Auditing | AccountingWEB



Recent Report Shows Drop in IRS Corporate Audits

Results of a recent examination of government data by Syracuse University's Transactional Records Access Clearinghouse show that the Internal Revenue Service has performed fewer corporate audits in the first six months of fiscal 2004, the Associated Press reported.Despite claims by the IRS that it would ramp up audits in an attempt to crack down on tax cheats, TRAC survey reported Monday that the IRS performed 7,794 corporate audits from October 2003 through March 2004, down 26 percent from the pace in fiscal 2003, the AP reported, adding that hours spent auditing corporate tax returns was

Sarbanes-Oxley Remains a Force to Be Reckoned With in the Boardroom

Two years after the introduction of the Sarbanes-Oxley Act, corporate reform continues to impact corporate directors, according to a recent study by Corporate Board Member magazine and PricewaterhouseCoopers LLP. The third annual "What Directors Think" study measures the opinions of directors and CEOs of the top 2,000 publicly traded companies.

PCAOB Adopts 2005 Budget of $152M, Proposes Subpoena Rule

Approval of 2005 Budget - The Board approved a budget of approximately $152.8 million for calendar year 2005. The budget will allow the Board to continue to fulfill its statutory mandate under the Sarbanes-Oxley Act of 2002 to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports. The budget supports the continuation of an aggressive hiring effort in order to satisfy the PCAOB’s mandates under Title I of the Act.
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KPMG, Auditors Sanctioned by SEC, Agree to $10M Settlement

The Securities and Exchange Commission this week sanctioned KPMG LLP, two former KPMG partners, and a current partner and senior manager for engaging in improper professional conduct as auditors for Gemstar-TV Guide International, Inc. KPMG and the auditors agreed to settle the action without admitting or denying the SEC's findings. As part of the settlement, KPMG was censured and agreed to pay $10 million to harmed Gemstar shareholders. This represents the largest payment ever made by an accounting firm in an SEC action.
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Marriott Says E&Y Disclosed Possible Independence Problems

Marriott International Inc. has revealed that Ernst & Young informed the company about nonaudit work it performed for hotel employees in China that could raise independence issues.

SEC: Time May Run Out on Internal Controls Compliance

The Securities and Exchange Commission last week warned that there will not be 100 percent compliance with the new internal controls requirements, with many firms possibly failing to comply, Dow Jones Newswires reported.Public companies are required by the Sarbanes-Oxley Act of 2002 to assure investors that internal controls are adequate.
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Canadian Regulator Recommends Audit Procedure Changes for Big Four

The Big Four accounting firms have been given six months to address deficiencies in their Canadian auditing procedures, with emphasis placed on more timely assessments of auditors, stricter requirements on documentation and more monitoring of audit quality control, CBC Business News reported.The deadline and recommended changes follow inspections of Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers, CBC Business News reported. Further inspections will be done early in 2005 to ensure the changes are being made.
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Former Grant Thornton Auditors to Stand Trial in Parmalet Scandal

As a turnaround expert tries to relaunch a smaller, streamlined Parmalet Finanziaria SpA in Italy, two former Grant Thornton auditors were ordered to stand trial for false accounting and market rigging in relation to the dairy giant's collapse last year, the Associated Press reported.As part of a closed-door, fast-track legal proceeding, Maurizio Bianchi and Lorenzo Penca, who worked at Grant Thornton's former Italian office, were ordered by Judge Cesare Tacconi to stand trial. The two were arrested Dec.

Fighting Fraud Calls for Assertive Auditors, Whistleblowers

Auditors already know that they must be on the lookout for fraud, but they may be uncomfortable playing the bad guy with high-powered corporate clients.Clients should understand up front that accounting and auditing firms are not only risking their reputation, but also their survival if they don't make finding fraud the central goal of their auditing services.Michael P.

