Financial Reporting

A&A

FASB Issues Standard as Part IASB Convergence Effort

The Financial Accounting Standards Board (FASB) has issued Statement No. 154, Accounting Changes and Error Corrections applying to all voluntary accounting principle changes as well as the accounting for and reporting of such changes. Statement No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Earlier application is permitted for fiscal years beginning after June 1, 2005.Statement No.

Reader Perspective: Never Tell Me Less Than the Full Truth

Institutional and general public investors use Auditor's Reports when calculating their buy, sell or hold decisions. I'm not sure auditor's always remember the numbers of people who examine and trust their comments, sometimes basing their decisions on the unknown but trusted professionals who make independent reports.
Technology

SEC Makes Comment Letters/Responses Public

Beginning today (May 12, 2005), the Securities and Exchange Commission (SEC) will begin the process of releasing to the public comment and response letters related to disclosure filings made after August 1, 2004 and reviewed by the Division of Corporation Finance and the Division of Investment Management.Letters will be released individually on a filing-by-filing basis through the EDGAR system at www.sec.gov. The oldest filings will be released first.

Accounting for Derivatives Leads to GE Restatement

General Electric Co.

Lease Accounting Problems Dominate Restatements

Errors in lease accounting contributed to 22.5 percent of the weaknesses reported to the Securities and Exchange Commission (SEC) in April. During March, less than 10 percent of weaknesses reported were due to errors in lease accounting. According to Compliance Week magazine, many of the disclosures came after Donald Nicolaisen, chief accountant for the SEC, sent a letter clarifying lease accounting rules to Robert Keupers, chairman of the Center for Public Company Audit Firms, an arm of the American Institute of Certified Public Accountants (AICPA).

Lease Accounting: Minor Blip or Major Issue?

Retailers, restaurants, and cellular service providers are changing the way they account for leases, according to accounting analyst Jack Ciesielski, publisher of The Analyst’s Accounting Observer. The majority of restatements are coming from the retail industry and most of those have to do with rent holiday issues.The SEC’s February 7 Letter to the AICPA identifies three types of issues that may arise in lease accounting.

Scrutinizing Accounting in the Retail Industry

The ever-changing world of vendor accounting is particularly susceptible to abuse. It is no surprise that under the increased scrutiny of the Sarbanes-Oxley era, problems with vendor accounting are affecting the retail industry as demonstrated by a probe by the Securities and Exchange Commission (SEC) into retail giant Saks, Inc.Saks announced in March that the SEC was probing vendor markdown allowances and the adequacy of Saks internal investigation into the matter at one of six merchandising divisions of it Saks Fifth Avenue stores.
A&A

SEC's Office of the Chief Accountant Release Staff Accounting Bulletin on Share-Based Payments

The Securities and Exchange Commission’s Office of the Chief Accountant and its Division of Corporation Finance announced on Tuesday announced the release of a Staff Accounting Bulletin relating to the Financial Accounting Standard’s Board (FASB) accounting standard for stock options and other share-based payments. Staff Accounting Bulletin No.
Tax

IRS Offers Tips for Accurate Schedule K-1 Filing

The Internal Revenue Service this week provided its annual list of tips to businesses, individuals and tax professionals to avoid errors on Schedules K-1. The Schedule K-1 is used to report income and other distributions from partnerships, S corporations and some estates and trusts.Accurate filing of the forms is important because the IRS matches income from Schedules K-1 to other tax returns. For tax year 2003, more than 25 million Schedule K-1 forms were filed reporting approximately $1 trillion in income to partners, shareholders and some estate and trust beneficiaries.
Tax

Smaller Accounting Firms Reap the Benefits of New Mandates

Midsize firms are more than happy to scoop up the audit clients being rapidly discarded by the larger accounting firms, the East Bay (CA) Business Times reported.With the large firms focused on the more lucrative consulting work-which limits their ability to audit the same clients under Sarbanes-Oxley Act rules-midsize firms are filling the gaps in audit and other areas.Advertisemen
Tax

Board Members Pay to Settle WorldCom Suit

In a settlement that has sent shock waves through corporate boardrooms, 11 former WorldCom Inc. board members have agreed to pay $20.2 million of their own money to settle a lawsuit tied to the company's $11 billion accounting fraud.The Wall Street Journal reported that the settlement, once sidelined by a legal technicality, was reached on Friday.It is highly unusual for board members to have to tap into their own resources to pay settlements such as this, and the WorldCom settlement, first announced in January, shocked many corporate boards.

