Auditing

A&A

FEI Outlines Top Financial Reporting Challenges for 2005

Financial Executives International has identified the top 10 financial reporting challenges for 2005. These challenges will impact the way companies manage their businesses, report their financial results, and compensate their employees. The challenges include:Stock option expensing. The Financial Accounting Standards Board (FASB) has mandated that all stock compensation be expensed beginning June 30, 2005 for most public companies. Smaller public companies and private firms have until the first annual reporting period after Dec.
Community News

E&Y to Pay $125M to Settle Claims Over Failed Illinois Bank

Ernst & Young LLP will pay $125 million to settle claims stemming from its involvement in the failure of an Illinois savings bank, according to a consent order with the Office of Thrift Supervision.
Community News

Top Trends in Banking, Securities and Asset Management for 2005

Deloitte & Touche's annual Global Financial Services Industry Outlooks examine the trends that industry executives, investors and consumers can anticipate in 2005. Based on the firm's in-depth experience in the financial services industry, it expects these trends to include: Banking: Getting Closer to the Retail CustomerIn order to benefit from the retail market's growth opportunities and stable revenue streams, banks will need to learn from leading retailers how to use their branches to build relationships with customers and differentiate their brands.
Tax

Rothstein Kass Divests Investment Fund Business

Rothstein Kass, an international accounting and consulting firm with a specialization in the financial services industry and specifically alternative investments, announced today that it will divest its interests in RK Consulting, the Firm's investment fund administration affiliate. RK Consulting will be acquired by The BISYS Group, Inc. (NYSE: BSG), a leading provider of outsourcing solutions for the financial sector. The transaction, which is subject to usual and customary closing conditions, is expected to be completed in the next several weeks.
Community News

Fannie Mae's Audit Under Scrutiny; Board Considers Shake-up

Fannie Mae, which faces a possible $9 billion restatement, is also looking at yet another investigation and the possibility of a management shake-up at the top.The Wall Street Journal reported that Fannie Mae's board of directors met most of Sunday to discuss whether changing top executives would give the mortgage finance giant a “fresh start” with regulators.The company did not issue a statement about the meeting and a company spokesman declined comment, the newspaper reported.Fannie Mae is already being investigated by the Justice Department and the Securities and Exchange Commi
Tax

SEC’s Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area. The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.
A&A

FASB: Companies Must Expense Options

The Financial Accounting Standards Board (FASB) on Thursday, published FASB Statement No. 123 (revised 2004), Share-Based Payment. Statement 123(R) will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued.
Tax

Board Proposes Rules Concerning Independence, Tax Services, and Contingent Fees

The Public Company Accounting Oversight Board voted unanimously at its open meeting to propose for public comment certain ethics and independence rules concerning independence, tax services, and contingent fees.The Board’s proposed rules fall into three areas. First, the proposed rules would identify three circumstances in which the provision of tax services impairs an auditor's independence: Proposed Rule 3521 would treat registered public accounting firms as not independent of their audit clients if they enter into contingent fee arrangements with those clients.
A&A

SEC May Reject PCAOB's Budget

The Securities and Exchange Commission may not approve the budget of the accounting oversight board, which offers an average salary of $203,000 a year.The Public Company Accounting Oversight Board (PCAOB), which has requested $153 million, offers salary increases of 30 percent a year, according to a report by Bloomberg, which cited people familiar with the matter.The PCAOB, formed in 2002 in the aftermath of massive corporate scandals and bankruptcies, is funded by publicly traded companies.

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Before Sarbanes-Oxley, the law stated that investors who were made aware of fraudulent activities had to file lawsuits against the misbehaving companies within one year of discovering the fraud and within three years of the actual fraudulent activity.
Community News

Big Four Accounting Firms Steering Clear of Risky Business

Statistics from research firm Audit Analytics indicate that the Big Four firms are dropping clients at record rates, and the trend is increasing. Since the auditing nightmares at Enron were exposed three years ago, audit firm resignations among the Big Four have increased from 18% of all departures from auditing assignments in 2001 to 34% in 2004. Just in the first three quarters of this year, the Big Four firms have resigned from a total of 157 U.S.
Community News

Accounting Firm Trades In SEC Practice for Governance Practice

Many accounting firms expanded into providing corporate governance services in the wake of the Sarbanes-Oxley Act of 2002, but very few have also divested themselves of their own public company clients.
Community News

AICPA Launches Site for Auditors; Promotes Audit Quality

The American Institute of Certified Public Accountants (AICPA) this week unveiled an enhanced Web site for its members who audit or are interested in auditing public companies.
Community News

American Express Ends 30-Year Relationship with E&Y, Hires PwC

American Express has announced it will end its 30-year relationship with its independent auditor Ernst & Young LLP next year, the Wall Street Journal reported.
Community News

Business Venture with Ernst Leads to TIAA-CREF Resignations

Two TIAA-CREF trustees have resigned because they violated auditor independence rules by forming a business venture with the pension fund's auditor, Ernst & Young. According to the Wall Street Journal, which cited people familiar with the matter, the trustees - Stephen A. Ross and William H. Waltrip - owned a company that entered into an agreement with Ernst & Young in August 2003.Ernst & Young paid the company, Compensation Valuation Inc., $1.33 million to help businesses figure out the value of stock options, the Journal reported.
Community News

California City in Distress, Files Suit Against Auditor

Wracked with debt and forced to sell off property to pay its employees, California's King City has filed suit against its former auditor, Moss, Levy & Hartzheim of Santa Maria, the Monterey Herald reported.

Judge Upholds Sarbanes-Oxley In Scrushy Fraud Case

Arguments that the Sarbanes-Oxley corporate reform law is unconstitutionally vague did not convince a federal judge, who has rejected Richard Scrushy's claims in his HealthSouth fraud case.Attorneys for Scrushy, HealthSouth's former chief executive, said the law should not be part of the indictment accusing him of fraud, the Associated Press reported. U.S. District Judge Karon O.

SEC Grants Extension On Internal Controls Reporting

The U.S. Securities and Exchange Commission on Tuesday issued an exemptive order to grant certain accelerated filers up to an additional 45-days to include in their annual reports management’s report on internal control over financial reporting and the related auditor’s report on management’s assessment of internal control over financial reporting. Both internal control reports are required under Commission rules implementing Section 404 of the Sarbanes-Oxley Act of 2002.
Community News

Few Audit Committees Are Implementing Key Practices, According to Report

As audit committees struggle implementing the requirements of Sarbanes-Oxley, fewer than one-third implement a majority of practices that lead to higher ratings of the financial audit process, according to the J.D. Power and Associates 2004 Audit Committee Best Practices Report(SM) released this week. The report is a comprehensive, independent study of audit performance in the wake of the Sarbanes-Oxley Act of 2002, which established new compliance and procedural requirements for corporate financial accountability of public companies.

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