Financial Reporting

Community News

Financial Executives Research Foundation Issues Three New Reports

Financial Executives Research Foundation (FERF), the research affiliate of Financial Executives International (FEI), has issued three new research reports as part of its mission to provide ongoing education to FEI's members. FEI is the leading professional association for CFOs and other senior financial executives. The reports include:Corporate Governance Survey -- FERF and The Board Institute (TBI) conducted a survey to help shed light on the quality and standards of corporate governance in the U.S. today at public and private companies.
Tax

Ex-WorldCom Directors Agree to Pay from Own Pockets

In an unprecedented legal move that could send shock waves through board rooms around the country, 10 ex-directors of the former WorldCom Inc.

GASB Clarifies Accounting for Contributions to Cost-Sharing Pension & OPEB Plans

The Governmental Accounting Standards Board (GASB) has published a staff Technical Bulletin, Recognition of Pension and Other Postemployment Benefit (OPEB) Expenditures/Expense and Liabilities by Cost-Sharing Employers. The Technical Bulletin clarifies the application of requirements regarding accounting for employers' contractually required contributions to cost-sharing pension and OPEB plans issued in Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, and Statement No.

GASB Clarifies Reporting Of Net Assets

The Governmental Accounting Standards Board (GASB) has issued Statement No. 46, Net Assets Restricted by Enabling Legislation, an amendment of GASB Statement No. 34. The purpose of Statement 46 is to help governments determine when net assets have been restricted to a particular use by the passage of enabling legislation and to specify how those net assets should be reported in financial statements when there are changes in the circumstances surrounding such legislation.
Technology

Investor Resource Guides Come Online

For the first time beginning in early February 2005, investors will receive information in public companies’ financial reports about whether adequate internal control over financial reporting is in place. Good corporate internal control is one of the most effective deterrents to fraud and a key factor in preventing financial misstatements, so this information is important to investors.
Tax

IRS Expands Pre-Filing Agreement Program

Large and Mid-Size Business division taxpayers seeking to resolve certain tax issues prior to filing their tax returns may now do so for multiple years under the IRS Pre-Filing Agreement (PFA) Program. The IRS issued revised PFA program guidelines last week that provide taxpayers and the IRS increased flexibility to enter into PFAs to resolve issues for the current taxable year and up to four future taxable years.
Tax

Chili's Resturant Owners Resolve Tip Reporting Dispute with IRS

Brinker International, Inc., recently announced that it has resolved its previously disclosed dispute with the Internal Revenue Service (IRS) concerning the Tip Reporting Alternative Commitment (TRAC) agreement.Brinker paid an assessment of $17.3 million in December 2004 for employer- only Federal Insurance Contributions Act (FICA) taxes on unreported cash tips for calendar years 2000 through 2002.
A&A

FEI Outlines Top Financial Reporting Challenges for 2005

Financial Executives International has identified the top 10 financial reporting challenges for 2005. These challenges will impact the way companies manage their businesses, report their financial results, and compensate their employees. The challenges include:Stock option expensing. The Financial Accounting Standards Board (FASB) has mandated that all stock compensation be expensed beginning June 30, 2005 for most public companies. Smaller public companies and private firms have until the first annual reporting period after Dec.

European Union Backs Accounting Rule for Options

On Monday, the Accounting Regulatory Committee (ARC), which advises the European Commission on the adoption of international accounting standards (IAS) in Europe, gave a positive opinion on a Commission Regulation making mandatory the international financial reporting standard (IFRS 2) on share based payments.

SEC Charges Walt Disney with Disclosure Violations

The Securities and Exchange Commission on Monday instituted settled enforcement proceedings against The Walt Disney Company (Disney). The Commission charged Disney for failing to disclose certain related party transactions between Disney and its directors, and for failing to disclose certain compensation paid to a Disney director. Under the settlement, Disney consented to the entry of an Order that it cease and desist from violating the proxy solicitation and periodic reporting provisions of the federal securities laws.
Tax

Knight Securities Settles, Pays $79M in Disgorgement and Penalties

The Securities and Exchange Commission on Friday announced the settlement of civil fraud charges against Knight Securities, L.P. The Commission issued an Order that found that Knight defrauded its institutional customers by extracting excessive profits out of its customers' orders while failing to meet the firm's duty to provide "best execution" to the institutions that placed those orders.
Community News

SEC Creates Committee to Examine SOX Impact on Small Public Companies

Securities and Exchange Commission Chairman William H. Donaldson announced on Friday the establishment of an advisory committee to assist the Commission in examining the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies. Appearing at a press conference today with the two individuals named as Co-Chairs of the committee, Chairman Donaldson stated, "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements.
Community News

Fannie Mae's Audit Under Scrutiny; Board Considers Shake-up

Fannie Mae, which faces a possible $9 billion restatement, is also looking at yet another investigation and the possibility of a management shake-up at the top.The Wall Street Journal reported that Fannie Mae's board of directors met most of Sunday to discuss whether changing top executives would give the mortgage finance giant a “fresh start” with regulators.The company did not issue a statement about the meeting and a company spokesman declined comment, the newspaper reported.Fannie Mae is already being investigated by the Justice Department and the Securities and Exchange Commi
Tax

Franklin Advisors Announces $20M Settlement

On Monday, The Securities and Exchange Commission (SEC) filed settled charges against Franklin Advisers, Inc. (FA) and Franklin Templeton Distributors, Inc. (FTDI) (collectively, Franklin), the investment adviser and principal underwriter and distributor affiliated with the Franklin Templeton mutual funds, alleging that Franklin, without proper disclosure, used fund assets to compensate brokerage firms for recommending the Franklin Templeton mutual funds over others to their clients.
A&A

FASB: Companies Must Expense Options

The Financial Accounting Standards Board (FASB) on Thursday, published FASB Statement No. 123 (revised 2004), Share-Based Payment. Statement 123(R) will provide investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued.
A&A

FASB Rules that Companies Must Expense Stock Options

In a long-awaited and sure-to-be controversial move, the Financial Accounting Standards Board ruled yesterday that companies have to begin expensing for stock options given to employees as part of compensation packages. The issuance of Statement 123R represents another important improvement in US generally accepted accounting principles. It will result in more comparable information in financial statements provided to investors, SEC's Donald T. Nicolaisen said in a statement.
Community News

Kmart Deals with Another Accounting Issue

Who knew chips and soda could cause accounting problems? That's what's happened at Kmart Corp. where another accounting issue has arisen over the improper booking of million in promotional payments to the retail giant from chip and soda suppliers, the Associated Press reported. On Dec.

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Before Sarbanes-Oxley, the law stated that investors who were made aware of fraudulent activities had to file lawsuits against the misbehaving companies within one year of discovering the fraud and within three years of the actual fraudulent activity.

SEC Suspends Trading in Securities of 26 Delinquent Companies

The Securities and Exchange Commission suspended trading today in the securities of twenty-six companies for not making required periodic filings with the Commission. Because of these delinquencies, investors were unable to obtain current and accurate information about these companies. The trading suspensions will last for ten business days.

SEC Grants Extension On Internal Controls Reporting

The U.S. Securities and Exchange Commission on Tuesday issued an exemptive order to grant certain accelerated filers up to an additional 45-days to include in their annual reports management’s report on internal control over financial reporting and the related auditor’s report on management’s assessment of internal control over financial reporting. Both internal control reports are required under Commission rules implementing Section 404 of the Sarbanes-Oxley Act of 2002.

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