SEC Official Fires Back at Critics of Accounting Reform Efforts

Remember way back in 2002 when corporate America was rocked by one accounting scandal after another? A top Securities and Exchange Commission official reminded reform critics on Friday that we are “not out of the woods yet,” the Washington Post reported.In remarks before the Directors' Education Institute at Duke University, SEC enforcement chief Stephen M.
Tax

SEC Charges Former Qwest CEO and Eight Others with Massive Fraud

The Securities and Exchange Commission this week charged Joseph P. Nacchio, former co-chairman and chief executive officer of Qwest Communications International Inc., and eight other former Qwest officers and employees with fraud and other violations of the federal securities laws.
Tax

Settling WorldCom Lawsuit Will Cost J.P. Morgan $2 Billion

J.P. Morgan Chase will pay $2 billion to settle a class-action investor lawsuit that alleges the bank failed to investigate WorldCom's financial health when it sold bonds just before the company imploded amid scandal.J.P. Morgan Chase is the last of 14 bond underwriters to settle the case, led by New York Comptroller Alan Hevesi, who oversees the New York State Common Retirement Fund.

High Compliance Costs Outweigh Benefits Say Investors

Most investors applaud recently instituted reforms intended to prevent corporate abuse, however they express deep reservations about the costs to implement them, according to a poll of institutional investors conducted in February by Broadgate Consultants LLC.In addition, with bonuses soaring for CEOs at the nation's top corporations, investors also believe that transparency surrounding executive compensation is not sufficient and should be improved.An overwhelming majority (83%) of the 105 institutional analysts and portfolio managers from across the U.S.
Tax

Ebbers Found Guilty in Massive WorldCom Fraud Case

In a closing chapter in what has become the nation's largest accounting fraud, former WorldCom chief executive Bernard Ebbers was found guilty today on all counts, the Wall Street Journal reported.The verdicts were a major victory for Justice Department prosecutors who spent nearly three years investigating the $11 billion fraud that pushed the company into bankruptcy and decimated a stock that was once worth $100 billion. The company, now known as MCI, emerged from bankruptcy in 2004 and is courting acquisition offers from Verizon Communications Inc.
A&A

Push is on to Require Finance Education in High Schools

Hoping to stem the future tide of overwhelming credit card debt, personal bankruptcies and foreclosures, seven states are now requiring high school students take a personal finance class, the Associated Press reported.A survey by the National Council on Economic Education found that the seven states require the basic finance course as a prerequisite for graduation, which is up from four states in 2002.
Community News

Minorities, Women See Greater Opportunities on Corporate Boards

While minorities and women are filling corporate board seats at unprecedented rates, challenges continue to impede the progress of diversification, according to the March issue of Worth magazine.Signifying a trend that "is not just good PR but also good business," contributing writer Suzanne McGee cites the changing face of the workforce and the steady rise in minority-owned businesses as factors contributing to this evolution.

Companies Rarely Get Back Bonuses from Ex-CEOs

Large companies almost never get back the bonuses they paid to CEOs who used questionable methods to earn them, a new survey says.The New York Times reported that 414 companies restated earnings in 2004 alone, but a review of the restatements shows that large corporations rarely get bonus money back from executives, even when the bonuses were based on numbers that were questionable, inflated or inaccurate.For example, William A.

SEC Announces Members of Advisory Committee on Small Public Cos

Securities and Exchange Commission (SEC) Chairman William H. Donaldson this week announced the appointment of 19 additional members of the SEC Advisory Committee on Smaller Public Companies. The additional appointments bring the total number of members of the advisory committee to 21. Chairman Donaldson previously had announced the appointment of Herbert S. Wander, a prominent Chicago securities lawyer, and James C. Thyen, President and CEO of Kimball International, Inc., as Co-Chairs of the advisory committee.

Pages