Financial Reporting

Accounting Manipulations at Fannie Mae Tied to Bonuses, OFHEO Says

A report by the Office of Federal Housing Enterprise Oversight (OFHEO) released on Tuesday charged senior management of the mortgage giant Fannie Mae with manipulating accounting to hit earnings targets in order to maximize their bonuses and other executive compensation, the New York Times reports.
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Stock-Option Backdating Scandal Expands

Although not illegal, the accounting associated with executive stock option backdating “doesn’t feel right,” according to The CorporateCounsel.net. One company, UnitedHealth Group, may end up restating three years of financial results due to option back-dating. This accounting adjustment will see a change of some $286 million in net income for the company.
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Tax

Survey Shows Fear of SOX Keeps Accounting Functions in U.S.

Companies are looking first to automation before moving their finance functions offshore, even as manufacturing and customer-service jobs are sent overseas.Advertisement
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Practice

GM Restructures Controller’s Office; Hires Outside Financial Advisor

General Motors (GM) announced last week that it will combine the positions of Corporate Controller and Chief Accounting Officer as part of a restructuring of the Corporate Controller’s office. The company’s current controller, Paul W. Schmidt, will retire later in the year. Peter Bible, chief accounting officer, will resign effective June 1st but will assist the company during the transition to the new structure.
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PCAOB to Consider Periodic Reporting Rules for Accounting Firms on Tuesday

The Public Company Accounting Oversight Board (PCAOB) has scheduled an open meeting for 10:30 a.m. Tuesday, May 23, 2006, to consider proposing rules for annual and special reporting of information and events by accounting firms registered with the PCAOB. The meeting will be held in the Board’s open meeting room at 1666 K St. NW, Washington, D.C.
189

SEC Announces Next Steps for SOX Implementation Includes Smaller Companies

The Securities and Exchange Commission (SEC) on Wednesday announced a series of actions intended to improve the implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act 2002.
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A&A

Financial Statements Still Significant In Predicting Bankruptcy

Researchers have found that financial ratios are still valuable tools in predicting bankruptcy.
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Practice Management

Survey Reveals Alarming Contract Management Practices

A new AberdeenGroup analyst report reveals some alarming practices in global business today. The report The Contract Management Benchmark Report: Sales Contracts reveals that 85 percent of responding companies are using manual or only partially automated systems to manage sales contracts and 32 percent of customer contracts are not tracked, improperly serviced or forgotten entirely.
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Technology

Strange Bedfellows: Newt Gingrich and XBRL Software Community

At about the same time last week that Newt Gingrich, former speaker of the U.S.
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SEC Beefing Up Internal Reporting in Response to GAO Audits

The Securities and Exchange Commission (SEC), the agency charged with overseeing the financial reporting of public companies, is “redoubling” its efforts to shore up major deficiencies in its own financial reporting procedures and internal controls that were uncovered in an audit by the Government Accountability Office.Advertisement
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A&A

Alternative Approaches to Accounting Outsourcing

Clients are turning to their accounting firms to provide “resource services” -- full-time accounting professionals who work on special projects on a contract basis at the CFO or controller level, the Philadelphia Business Journal reports. Resource servicing differs from typical staff or consulting outsourcing because the client manages the project, and the positions are high level.
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Proposed GASB Document Intends to Improve Derivatives Accounting

The Governmental Accounting Standards Board (GASB) voted unanimously this week to issue a Preliminary Views document that is intended to improve the accounting and financial reporting of derivatives by state and local governments. The New York Times reports that derivatives are increasing in popularity among local governments as a means of reducing their cost of borrowing. The governments enter into derivatives contracts at the same time they issue bonds, in what is known as interest rate swaps.
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Bill Requires Reporting Unfunded Federal Liabilities

With state and local governments scrambling to meet the Government Accounting Standards Board’s (GASB) amended rules for reporting on postretirement benefits, and private and public companies getting ready for compliance with the Financial Accounting Standards Board’s (FASB) proposed statement on recording pension liabilities, a congressman from Indiana has introduced legislation that would require the federal government to meet a similar standard. The Truth in Accounting Act, sponsored by Rep. Chris Chocola (R-Ind) and co-sponsored by Reps.
410
A&A

FASB Proposes Bringing Pension Obligations to Balance Sheet

The Financial Accounting Standards Board (FASB) issued a proposed statement on Friday that would require public companies to recognize the overfunded or underfunded position of defined benefit postretirement plans on their balance sheets, effective for fiscal years ending after December 31, 2006.
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A&A

15 Business Performance Management Capabilities for Better Compliance

A new study, Improving Compliance Sustainability with Business Performance Management, from Cartesis and Robert Frances Group, proposes that organizations seeking sustainable financial reporting and regulatory compliance shift their focus to business performance management (BPM) technologies.
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Community News

Ex-Qwest Accountant Accuses SEC of “Abuse of Process”

The lawyer for former Qwest accountant James Kozlowski alleged in a suit filed in U.S. District Court in Denver last week that the the Securities and Exchange Commission (SEC) charged Kozlowski with fraud in March 2005 because he wouldn’t “spill the beans” on ex-chief executive Joe Nacchio. Eleven other ex-officials of the company were charged along with Kozlowski and Nacchio.
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Practice Management

Former Andersen Partners Testify in Trial of Lay and Skilling

John R.
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GM Revising 2000 to 2005 Profit Figures

Better times behind them, General Motors announced their intention to restate their profit figures, for years 2000 through the first quarter of 2005, that have already been reported. There is an indication that the car giant used highly questionable accounting methods in 2000, because profits fell sharply in the following year. GM made this announcement on the eve of filing its annual report that has already been delayed.
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A&A

Martin Baumann, CFO of Freddie Mac Resigns

Martin F. Baumann, executive vice president of Finance and Chief Financial Officer (CFO) of Freddie Mac, today announced his resignation.“Marty Baumann has been a key contributor to the turnaround currently underway at Freddie Mac,” Richard Syron, Freddie Mac’s chairman and CEO, said in a prepared statement about the resignation.
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GASB Identifies Key Differences Between Governmental & Business Financial Reporting

The Governmental Accounting Standards Board (GASB) released a white paper last week describing how the information needs of individuals and organizations interested in the financial performance of state and local governments differ from those following the financial performance of for-profit businesses. According to the GASB, these diverse needs result from basic environmental differences between governments and businesses. The primary purpose of governments is to enhance or maintain the well being of citizens by providing services in accordance with the public policy goals.
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Pages

Voice of the Editor

Even though any accounting auditor would tell you it seems like there are an awful lot of tax accountants out there, surely one-third of the country isn't made up of tax preparers, so it's rather startling news to learn that one-third of Americans like to do their taxes. Who knew?
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Gail Perry, CPA
Publisher/Editor-in-Chief, AccountingWEB
editor@accountingweb.com
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