Auditing

Survey Provides Insight Into CFO-Auditor Relationships

"The ultimate responsibility for financial statements may lie with corporate managers, but by any measure, the audit firms have failed miserably in their role as financial watchdogs." This conclusion is based on results of the second in a series of four surveys on corporate financial practices produced by CFO Magazine.The CFO Survey of Auditor-Client Relationships demonstrates that 38% of auditors challenge the accounting practices of their clients, yet 57% of the clients retaliate by either convincing

SEC Sues CEO for Falsifying 80% of Company's Revenues

The U.S. Securities and Exchange Commission filed a complaint against the former president, chairman and CEO of HPL Technologies, charging him with fabricating over 80% of the company's reported revenues for fiscal 2002.According to the complaint, the CEO began his fraud in anticipation of HPL's initial public offering in July 2001.
Community News

Andersen Surrenders Its Licenses to Audit

The day that employees of Andersen never could imagine has arrived. On Saturday August 31, 2002, Andersen LLP, the U.S. firm, surrendered its license to practice in the United States.Read AccountingWEB's two-part report:Good-Bye Andersen: Venerable Giant Will Audit No More: "As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of, its firm permits in all states where it was licensed to practice public accountancy with state regulators," said the former Big Five accounting firm in a statement on Saturday.
Practice Management

Andersen Surrenders Its Licenses - Its Legacy Lives On

Although it will continue in business, Andersen officially surrendered its state licenses on August 31, 2002 as agreed with the Securities and Exchange Commission. Observers are still trying to sort through the factors that led to the demise of the firm's audit practice and helped shape its legacy to the accounting profession. A special four-part series in the Chicago Tribune describes a series of troublesome trends that developed over the past two decades.
Community News

Good-Bye Andersen: Venerable Giant Will Audit No More

"As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of, its firm permits in all states where it was licensed to practice public accountancy with state regulators," said the former Big Five accounting firm in a statement on Saturday.Life as Arthur Andersen accountants knew it began unraveling last January when the firm admitted that members of the firm shredded
Community News

KPMG to be Named in Fraud Action

KPMG-U.S. has been caught in the net of shareholder lawsuits that will relate to accounting work performed for voice recognition software company Lernout & Hauspie. The company's auditor, KPMG-Belgium, will share defendant status with its U.S. counterpart as the shareholder suits alleging fraud go to trial. It is anticipated that shareholders will band together to file a class action lawsuit alleging that KPMG auditors should have been aware of problems with the software company's accounts.U.S. District Court Judge Patti Saris, who ruled that KPMG-U.S.
Community News

Andersen Worldwide Faces $350 Million RICO Action

Troubles continue to plague Arthur Andersen Worldwide, the global umbrella company that oversees worldwide operations of the Andersen firms, including Arthur Andersen LLP, U.S. The global firm settled a lawsuit for $60 million earlier this week relating to its role in the botched Enron audit performed by the U.S. firm. Now the worldwide firm is being sued in the U.S.

E-mails Show How WorldCom Blocked Auditor Communications

A series of WorldCom e-mails released by the House Financial Services Committee confirms that members of WorldCom management were not forthcoming in their discussions with the company's auditors. Some of the e-mails hint at a "cover-up" of the accounting techniques used to improperly manage earnings. One particularly egregious accounting technique involved improper capitalization of $3.8 billion in line costs.

IFAC Commits to Translating Public Sector Accounting Standards With IASB

Furthering its efforts to improve financial reporting by governments worldwide, the International Accounting Standards Board (IASB) and the Public Sector Committee (PSC) of the International Federation of Accountants (IFAC) will work together to translate the accrual basis International Public Sector Accounting Standards (IPSASs) into languages other than English.

Grant Thornton Launches Advisory Services to Audit Committees

Grant Thornton has introduced its Independent Advisory Services to Audit Committees, an expansion of the services it offers to public companies. “The events of the past few months clearly reveal the importance of audit committees' responsibility to protect the interests of investors, employees and customers,” says Mendy Kwestel, Grant Thornton partner.