Fannie Mae Agrees to Demands of Regulator

Fannie Mae, the nation's largest mortgage buyer, has signed an agreement with its regulator to fix accounting problems, raise billions of dollars in capital, and scrutinize management policies and internal controls, the Washington Post reported.The agreement came Monday, on the heels of a highly critical report by the Office of Federal Housing Enterprise Oversight (OFHEO), which outlined steps to repair widespread accounting irregularities that allowed the company to manipulate numbers to make earnings look less volatile from quarter to
Community News

Companies Deciding Big Four Seal of Approval Not Worth the Cost

With audit fees skyrocketing and a highly complex portion of Sarbanes-Oxley coming due for implementation, many companies are leaving Big Four accounting firms for smaller audit shops where they can get more attention at less cost, USA Today reported.
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SEC's Chief Accountant Objects to KPMG's Recent Statement to Clients

KPMG LLP has removed a contested statement that appeared in a summary of findings from the firm's first-ever inspection by the Public Company Accounting Oversight Board (PCAOB).
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SEC Warns Big Four Against Dropping Small Clients

The Securities and Exchange Commission is worried that the Big Four accounting firms are using the Sarbanes-Oxley Act as a handy excuse to drop smaller, less profitable audit clients.The firms, however, say they simply do not have the staffing they need to help big companies meet the new internal control requirements of the law while serving the same number of smaller businesses, Bloomberg reported.Ernst & Young CEO James Turley, for example, has testified before Congress that Sarbanes-Oxley has drained resources across the profession.

PCAOB Adopts Amendments to Interim Auditing Standards

The Public Company Accounting Oversight Board (PCAOB) this week adopted amendments to its interim standards that conform the text of the interim standards to the requirements of PCAOB Auditing Standard No.

GAO: Consolidated Financial Statements Need Improvements

Why the Government Accountability Office (GAO) Conducted the StudyFor the past 7 years, since the first audit of the consolidated financial statements of the U.S. government (CFS), certain material weaknesses in internal control and financial reporting have resulted in conditions that have prevented GAO from expressing an opinion on the CFS. Specifically, GAO has reported that the federal government did not have adequate systems, controls, and procedures to properly prepare the CFS.

PCAOB Announces Advisory Group Meeting to Discuss Future Standards

The Public Company Accounting Oversight Board announced last week that it has scheduled a Standing Advisory Group meeting for September 8 and 9 to review existing auditing standards and to discuss potential future standards. The group will meet on Wednesday, September 8, from 1:30 to 5:30 p.m. and on Thursday, September 9, from 8:30 a.m. to 3:30 p.m. The two-day meeting will be held in the Marriott at Metro Center’s ballroom located at 775 12th Street, NW, Washington, DC.

PCAOB Auditing Standard No. 3 Approved by SEC

The Public Company Accounting Oversight Board (PCAOB) announced that its Auditing Standard No. 3, Audit Documentation, has been approved by the U.S. Securities and Exchange Commission. PCAOB Auditing Standard No. 3 establishes general requirements for documentation an auditor should prepare and retain in connection with engagements conducted pursuant to the standards of the PCAOB. The standard, which supersedes SAS No.
Community News

Brown Smith Wallace Opens Chicago Office

In response to Sarbanes-Oxley and increased attention from the National Association of Insurance Commissioners (NAIC), Brown Smith Wallace of St. Louis, an accounting and consulting firm, is expanding into the Chicago market. “The Chicago team, which will be located 200 South Wacker Drive, will serve the firms’ insurance and reinsurance clients in the upper Midwest,” says Brown Smith Wallace Managing Member Jeffrey Smith, CPA.
Community News

Parmalat Seeks $10 Billion from Ex-Auditors

Failed dairy giant Parmalat continued efforts to save itself Wednesday by filing suit against its former auditors for more than $10 billion.According to the Wall Street Journal, bankruptcy administrator Enrico Bondi is working to recover sizable damages for creditors, swap creditors' debt for equity and create a “pared-down, cleaned-up, newly listed Parmalat.”Wednesday's suit was filed against Deloitte & Touche Tohmatsu International and Grant Thornton International in Circuit Court of Cook County, Ill.
Community News

Auditor Turnover: SEC Seeks 'The Rest of the Story'

With the big increase in the number of breakups between corporations and their auditors, the Securities and Exchange Commission is looking for the reasons why.By the end of last month, more than 900 businesses said goodbye to their auditors - about the same number as in all 12 months of the previous year.


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