Financial Reporting

Challenges of Section 404 Compliance

Compliance with Section 404 of the Sarbanes-Oxley Act (SOX) is required in 2006. A report by the Public Company Accounting Oversight Board (PCAOB) states that both accounting firms and the public companies they audit will face “enormous challenges” this year as reported in CFO.com. This section of SOX requires that companies document their internal controls. “It is clear to us that the internal control assessment and audit process has the potential to significantly improve the quality and reliability of financial reporting.
Tax

Corporate Fraud Still Widespread, Difficult to Detect

The number of companies around the world that reported incidents of fraud increased 22 percent in the last two years, according to a new Big Four survey.While layers of new controls have been implemented to improve corporate governance, fraud is still widespread, difficult to prevent, and detected many times by chance, according to the biennial survey by PricewaterhouseCoopers (PWC), which interviewed more than 3,000 corporate officers in 34 countries.Fraud was detected by 45 percent of the companies polled, which is up from 37 percent in 2003, Reuters reported.
Practice Management

Governance & Accounting Still Concern Investors

Things have improved but there is still cause for concern. That is the message investors and creditors seem to be sending in a special report published Monday by Standard and Poor’s.“Governance and accounting remain heightened areas of concern for investors and creditors, and it remains critically important for them to assess the often qualitative, intangible, and principle-based dimensions of governance and accounting,” said George Dallas, managing director and global practice leader, corporate governance, Standard and Poor’s in a prepared statement.
A&A

FASB to Review Proposed Fair Value Reporting of GICs

The Financial Accounting Standards Board (FASB) will meet Tuesday to consider the proposed FASB Staff Position (FSP) Reporting of Fully Benefit-Responsive Investment contracts Held by Certain Investment Companies Subject to the AICPA Investment Guide, issued on August 15th.
A&A

Stock Option Expensing Coming in 2006

American companies with fiscal years ending December 31, 2005 will start expensing their stock options in 2006. This newly required reporting is expected to drop company net income figures noticeably. The Financial Accounting Standards Board (FASB) has been working to require American public companies to account for the impact of stock options in their financial statements since 1993, according to Business Journalism.

Freddie Mac to Revise Income Downward for First Half of 2005

The mortgage finance company Freddie Mac said Tuesday that it will lower first and second quarter income by $220 million because of a computer error. Total profit for the period will be adjusted to $1.4 billion from $1.6 billion.
Technology

Accounting for Campaigns

Political campaigns, whether they are for the local school board or the Senate, are run on money as much as on issues. And all that money must be accounted for. Candidates, election officials and the public have a right to know how much money was raised from whom and how it was spent. Two software applications, DirectFile and CompleteCampaigns makes the job of campaign accounting and financial reporting easier.Calling itself “the most advanced political accounting software available today”, DirectFile was created in 1995 for campaign treasurers in California.
Community News

Mark Your Calendar: Conference on Current Financial Reporting Issues

Financial Executive International’s Conference on Current Financial Reporting Issues (CFRI) is scheduled for November 17 and 18 at the Hilton New York Hotel in New York. The conference, promoted as “the must-attend event for preparers of corporate financial statements”, will include updates from regulators on accounting standards, reporting requirements and projects being developed.Featured speakers at the conference include:Donald Nicolaisen, Chief Accountant, U.S.
Tax

Berkshire Hathaway Wins Three-Year Tax Case

Warren Buffett’s Berkshire Hathaway will receive $23.1 million plus interest after a Federal District Court judge ordered the Internal Revenue Service (IRS) to pay the company ending three years of litigation. Reuters reports the case stems from the 1989, 1990, and 1991 purchases of dividend-paying stocks with the proceeds of portions of $750 million which the company said it borrowed to strengthen its finances. The tax rule cited by the IRS in prosecuting the company governs the purchase of stock with borrowed money and any deductions resulting from the purchases.