California Enacts New Laws Affecting Accountants

On August 23, 2002, California Governor Gray Davis signed three bills that affect accountants doing business in the state.

IIA Chairman Cites Four Challenges For Internal Auditors

The Institute of Internal Auditors Chairman LeRoy E. Bookal has outlined the key challenges confronting internal auditors after the recent round of accounting scandals and legislative reforms. The challenges focus on ways to create a working environment conducive to creating opportunities for internal auditors to add value. For maximum value-added, Mr.
Community News

Andersen Loses License to Practice in Texas

On Friday, August 16, the Texas Board of Accountancy revoked Arthur Andersen LLP's license to practice accounting in the state. The Board used the accounting firm's June 15 guilty verdict on federal obstruction of justice charges as the reason for its unanimous decision to issue the revocation.The Texas Board has been conducting an investigation of Andersen since last November after the announcement that Enron's financial statements would be restated.
Community News

Andersen Won't Dissolve When Audit Practice Ends

Although Andersen is scheduled to discontinue its audit practice on August 31, 2002, the firm has said in a legal document filed in Houston that it will not dissolve at that time and it has no plans to dissolve in the future. The firm's statement was made in response to a motion for a temporary restraining order made as part of a class-action suit brought by Enron shareholders.
Practice Management

Insurers Demand Assurance of Accounting Reform

Although they play a less visible role than the Securities and Exchange Commission, insurance companies carry a big stick today when it comes to enforcing accounting reform. Companies that don't measure up to insurance company standards can find their D&O policies canceled or their rates raised.D&O stands for directors and officers liability coverage.
Community News

Accounting Firms Expect Double Digit Hikes in Audit Fees

Accounting firms say audit fees are headed upward due to a wide range of factors. Research by the Wall Street Journal indicates audit fees have increased approximately 5% per year in recent years, but the fee could increase as much as 25% this year at some companies.The reasons cited by accounting firms include the following:Post-Enron cost increases. After the Andersen meltdown, firms say they face higher costs of insurance and recruiting.

AOL's Non-Financial Metrics Add Fuel to Reporting Debate

AOL Time Warner recently announced it is being investigated by the Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). But federal authorities are not likely to examine AOL's subscriber base, a key non-financial metric of critical importance to analysts and investors in gauging future revenues.

Audit Shows DOJ Needs a Lesson in Accountability

Attorney General John Ashcroft's ears must really be ringing now. It was bad enough when the Department of Justice (DOJ), which he heads, was criticized for its handling of the Andersen obstruction-of-justice charges. Those charges cost thousands of innocent workers their jobs. Now, Mr. Ashcroft has received an audit report showing his entire department suffers from "a lack of accountability" for its assets, including laptops and firearms. The report, which was issued by the Inspector General, shows that at least 400 laptop computers are missing, lost or stolen.
Practice Management

20 Ways You Can Detect Fraud

Here is a list of items to help you detect fraud in your company or a client's company. 1. Unusual BehaviorThe perpetrator will often display unusual behavior, that when taken as a whole is a strong indicator of fraud. The fraudster may not ever take a vacation or call in sick in fear of being caught. He or she may not assign out work even when overloaded. Other symptoms may be changes in behavior such as increased drinking, smoking, defensiveness, and unusual irritability and suspiciousness.2.

SEC Blasted For Allowing IBM to Retain PwC as Auditor

Congressman Edward Markey blasted the Securities and Exchange Commission (SEC) for its "dead wrong" decision to allow IBM to keep PricewaterhouseCoopers as its auditor after the company completes its acquisition of PwC's consulting practice. Rep. Markey faulted the decision for being inconsistent with a decision previously made by the SEC that PwC's independence would be impaired if it continued to audit Hewlett-Packard after it was acquired by H-P.

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