax

HealthSouth's Former President Indicted, Faces Financial Ruin, Jail Time

The former president and chief operating officer of HealthSouth Corp., James P. Bennett, was indicted on Thursday for his alleged part in a $2.7 billion accounting fraud that occurred from 1996 to 2002. HealthSouth was the country's largest operator of rehabilitation hospitals.Prosecutors have accused Mr.
Tax

WorldCom Settlement Rejected, Case Headed for Trial

In a surprise decision, U.S. District Judge Denise Cote of the Southern District of New York ruled on Wednesday that a provision in the settlement agreement in the class-action case against WorldCom was illegal.
Community News

404 Institute Webcast to Feature Moody's Perspective on Corporate Governance

The 404 Institute's February 2 Webcast -- "Analyzing Corporate Governance from a Creditor's Perspective" -- will focus on the rating agency's perspective on corporate governance.Featuring Kenneth Bertsch, senior vice president of corporate governance for Moody's Investors Service, the Webcast will address an array of key questions. They include: How do creditors view corporate governance? Are qualitative factors more or less important than quantitative factors? What issues are at the heart of corporate governance concerns?Mr.
Community News

Ben Neuhausen Named to AICPA’s Accounting Standards Executive Committee

The American Institute of Certified Public Accountants has named Ben Neuhausen of BDO Seidman, LLP, as Chairman-elect of its Accounting Standards Executive Committee (AcSEC). He succeeds Mark Bielstein of KPMG LLP, effective with the conclusion of the next AcSEC meeting.As a member of AcSEC, Neuhausen chaired the AICPA Task Force on Real Estate Time-Share Transactions. He also has served as a member of FASB’s Interpretation 46 Resource Group and its Liabilities and Equities Resource Group.
Tax

Failed Venture Prompts Wealthy Investors to Sue KPMG

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.
Community News

Former E&Y Audit Partner Jailed for SOX Violations

Back in October of 2004, Thomas Trauger pled guilty to falsifying records in a federal investigation in violation of the Sarbanes-Oxley Act. He admitted as part of this plea that he knowingly altered, destroyed and falsified records with the intent to impede and obstruct an investigation by the Securities and Exchange Commission (SEC). This is one of the first cases of document destruction brought under the recently enacted Sarbanes-Oxley Act. U.S. Attorney Kevin V.

Rein in the Public Company Accounting Oversight Board: Guest Article

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.

PCAOB Standards, Related Rules Reference Guide Offered by AICPA

The PCAOB Professional Standards and Related Rules (including SEC-Approved Releases and PCAOB Staff Q&A Guidance) has been developed by the AICPA to supply auditors with a workable, current, and comprehensive source of PCAOB standards for their engagements. This compilation delivers – Professional standards and staff guidance – including standards on auditing, attest, quality control, ethics, and independence. PCAOB Auditing Standard Nos. 1, 2, and 3, and all of the conforming amendments related to PCAOB Auditing Standard No.
A&A

KPMG LLP Reports Revenues of $4.1 Billion

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.

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