Financial Reporting

Community News

Gems on Reform From Investment Guru Warren Buffett

Warren Buffett is known as the "Oracle of Omaha" because of his unique investment acumen. In what has become an annual tradition, the investment community eagerly looks forward to Mr.
Tax

Voices of Reform: Get Out of Tax, Get Out of Audit, Shape up!

These are confusing times for accountants. As the accounting profession jockeys to identify and secure its proper place in the financial universe, conflicting messages continue to emanate from the leaders of the profession.Paul Volcker Calls For an End to High End Tax WorkIn an interview this week with the Financial Times, former Fed Chairman Paul Volcker called upon the Public Company Accounting Oversight Board to ban audit firms from performing tax work for audit clients.

AICPA Issues Internal Control Reporting Exposure Draft

In an effort to help auditors understand and implement Section 404 of the Sarbanes-Oxley Act - "Management Assessment of Internal Controls" - the AICPA's Auditing Standards Board (ASB) has issued an exposure draft on Internal Control Reporting.

PwC Chairman Calls For Expanded Auditor Responsibility

Speaking at the Economic Club of Detroit on March 17, PricewaterhouseCoopers Chairman Dennis Nally called for the auditing profession to expand its role to include greater responsibility for more of the contents of a company’s annual report.Audit reports "should cover the Management Discussion & Analysis, the proxy and other nonfinancial operating data," according to Mr. Nally.Mr.
A&A

Stock Options And Pensions Added to FASB Agenda

Responding to requests from investors, financial analysts and other users of financial information, the Financial Accounting Standards Board (FASB) added to its agenda two projects that will seek to improve the accounting and disclosures relating to stock-based compensation and pension costs.Amongst other issues, the project on stock-based compensation will address whether to require that the cost of employee stock options be treated as an expense.
Practice Management

Are You Teaching Your Employees to Steal? (Part 3)

Continued from "Are You Teaching Your Employees to Steal? Part 2"WHEN DO PEOPLE EMBEZZLE OR ABUSE THE COMPANY? Generally, three things have to be present before someone commits fraud or embezzles: need, opportunity, and rationalization. This is known as the "triangle of fraud." (See Figure 1.)Need takes two forms—direct and indirect. Direct need is stealing to fund cash needs and is often driven by an addiction—drugs, alcohol, gambling, or an extramarital affair.
A&A

US Senators Urge FASB to Reconsider Stock Options Stance

A bi-partisan coalition of United States Senators, led by former accountant Sen. Mike Enzi (R-WY), is urging the Financial Accounting Standards Board to more fully consider the question of expensing stock options, and suggested that the deliberation process currently underway is “basically flawed.”The Federal Accounting Standards Board Invitation to Comment specifically stated that it was not interested in views on whether stock options granted to employees result in compensation expense for the issuing entity.
Practice

Are You Teaching Your Employees to Steal? (Part 2)

Continued from "Are You Teaching Your Employees to Steal? Part 1"FRAUD AND ABUSE ARE COSTLYFraud and abuse cost the U.S. economy $400 billion a year. That translates into 6% of revenue or $9 per day, per employee. And relatively speaking, small companies are at a higher risk of fraud than large companies. Why? Because small companies don’t have as sophisticated systems of internal controls as large companies.
Practice Management

FASB Chairman is Bullish on Fair Value

If U.S. accounting practices swing to fair value, it will be in large part due to the efforts of Robert Herz, chairman of the Financial Accounting Standards Board (FASB), according to an article in the February issue of CFO magazine.
Education & Careers

Loyola Marymount Receives Endowment For Accounting Ethics Courses

Loyola Marymount University alumnus, R. Chad Dreier, and his wife, Ginni, have pledged $3.5 million to LMU for purposes of endowing a program of accounting ethics courses. Mr. Drier is chairman of the LMU board of trustees as well as president, chairman, and chief executive officer of the California-based Ryland Group, one of the nation's largest homebuilders and mortgage lenders."We are at a crossroads in the accounting profession from an ethical standpoint," Mr. Drier said.

