Auditing

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.

AICPA Describes Transition to New Regulatory Framework

The American Institute of CPAs (AICPA) has e-mailed an alert to its members, advising them of its plans for transitioning to the new regulatory framework established by the Sarbanes-Oxley Act of 2002. As part of its transition plan, AICPA will:Work with the Securities and Exchange Commission (SEC) to establish an orderly transition of the activities of AICPA's SEC practice section.
Community News

DOJ Files Request to Block Andersen's Retrial

The Department of Justice (DOJ) responded yesterday to an appeal filed by Andersen's attorneys on June 25, 2002. The DOJ's response was to file a request that U.S.

President Bush Signs Bill Establishing New Rules For The Accounting Profession

President Bush has signed into law the Sarbanes-Oxley Act of 2002, one of the most far-reaching bills ever to address corporate fraud and public accounting.Support for the Bill, which many thought was too aggressive just a few weeks ago, was fueled by multiple reports in July of corporate accounting scandals, defrauding investors, and a plummeting stock market.The Bill establishes a number of provisions, including the following which directly affect the accounting profession:The establishment of an independent not-for-profit Public Company Accounting Oversight Board, su

AICPA Proposes Audit Standard for Interim Financial Info

The Auditing Standards Board (ASB) of the American Institute of CPAs (AICPA) has issued a proposed Statement on Auditing Standards (SAS) entitled "Interim Financial Information." The document defines interim financial information as financial information or statements covering a period of less than a full year or for a 12-month period ending on a date other than the entity's fiscal year.The main reasons for the update, which would replace the standard previously issued on the subj

Lawmakers Agree on Accounting Reform Legislation

U.S. lawmakers reached agreement on accounting reform legislation and sent the bill to President Bush for his signature.
Practice Management

Software Startup Says Growth Was Fictitious, Blames CEO

Silicon Valley companies had been mercifully spared the bad publicity of accounting scandals -- until HPL Technologies announced at a press conference earlier this week that much of its growth was based on fictitious transactions.The San Jose-based software company said it had uncovered massive accounting fraud that was apparently orchestrated by the company's founder and chief executive officer (CEO) who took the company public a year ago.HPL's audit committee chairman estimates that at leas
Community News

Deloitte to Create Model For Investigating Business Failures

James E. Copeland, chief executive officer of Deloitte & Touche, has announced his firm is assembling a team to develop a model for a new approach to restoring investor confidence. The new approach involves creation of a national board to investigate business failures and recommend steps to prevent similar failures in the future. The concept is reminiscent of a similar initiative for audit failures introduced by the Public Oversight Board in the mid-1990s.

House Rushes Penalties, Mulls Delay in Accounting Reforms

In an election-year political scramble, the House of Representatives rushed through H.R.5118, a tough reform bill containing criminal penalties for corporate fraud that are even harsher than the ones passed unanimously by the Senate a day before. The man behind the rush, the bill's sponsor, Rep.

Senate Unanimously Passes Accounting Reform Bill

By a vote of 97 to 0, the Senate approved an amended version of S.2673, the accounting reform bill authored by Senate Banking Committee Chairman Paul Sarbanes.This bill will create an oversight board that is empowered to set accounting and auditing standards and fine or ban any individual or firm that violates them.
Community News

Connecticut Closer to Pulling Andersen's License to Practice

Earlier this year it was reported that the Connecticut Board of Accountancy was considering an action to revoke Arthur Andersen LLP's license to practice in the state.
Community News

Rating Agency Initiates Report Cards on Auditors

Weiss Ratings, a rating agency whose revenues come from consumers rather than the companies it rates, prepared a report on the role of auditors in the worsening crisis of confidence on Wall Street and sent it to the Senate. The paper contains report cards on major audit firms, and it suggests that similar reports be prepared and disclosed to the public in the future.

President Bush Plans to Move Accounting Out of The Shadows

Speaking to business leaders on Wall Street on July 9, 2002, President George Bush called for a new ethic of responsibility in Corporate America, consisting of truthful books, honest people and well-enforced laws against fraud and corruption.

GAO Announces New Compliance Date For Independence Rules

Accountants subject to the new auditor independence rules issued by the General Accounting Office (GAO) earlier this year have been given a small reprieve.

Senate Debate Puts Audit Standards on Center Stage

The Senate is scheduled to resume discussion of the Sarbanes accounting reform bill on July 9, 2002, putting audit standards on center stage. A key issue is the extent to which audits can or should uncover major frauds. Under current and proposed audit standards issued by the American Institute of CPAs (AICPA), auditors are not required to detect major types of frauds. But lawmakers are keenly aware that recent audits have disappointed investors by failing to detect alleged frauds.

IRS Issues New Life-Expectancy Tables

The Internal Revenue Service has released new life expectancy tables for taxpayers who calculate required withdrawals from Individual Retirement Arrangements (IRAs).The new tables appear in Publication 590SUPP, "Supplement to Publication 590, Individual Retirement Arrangements (IRAs)." The tables are effective immediately and are optionally retroactive to January 1, 2002.
Community News

Senate Report: Enron's Board Knew Accounting Pushed Limits

On July 7, 2002, the day before the Senate took up the accounting reform bill, the Subcommittee on Investigations released a report finding that Enron's directors failed to perform their duties in several important respects.
Community News

Andersen Sued in WorldCom Fiasco, Will Testify Before House Panel

Arthur Andersen, LLP has been named in a class action suit resulting from the firm's role as the former auditor of WorldCom. The suit, filed New York Comptroller H. Carl McCall on behalf of WorldCom shareholders, names WorldCom, Inc., and some of its officers as well as the accounting firm as defendants. Mr.
Community News

Judge Dismisses Independence Case Against EY

Ernst & Young (EY) has won its appeal of the auditor-independence case brought against it by the Securities and Exchange Commission (SEC) in connection with past audits of PeopleSoft.
Community News

Adelphia Goes Into Bankruptcy as Deloitte's Role is Questioned

Cable television giant, Adelphia Communications, has filed for Chapter 11 bankruptcy protection while the company tries to regroup after revelations about financial abuses by the company's founding Rigas family. Meanwhile, some of the finger-pointing goes to Big Four firm Deloitte & Touche, the company's auditor that signed off on financial statements that didn't disclose off-balance sheet loans of more than $4.5 billion to the Rigas family.

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