Financial Reporting

SEC Considering Softening Impact of New Rules

The Securities and Exchange Commission may revise aspects of some major reform legislation to answer concerns that smaller companies are overburdened by the new requirements.But Chairman William Donaldson, in an interview with the New York Times, denied that he is backing away from an aggressive regulatory stance taken in the aftermath of Enron and other massive accounting scandals. He said he wants the rules to be more “cost-effective,” without weakening them."I'm not reacting to the 'pendulum swinging too far,"' Donaldson said in an interview.

EU Companies to Book Stock Options

The European Union announced Monday it would begin immediately enforcing new accounting rules that require listed companies to book employee stock options as current expenses. The rule was endorsed last December by the 25 EU governments. This week the European Parliament and the European Commission approved the measure, clearing the way for instituting the new method of accounting.

SEC Approves Use Of Data-Tagged Corporate Reports

The U.S. Securities and Exchange Commission this week issued a release adopting amendments to establish a voluntary program related to eXtensible Business Reporting Language (XBRL). Registrants may voluntarily furnish XBRL data in an exhibit to specified EDGAR filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940.
Community News

Ben Neuhausen Named to AICPA’s Accounting Standards Executive Committee

The American Institute of Certified Public Accountants has named Ben Neuhausen of BDO Seidman, LLP, as Chairman-elect of its Accounting Standards Executive Committee (AcSEC). He succeeds Mark Bielstein of KPMG LLP, effective with the conclusion of the next AcSEC meeting.As a member of AcSEC, Neuhausen chaired the AICPA Task Force on Real Estate Time-Share Transactions. He also has served as a member of FASB’s Interpretation 46 Resource Group and its Liabilities and Equities Resource Group.
Technology

Sun Microsystems, Inc. Announces Identity Auditor

Sun Microsystems, Inc. announced this week “Sun Java System Identity Auditor”, a comprehensive identity audit solution for helping to improve audit and compliance performance. Identity Auditor provides the most extensive feature set available today, can enable customers to create a secure identity audit trail and present a unified view of an individual's identity and system access activities. Sun is the only vendor to deliver proactive, automated, and sustainable visibility into identity controls across critical enterprise applications and the entire identity management infrastructure.

Rein in the Public Company Accounting Oversight Board: Guest Article

By Peter J. Wallison, resident fellow at the American Enterprise Institute - The Public Company Accounting Oversight Board is a not-for-profit corporation established by the Sarbanes-Oxley Act to regulate the business of auditing public companies. Although industry self-regulatory organizations are not unusual, this one has the extraordinary power to tax all public companies to support its operations. Its freedom from the ordinary mechanisms of accountability for quasi-governmental functions is already having an effect, shown in its rapidly growing budget.

SEC Signals 'Change of Tone' on Foreign SOX Compliance

With the New York Stock Exchange's reputation as the market of choice for overseas companies at stake, the Securities and Exchange Commission signaled “a change in tone” yesterday toward foreign companies looking to avoid strict U.S. governance rules, Financial Times reported.The Sarbanes-Oxley Act of 2002 laid down stringent new rules designed to protect U.S. investors in the wake of a spate of corporate scandals. Foreign companies are currently required to follow Sarbanes-Oxley if they are publicly listed in the U.S.

Another Hurdle on the Road to Compliance: Assessing Company-Level Controls

By J. Stephen McNally, CPA - For many companies, the deadline to comply with Sarbanes-Oxley Section 404 is literally weeks away. There is, however, another hurdle on the road to compliance, one often overlooked or consciously not addressed until the final phase of a company's overall Section 404 compliance efforts. This hurdle is the assessment of an entity's company-level controls.
Tax

'Accounting Fraud' Penthouse Uncovered

Penthouse International Inc.
Community News

Auditors Hesitant to Use Judgment, Fear Challenges

Recent events have made auditors skittish about using their judgment in their work, as they fear challenges by lawyers, the media and regulators, Robert Herz, chairman of the Financial Accounting Standards Board (FASB) said in a statement reported by Financial Times.This reluctance to use judgment is in spite of a Securities and Exchange Commission (SEC) call for a principles-based approach to accounting.