Investors See SOX Regulations Lacking

A new poll Wall Street Journal Online / Harris Interactive Personal Finance Poll shows that 55 percent of the participating adult investors believe the current financial and accounting regulations governing publicly held companies are too soft. Harris Interactive reports that for male investors aged 45 to 54, this number rose to 77 percent.

Circular Logic: Making Sense of Circular 230 Changes

Tax practice for CPAs is changing. Recent modifications to Circular 230, the U.S. Treasury Department regulations that govern practice before the IRS, have established several changes that leave CPAs with a new standard for the practice of taxation. The rationale for the revised regulations is part of an IRS effort to promote ethical tax practices and curb abusive tax avoidance programs promoted by some tax professionals. Some CPA and law firms were coming up with tax-motivated transactions for clients and then packaging those transactions to sell to other companies.
Community News

Measuring Non-Profit Performance -- Self-Review & Charity Monitors

Member charities of the United Way of the Coastal Empire (Georgia) are receiving visits from volunteer internal inspectors during their fall campaigns, savannahnow.com reports. Denise Oberlin, an inspector, accompanied Patti Lyons on a food delivery for Senior Citizen’s Inc. and was told that three out of four of the people served by the Agency were below the poverty level. Lyons also told Ms.
A&A

New Tools Solve Complicated Requirements for Funds & Individual Investors

GainsKeeper®, part of Wolters Kluwer Corporate & Financial Services division, addes new tax reporting tools to its three industry-leading tax lot accounting suites – GKAdvisor™ used by funds, GKBrokerage™ for shareholders, and FundTax™ used by individual investors – in September.“Our tax lot accounting suites offer an automated solution designed to calculate key fund and investor figures, allowing both professionals and individual investors to spend significantly less time compiling and attempting to make calculations based on tax- relevant date,” Sanjeev Doss, GainsKeeper di
A&A

FASB Launches Investor Task Force (ITF)

The Financial Accounting Standards Board (FASB) last week announced the launch of its Investor Task Force (ITF), an advisory Resource that will provide the Board with sector specific insight and expertise from the professional investment community on relevant accounting issues. The first ITF research session will probably be held this month.The ITF represents the latest in a series of steps designed to enhance participation of investors and other users of financial information in the standard setting process.
Practice

Grant Thornton LLP Revenues Rise 29%

Grant Thornton LLP reported revenues increased 29 percent to $728 million during the fiscal year ending July 31, 2005 making it the revenue growth leader for U.S.

Pace of Giving Slows: Donors Scrutinize Charities

Donations for Hurricane Katrina relief to the online giving site, Network for Good, have dropped 30-fold since September 1st, Katy Anderson, vice president of marketing told the Washington Post.
A&A

For Accounting Purposes, Katrina Considered 'Ordinary'

If Hurricane Katrina and the Sept. 11, 2001 terrorist attacks are not considered “extraordinary” events, what are?

Cisco's Plan Rejected but SEC Leaves Door Open to New Approaches

Donald Nicolaisen, the departing chief accountant of the U.S. Securities and Exchange Commission (SEC), said on Friday that based on the SEC’s staff review of Cisco Systems’ plan to value stock options by selling similar securities to investors, he had “significant doubts” that the method would produce an estimate of fair value, Reuters reports. In a separate statement, however, SEC Chairman Christopher Cox said that the staff’s conclusions were “tentative and subject to ongoing assessment,” according to the New York Times.
Community News

AICPA's Financial Reporting Assailed from Within

The 118 year old American Institute of Certified Public Accountants (AICPA, the Institute), the profession’s trade organization and one of its standard setting boards, while adjusting to changes in its role and focus resulting from the accounting scandals, is facing charges from some of its own members that its financial reporting does not clearly describe the AICPA’s financial activities.

Debate on Global Accounting Standards: Rules Versus Principles

Harmonizing accounting standards among the United States and 95 other countries means agreeing to a common language for financial reporting.Advertisement

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