Financial Reporting

SEC Requires Analysts to Certify Reports

Stock analysts will now have to certify the truthfulness of their research reports, under a recent unanimous ruling by federal regulators. On January 6, the Securities and Exchange Commission (SEC) ruled that analysts must certify that the research in their reports and public comments represent their true view. In addition, analysts must certify that haven’t received any payment from the company they are assessing. If they were paid for the report, they must disclose the amount they received and state that the compensation could influence their opinion.
A&A

FASB Enrolls Investment Community in Standard Setting Process

To increase the investment community’s participation in the accounting standard setting process, the Financial Accounting Standards Board (FASB) has established a User Advisory Council. The FASB will host its first meeting of the User Advisory Council on Thursday, February 13, at the Grand Hyatt in New York City.The Council will assist the FASB in raising awareness of how investors and investment professionals, equity and credit analysts and rating agencies use financial information.

Accounting Oversight Board Holds Second Meeting

The Public Company Accounting Oversight Board held it's second public meeting on February 4 as it begins settling in on its role of overseeing the implementation of several key provisions of the Sarbanes-Oxley Act.Among the discussions at this week's meeting:Acting Chairman Charles Niemeier expressed confidence that the Board will be able to carry out its responsibilities by the April 26, 2003 deadline set by Congress.Roderick M.

Consulting Group Analyzes Cause of Financial Restatements

What was really behind all of the financial restatements last year? What kinds of trends can be seen in the causes of these financial restatements?

The Auditing Debate: What's The Real Issue?

Reprinted from an article originally published in early 2002 by David H. Maister, as the Enron scandal was unfolding, and still very relevant to today's debates. Any way you look at it, the audit business cannot continue much longer as it is. If years of "clean" audits are no guarantee that billions of dollars of previously reported profits are, in fact, illusory, then what value does an audit actually provide?
A&A

FASB Issues FIN 46 to Curb Enron-Style Abuses

It took several decades and a crisis of unprecedented proportions to bring the issues to a head, but today's accountants have only weeks to come to grips with the new rules on accounting for special purpose entities (SPEs) like the ones that contributed to Enron's collapse.

SEC Finalizes Reg G on Non-GAAP Financial Measures

The Securities and Exchange Commission voted on January 15, 2003 to adopt Regulation G.
Practice Management

SEC Expands Definition of 'Financial Expert'

Accountants and retired audit partners looking for seats on boards of directors may be disappointed to hear the Securities and Exchange Commission has expanded its proposed definition of "financial expert." This definition has proven to be one the most controversial aspects of the Sarbanes-Oxley Act.Under the Sarbanes-Oxley Act, companies are required to disclose whether or not they have a "financial expert" on the audit committee of their board of directors.

AICPA Responds to SEC's Proposed Independence Rules

The AICPA has submitted a 60-page comment letter to the Securities and Exchange Commission in response to the auditor independence rules that the SEC proposed in November, 2002.Highlights of comments on key provisions include:Audit Partner Rotation: The AICPA supports audit partner rotation but has requested an exemption for smaller firms because of the undue hardship it would bring in trying to comply.Conflicts of Interest Resulting from Employment Relationships: The AICPA believes that there are safeguards already in place to pr

Powerful Panel Pressures Auditors to Limit Tax Services

The Conference Board's power-packed Commission on Public Trust and Private Enterprises released a report that adds to the pressures facing audit firms today. The report studied causes of declining public and investor trust and recommended that best practices include rotation of audit firms in some circumstances and relinquishing of certain types of tax work by audit firms.

SEC Proposes New Audit Committee Requirements

The U.S. Securities and Exchange Commission voted on January 8th to publish for comment new proposals that would set the rules for oversight of auditors by audit committees -- and it agreed to put real teeth into the new rules. Any U.S. public company that doesn't follow the rules will be delisted. Limited exceptions were agreed upon for non-U.S. companies.

Former SEC Chief Accountants Urge PCAOB Action

Below is the full text of a letter from Walter P. Schuetze, Michael H. Sutton, and Lynn E. Turner to members of the Public Company Accounting Oversight Board.December 31, 2002Public Company Accounting Oversight Boardc/o Mr. Charles NiemeierSecurities and Exchange Commission450 Fifth Street, N.W.Washington, D.C.
Community News

Deloitte's Practical Guide to Better Financial Reporting

After the corporate scandals of 2002, there has been no shortage of suggested accounting reforms. Many ideas, including principles-based standards, seem too abstract to offer any fast results. But the latest paper in Deloitte's Integrity and Quality series provides a refreshingly practical perspective. It is packed with helpful tools to improve the financial reporting process. Basically, