Financial Reporting

IFAC Seeks Independent Oversight of IAASB

With a global set of auditing standards the goal, the organization representing accountants worldwide is ready to open its doors to external oversight for the first time —part of the industry’s ongoing effort to restore its reputation after U.S. corporate scandals. The International Federation of Accountants, which sets global best-practice auditing rules, is looking for a prominent group of regulators to head the oversight group.

Big Four, AICPA, Continue to Jockey For PCAOB Presence

The maneuvering continues as the Big Four accounting firms and the AICPA struggle to absorb the Public Company Accounting Oversight Board’s (PCAOB) decision last month to assume responsibility for setting auditing rules for public companies.A panel will advise the board and the firms are seeking a place on the panel to help set the rules. The PCAOB, formed to oversee the profession in answer to the recent accounting scandals, also took standard-setting authority away from the AICPA, the industry’s primary trade organization.
Community News

Gateway's Accounting Subject of Criminal Investigation

The San Diego U.S. Attorney's office has added to Gateway's woes by launching a criminal investigation into the computer maker's accounting practices. The Securities and Exchange Commission is also investigating accounting issues at Gateway.The U.S. Attorney investigation covers financial reporting beginning in fiscal year 2000, as does the SEC inquiry. Gateway indicated that the SEC investigation is expected to conclude during this quarter or next quarter.
Tax

Senate Prohibits Tax Refunds on False Earnings

Last Thursday the Senate voted unanimously for an amendment to the tax-cut bill that would prohibit companies from seeking tax refunds on inflated earnings. The measure, which was introduced by Sen. Charles Grassley (R-IA), comes at a time when a number of high-profile companies are in the process of filing or collecting tax refunds on billions of dollars of earnings that were falsely overstated.
Tax

Aggressive Tax Spending Leads to Fewer Restatements

Companies that engage their audit firm for significant tax consulting services are less prone to revising their financial statements, an American Accounting Association study has found. "Companies that spend a large amount on tax services from their audit firm typically had fewer restatements than those who spent small amounts or zero," the study said.

Sprint Shareholders Vote on Controversial Retention of Auditor

Hot on the heels of recent scandals involving Sprint Corporation executives and the tax shelters they purchased from Big Four accounting firm and auditor Ernst & Young, shareholder's at Sprint's annual meeting voiced a significant objection to the retention of E&Y as auditor for another year.While the majority voted to keep E&Y, a resounding 38% voted to oust the auditor, an amount that pleases representatives from the AFL-CIO.
Community News

Canadian Regulators Okay Use of US GAAP

The Canadian Securities Administrators have announced that Canadian firms registered with the Securities Exchange Commission (SEC) will be permitted to file their financial statements in Canada using US generally accepted accounting principles (GAAP). Of the nearly 1,300 foreign companies registered with US stock exchanges, 500 are Canadian. The rule takes effective for fiscal years beginning January 1, 2004, or later. Canadian firms must apply for the exemption.
Tax

Enron And Others Restate Income, Look For Big Tax Refunds

Big companies that made news in recent years for inflating income in order to meet Wall Street demands are in the news again. This time the companies are making headlines for what some feel is a nervy gesture of claiming federal income tax refunds after restating their income to true levels.Enron is in the process of filing for tax credits after paying taxes on billions of dollars they reported on tax returns but didn't actually earn.

Sarbanes-Oxley Implementation: Painful And Costly

Implementation of the Sarbanes-Oxley Act of 2002 is costing corporate America a bundle, for everything from public relations to insurance to fees for attorneys, directors and auditors.
Community News

Tyco Audit Uncovers New Accounting Errors

When Edward Breen came on board as chairman of scandal-ridden Tyco International last summer, he vowed to clean up the company. But nine months later, accounting problems keep popping up. In March, Mr. Breen estimated the company would take a $300 million charge for the first quarter. This week, the company announced a final after-tax charge for the quarter of $1.5 billion and a net loss of $468 million.This newest revelation marks the fourth time since October that the company has disclosed accounting problems, for a total of $2 billion. In March, Mr.
Community News

AFL-CIO Launches Anti-E&Y Campaign

The American Federation of Labor/Congress of Industrial Organizations (AFL-CIO) is urging Sprint shareholders to vote against the continued appointment of Big Four firm Ernst & Young as Sprint's auditor.
A&A

FASB Approves Expensing of Stock Options

The debate on mandatory expensing of stock options moved center stage last week when the Financial Accounting Standards Board (FASB) voted unanimously to require companies to expense employee stock options. It could take up to a year before the final draft is released with the new rule taking effect sometime in 2004. In 1994 the board considered adopting the expensing method but encountered resistance from corporate groups as well as Congressional members. It seems likely that will happen again. Last month, 15 U.S.

SEC Stops Executives From Quietly Selling Stock

The days of top executives dumping their company stock to protect their own wealth — while encouraging stockholders to keep investing — appear to be over. Beginning June 30, corporate insiders have two days to electronically report their transactions to the Securities and Exchange Commission Web site and to post the actions on their company Web site.This replaces the old paper reporting system, which required regulators and the media to dig through mountains of paper at SEC headquarters to uncover fraudulent transactions.
Community News

Accenture Reports Favorable Second Quarter Earnings

Defying analysts expectations, Accenture, Ltd announced that its fiscal second quarter earnings increased tenfold compared to last quarter, but revenues trailed off slightly.Accenture, Ltd reported net revenues of $2.83 billion, representing a three percent decline over net revenues from last year.

ABA President Objects to Proposed SEC Rule

The American Bar Association (ABA) is lobbying hard to stop the adoption of a new SEC rule that would require lawyers to make a "noisy withdrawal" - essentially requiring that they become whistleblowers - if their clients are involved in wrongdoing. On April 4, Alfred P. Carlton, president of the ABA, wrote a comment letter to the Securities and Exchange Commission, voicing his objections to the proposed procedure.

SEC Files Insider Trading Charges Against Former HealthSouth Chief

Richard Scrushy, former head of HealthSouth Corp., joins his two former chief financial officers, William Owens and Weston Smith, in
A&A

Tell The Truth, Unless it Hurts - Stock Option Accounting

The following is a guest editorial by, Raymond L. Dever, CPA (Retired)Tell the Truth, Unless it Hurts - Stock Option Accounting. Or, unless it is politically dangerous. "We can't stand by and let accountants wearing green eyeshades decide who is going to get the American dream," says Senator Barbara Boxer (D-California) before a Silicon Valley lobbying organization.
Tax

Companies do Pay Substantial Taxes, Even on Inflated Earnings

Just because a company inflates its earnings by a couple hundred million doesn’t mean it won’t pay the taxes on those bogus earnings.
Community News

Former Enron Accountant Writes Tell-All Book

She was Time magazine’s co-Person of the Year and the inspiration for Congress inserting whistle-blowing protections into the Sarbanes-Oxley Act. Now, Sherron Watkins, the former vice president at Enron, tells her story in the book, Power Failure: The Inside Story of the Collapse of Enron, co-written with Mimi Swartz, executive editor of Texas Monthly magazine.

Canada Names Members of New Oversight Body

Canadian accounting regulators have named the thirteen members of the group that will provide independent oversight to auditing and assurance standards across Canada.In response to high-profile business scandals in the United States, in October, 2002, the Canadian Institute of Chartered Accountants established the Auditing and Assurance Standards Oversight Council (AASOC), an independent body to oversee the activities of the Assurance Standards Board.The members, drawn from a cross-section of constituencies, are:Jim Baillie, A

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