OFHEO Seeks to Recoup Freddie Mac, Fannie Mae Executive Bonuses

When the Office of Federal Housing Enterprise Oversight was created in 1992, mortgage guarantee corporations Freddie Mac and Fannie Mae lobbied against the OFHEO having strict control over executive compensation, the Washington Post reported.
Practice Management

Corporate Directors Increasingly Paying Their Own Penalties

The days when company directors could emerge from scandal both unpunished and rich may be over.If several major legal settlements of the last few weeks are any indication, the Washington Post suggested, company directors more often will be held personally accountable for the financial misdeeds of the companies they are supposed to be overseeing.
Practice Management

Business Process Management Can Solve Compliance Issues and Reduce Costs

BearingPoint, Inc. last week issued a white paper, "Business Process Management in the Capital Markets," which details the way financial services organizations can improve profit margins and reduce cost by digitizing content.The paper covers a fundamental issue: while some firms report improving revenues, profit margins are still under pressure as companies struggle with supply chain issues for their "plain vanilla" or commoditized products as they try to comply with new regulations. Companies are therefore choosing business process management (BPM) to reduce costs and improve controls.

Disclosures of Control Weaknesses Way Up from 2003

Fifty-six companies reported material weaknesses or significant deficiencies in internal controls last month, compared with 14 companies one year earlier, according to Compliance Week.A total of 582 companies made these kinds of disclosures in 2004, the newsletter reported, with about half of them related to financial systems and procedures, such as problems with the financial close process, account reconciliation or inventory processes. Personnel issues accounted for about 30 percent of the disclosures.
Tax

Treasury, IRS Announce Guidance on Repatriation of Foreign Earnings

The Treasury Department and IRS last week announced the first in a series of notices that will provide guidance for U.S. companies planning to repatriate earnings from overseas subsidiaries subject to the temporary reduced tax rate available under the American Jobs Creation Act (AJCA). Internal Revenue Code Section 965, enacted as part of the AJCA in October 2004, allows U.S. companies to repatriate earnings from their foreign subsidiaries at a reduced tax rate. Section 965 provides that U.S.
Community News

Four Out of Five Major Financial Firms Now Have a Chief Risk Officer

Global financial services institutions are facing growing exposure to risk from a variety of factors, including mega-mergers, off-shoring, outsourcing, greater regulation, and the need to manage an increased volume of lending.

Google Settles SEC Suit for Failing to Report $80M in Options

The Securities and Exchange Commission last week charged Google, Inc. with failing to register the issuance of option grants to employees or provide required financial information to the option recipients. According to the Commission, the Silicon Valley search engine technology company issued over $80 million in stock options to its employees in the two years preceding its IPO, yet failed to register the securities or make financial disclosures mandated by federal securities law. To settle the charges, Google and its General Counsel, David C.

SEC Signals Possible Guidance on Options Expensing

The Securities and Exchange Commission's Chief Accountant Don Nicolaisen said Wednesday that while he fully supports the Financial Accounting Standards Board's decision to require stock option expensing, the SEC is realizing it may have to issue guidance to aid compliance, Dow Jones Newswires reported.Speaking to reporters at an internal controls conference at Stanford Law School on Wednesday, Nicolaisen said the commission is hearing corporate cries for help on how they should go about counting employee stock options as expenses."We are sympathetic to some of the requests people have fo

Nortel Restates Earnings; Seeks Return of Executive Bonuses

If a company fails to meet its financial goals, should executives have to return their bonuses?This question is at the heart of a controversy surrounding several former top executives at Nortel Networks, with the company signaling it will take legal action to recoup the money if necessary, the New York Times reported.On Tuesday, the Toronto-based telecom company released its highly anticipated-and often delayed-financial restatements for 2001 to 2003, with an internal probe pointing to executive manipulation to ensure bonuses, the Times reported.In an unusual development, Nortel, the

European Companies Grappling with SOX Compliance

Some European companies are wondering if the benefits of being listed on U.S. exchanges is worth the cost of Sarbanes-Oxley compliance, IT-Analysis.com reported.With public and private companies alike struggling to comply with the rigid new requirements intended to improve transparency and accountability, international companies are weighing the pros and cons. Companies with 300 or more U.S.

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