Auditing

Fortune Cites Creative Accounting, Blames The Auditor

When Fortune magazine published its listing of the 500 largest U.S. companies this year, it listed Enron as No. 5 based on nine-month revenue figures. Next to Enron's name were a question mark, exclamation point and a cross-reference to a separate article about the Revenue Games People (like Enron) Play.
Community News

Xerox to Pay Record Financial Fraud Penalty, Investigation Turns to KPMG

The SEC has informed representatives of KPMG, and executives of Xerox, about the possibility of leveling charges against them as part of an ongoing investigation into accounting irregularities at Xerox.In a civil complaint filed against Xerox today, the SEC meticulously outlines details of an alleged fraud, accusing Xerox of "relying on what it called 'one-time actions,' 'one-offs,' 'accounting opportunities' and 'accounting tricks'" resulting in an acceleration of the recognition of copier-equipment r

House Set to Reconcile Competing Audit Reform Bills

On April 9, 2002, the House Committee on Financial Services held its final hearing on proposed legislation for accounting and auditing reforms. Witnesses were asked to compare the merits of two major bills now under consideration, the Oxley bill (H.R. 3763) and the LaFalce bill (H.R.
Tax

Andersen Mulls Ground-Breaking LBO of Tax Practice

As an alternative to the offer from Deloitte & Touche (D&T), Andersen is considering a management-led leveraged buy-out (LBO) of its entire tax practice. The proposed transaction would help stem layoffs, and it presents clear benefits for Andersen.
Community News

Andersen's Duncan Pleads Guilty

David B. Duncan, the former Andersen partner in charge of the Enron audit, who made headlines shortly after the Enron bankruptcy occurred when it was discovered that he ordered the "rushed disposal" of documents relating to the Enron audit, has plead guilty to a federal charge of obstructing justice.Mr. Duncan has agreed to cooperate with the U.S.

Lessons Learned From Ten Most Common Frauds

In the April 2002 issue of Journal of Accountancy, Joseph Wells, chairman of the Association of Certified Fraud Examiners (CFE), reviews the results of a survey by CFE and discusses the implications for CPAs.Most Common FraudsBased on a study of 971 fraud cases, CFE's study found the ten most common types of frauds, along with their respective frequencies and median costs in 2002, were as follows: Billing schemes, 25.2%, $160,000Skimming, 24.7%, $70,000Che
Community News

Andersen's Bass Warned of Problems with Enron in 1999

Documents released by the House Energy and Commerce Committee demonstrate that Andersen partner Carl Bass expressed concern and disagreement with accounting methods at Enron long before Enron's whistle-blower Sherron Watkins sent her memo warning that Enron "could implode in a wave of accounting scandals" in August 2001.Mr.

IFAC Names Members of New Auditing Standards Board

The International Federation of Accountants (IFAC) has named the members of its new International Auditing and Assurance Standards Board (IAASB).
Community News

Survey - The Impact of Enron: How Far Will It Go?

As the accounting profession experiences the aftershocks of the Andersen/Enron affair, it is difficult to know how to plan for the future. Preliminary information indicates that partners, staff, support personnel, vendors and consultants to the industry agree that the event will forever change the profession. While negative press has given the profession a "black eye," the extent of the damage remains to be seen. How far will it go? When are significant changes likely to occur? How are other firms reacting to the audit reform developments? Are other firms losing business?
Community News

Andersen Raises the Stakes with Audit Reforms

At a news conference on March 29, 2002, Paul Volcker, chairman of Andersen's oversight board, announced the firm's partners have agreed to back his reform plan.
Community News

Andersen Reneges on Baptist Church Settlement

Big Five firm Andersen has told Arizona state officials and others involved in the firm's settlement relating to the bankruptcy of the Baptist Foundation of Arizona that it will not be able to meet its obligation to pay $217 million for its role in the demise of the religious organization.
Community News

Andersen: The Enron Story So Far

So many stories have been reported on this issue that it's often difficult to keep developments in perspective.

SEC To Hold Roundtable on Audit Reforms in Chicago

The Securities and Exchange Commission (SEC) has announced that its third roundtable discussion on accounting and audit reforms will be held in Chicago on April 4, 2002. This event follows similar roundtable discussions held in New York and Washington. It will examine proposals to better protect investors by reforming financial disclosure and auditor oversight. The morning session (10:00 a.m.
Community News

Update: Andersen Defections Continue

updated 6/15/02Editor's Note: Today, a guilty verdict was issued in the obstruction of justice case against Andersen for its role in allegedly destroying documents related to the Enron collapse. As part of the guilty charge, the Andersen accounting firm is barred from performing audits on public companies for a period of twelve months.

AICPA Roadshow Intended to Rally Membership

Leaders of the American Institute of CPAs have been traveling the country recently to inform constituents on current audit reform initiatives and to outline the position of the AICPA on behalf of the membership.After similar presentations in Los Angeles and Dallas last week, AICPA President Barry Melancon addressed an audience of professionals and students in Arkansas on how the Enron scandal has challenged the accounting profession."For virtually every [certified public accountant] in this room, it is probably the most significant event in your career," said Mr.

SEC Sues Former Waste Management Officers for Fraud

The Securities and Exchange Commission has filed suit against the founder and five other former top officers of Waste Management Inc. for massive fraud. The complaint charges the defendants with inflating profits to meet earnings targets.

IASB Gets More Attention, Issues SIC-32

A survey of U.S. insurance executives conducted by Ernst & Young found that more than two-thirds (67%) of companies have someone tracking developments of the International Accounting Standards Board (IASB). In addition, almost half (44%) have someone within their organization participating on committees related to International Accounting Standards (IAS), and almost a third (30%) have developed an internal task force on IAS.
Community News

Unions Push Audit Reforms at More Companies

Johnson & Johnson and Bristol-Myers Squibb Company agreed to stop hiring the same accounting firm for auditing and consulting after prodding from unions led by the United Brotherhood of Carpenters. The unions are trying to achieve the same result at Avon Products and as many as 27 other companies.
Community News

Volcker's Plan May Reopen DOJ-Andersen Talks

Paul A. Volcker, former chairman of the Federal Reserve Board and head of Andersen's oversight board, issued a statement on March 22, 2002, outlining a plan for a "new Andersen." Many are hoping this plan will reopen the talks between the firm and the Department of Justice (DOJ). The talks broke off after Andersen refused to plead guilty to charges of obstructing justice.Mr. Volcker's planUnder the terms of the plan, which Mr.

SEC Chairman Opposes Radical Audit Reforms

Speaking as the final witness before the Senate Banking Committee, Harvey L. Pitt, chairman of the Securities and Exchange Commission (SEC) argued against proposed legislation that would introduce radical reforms for accounting firms, but supported reforms of companies, credit agencies, and accounting standard-setters.

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