Auditing

The 3Cs of Fraudulent Financial Reporting

Faced with changes in business ethics and environments, auditors are being called upon to step up to a new standard of fraud detection. One way to facilitate discussions and communications in this area is to use the 3Cs model.

Report Measures Human Costs of Accounting Scandals

The "No More Enrons" Coalition was formed to push for aggressive implementation of accounting reforms. At a recent press conference, the Coalition presented a report of the human costs of accounting scandals.
Practice

SEC Proposes Disclosures About Ethics and Controls

The U.S. Securities and Exchange Commission unanimously agreed to issue for public comment proposed rules that would implement recent legislative reforms enacted in response to accounting scandals. The proposed rules will require public companies to report on their internal controls, codes of ethics, and the financial expertise of their audit committees.

AICPA Provides Glimpse of Upcoming Fraud Standard

Critics will be harder-pressed to complain about "drive-by" audits after the American Institute of CPAs (AICPA) issues its new fraud standard.
Community News

Judge Hits Andersen With Maximum Sentence

Federal District Judge Melinda Harmon hammered her gavel for Arthur Andersen LLP for the last time yesterday, sentencing the firm to five years' probation and a $500,000 fine as a penalty for obstructing justice in regard to the firm's audit of Enron Corp.

Europe Mulls U.S.-Style Accounting Oversight Board

Negotiations over the possible exclusion of European auditors from certain provisions of the Sarbanes-Oxley Act ended in compromise. European Union (EU) Internal Market Commissioner Frits Bolkestein said Europe might consider forming its own U.S.-style accounting oversight board.The concession was made after U.S.
Community News

BDO Cyprus Settles With SEC

BDO Cyprus, an overseas affiliate of BDO Seidman, has reached a settlement agreement with the Securities and Exchange Commission over the audit of collapsed company ACLN Ltd.

Federal Reserve Governor Calls on Accountants For Help

Speaking to a risk management symposium at Fordham University, Federal Reserve Governor Susan Bies commented on lessons learned from recent accounting scandals. She said confidence can be restored in the capital markets, if companies improve their risk reporting and accountants return to their core values.Ms.

SEC's Pitt Backs Off on Support For Oversight Board Leader

Harvey Pitt, chairman of the Securities and Exchange Commission, has backed off on his support for John H. Biggs, chairman of the teachers' pension fund TIAA-CREF, to chair the new accounting oversight board being created as a result of the Sarbanes-Oxley bill. The New York Times is reporting that Mr. Pitt was pressured by lawmakers and accounting industry lobbyists to back off on his recommendation of Mr. Biggs as the board chairman ("S.E.C. Chief Hedges on Accounting Regulator," October 3).Mr.

Economic Fallout Casts Spotlight on Pension Accounting

Auditors of companies with large defined benefit plans would be wise to pay extra close attention to their clients' pension accounting this year, as investors and analysts cast a wary eye on corporate pension woes. Reasons for concern:Effects on profits. A report issued by Morgan Stanley this summer points out that net pension surpluses among S&P 500 companies were $235 billion in 2000, but tumbled 98% to only $4 billion in 2001.

Making The Audit Process Work For You

By, Leading Edge AllianceJust mentioning the word audit to some business owners is enough to cause them to groan. The good news about audits is that at their core, they are designed to help your business run more efficiently.

Lobbying Blitz Battles Accounting Board Appointments

An intense lobbying blitz is battling for control in the effort to appoint the members of the new accounting oversight board. Faced with a storm of opposition from accounting firms and congressmen, Securities and Exchange Commission (SEC) Chairman Harvey Pitt issued a statement denying a New York Times report that John Biggs has accepted a position as the first chairman of the new Public Company Accounting Oversight Board.

President's Progress Report Omits Audit Lessons Learned

President Bush released a fact sheet showing the government's response to recent accounting scandals. It was part of an on-going effort to restore confidence in the U.S. capital markets and the economy. But this effort left market indexes at four- and six-year lows.
Community News

Peregrine Files For Bankruptcy, Sues Andersen For $1 Billion

Software company Peregrine Systems Inc., the self-described leading global provider of Infrastructure Management software, filed for Chapter 11 bankruptcy projection over the weekend and announced plans to file a lawsuit naming Arthur Andersen LLP, Arthur Andersen Worldwide, Arthur Andersen Germany, and Andersen audit partner Daniel Stulac and possibly others for not detecting the problems that led to the firm's bankruptcy. Peregrine plans to claim in its lawsuit that Andersen was negligent and engaged in fraud in its audit work for the company's 2000, 2001, and 2002 fiscal years.
Community News

Insurance Regulators Sue Andersen in Massachusetts

State insurance regulators in Massachusetts have filed suit against Arthur Andersen LLP in an attempt to recover as much as $90 million. The suit stems from Andersen's 1997 audit of Trust Insurance Company, once the ninth largest auto insurance company in Massachusetts.
Community News

Auditor's E-mail Blunder Raises Internet Policy Issues

A major accounting firm recently got a glimpse into the darker side of the Internet when a young and socially-active auditor in its New York office accidentally sent a very personal e-mail to the wrong recipient. The recipient sent the message to a friend, who sent it to another friend and so on.
Community News

Teamsters Sued For Using Audits by Thomas Havey

The National Labor Relations Board (NLRB) recently joined in filing class-action federal charges against the International Brotherhood of Teamsters. The suit
A&A

FASB to Consider Project on International Convergence

On September 18, 2002, the Financial Accounting Standards Board (FASB) met with the International Accounting Standards Board (IASB). There were reports that the meeting ended in a definite commitment to future action. But the truth seems to be that no decisions were reached, except that FASB will consider a project on international convergence.A tentative approach might be a 3-part project to address differences between U.S.

American Stock Exchange Sets New Reporting Requirements

The American Stock Exchange (Amex) Board of Governors has approved changes in reporting and governance requirements for companies listed on the Exchange.Highlights of the new reporting requirements:Each Amex-listed company must adopt and disclose a code of ethics and compliance program.Each foreign Amex issuer must summarize in its annual proxy statement any material differences between Amex requirements and corporate governance practices followed in its home country.

SEC Charges Former Tyco Officers With Fraud

The U.S. Securities and Exchange Commission (SEC) has filed fraud charges against three former officers of Tyco International. Due to the nature of some of the violations cited, the enforcement action became known as "a looting case." Other charges include financial reporting violations and lying to the company's auditor, PicewaterhouseCoopers.The former officers named in the complaint are the CEO, CFO and general counsel.

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