Corporations Take Big Hits on Goodwill in 2002

U.S. corporations wrote $750 billion off their books last year to reflect the decline in value of business acquisitions. If the market continues to slide, analysts believe that goodwill write-downs could reach $200 billion in 2003. Most of the write-downs are for businesses acquired in the merger and acquisition frenzy in the late 1990s and 2000, especially those in the technology sector. The Financial Accounting Standards Board (FASB) statement on goodwill, FASB 142, requires companies to perform an annual goodwill impairment test and write down to value.
Practice Management

Are You Teaching Your Employees to Steal? (Part 1)

 My Employees Wouldn’t Embezzle: Yeah, Right Yes or No - Have you taught your employees to embezzle?  

Accountants Lobby For Cap on Liability Claims in Europe

Legal negligence claims against the Big Four firms threaten to decrease that number to the Big Three or less, according to David Devlin, President of the European Federation of Accountants. With that concern, Devlin is leading a charge to lobby the European Union for caps on claims against accounting firms, according to an article in this week’s Financial Times.The model for the liability cap should be a multiple of a firm’s audit fees, according to Mr. Devlin, who is also a partner at PricewaterhouseCoopers.
Community News

Two Ex-Kmart Executives Charged With Accounting Fraud

Yesterday federal authorities charged two former Kmart executives with committing an accounting fraud that resulted in the bankrupt retailer overstating earnings by $42 million.Separately, the Securities and Exchange Commission (SEC) filed civil and criminal complaints against Enio Montini, a former senior vice president and general manager, and Joseph Hofmeister, a former divisional vice president. According to the SEC, Mr. Montini and Mr. Hofmeister conspired to mislead Kmart accountants about the true nature of a $42 million payment from American Greetings Corp., a Kmart vendor.
Technology

Study Looks at Investor Relations Web Sites

What do potential investors really want from an investor relations Web page? To find the answer, Jakob Nielsen, a researcher from Fremont, CA-based Nielsen Norman group, conducted a research study to assess user response to information on corporate Web sites. The study had 42 potential investors look at the Web sites of 20 companies, including Home Depot, Johnson & Johnson, Pacific Sunwear of California, Symantec, Starbucks, and UPS.

Qwest Executives Charged by SEC

A federal grand jury in Denver has indicted four former executives of Qwest Communications for fraud.
A&A

Help is on The Way For Real Estate Time-Share Reporting

Professionals dealing with real estate time sharing transactions will soon get additional reporting guidance by both the AICPA and the Financial Accounting Standards Board.The AICPA has released a Statement of Position (SOP), "Accounting for Real Estate Time-Sharing Transactions." The proposed SOP would provide guidance on a seller's accounting for real estate time-sharing transactions in financial statements prepared in conformity with generally accepted accounting principles (GAAP).
Community News

Ernst & Young’s Stand on Options Displeases High-Tech Clients

Last week Ernst & Young weighed in on the issue of expensing stock options and in the process upset its high-technology clients. The Big Four accounting firm reversed its previous opinion, notifying the Financial Accounting Standards Board (FASB) that it now believes employee stock options should be expensed. Ernst & Young audits 46 of Silicon Valley’s 150 largest companies. High-technology firms, which routinely use employee stock options, have been vocal in their opposition to expensing the options. Until now, Ernst & Young had agreed with its Silicon Valley clients.

Convergence on International Reporting Standards Moves Closer

The results of a new research study out this week reveal that an overwhelming majority of countries - 90% - have plans to converge with International Financial Reporting Standards, but many obstacles still lay ahead.

Progress at PCAOB; Congress Drops PCAOB Salary Caps

Charles Niemeier, the interim chairman of the Public Company Accounting Oversight Board, responded to an article in Wednesday’s Financial Times that the Board was falling behind its schedule to fully review the Big Four accounting firms by the end of 2003."To fall behind, you have to have something to fall behind from ....

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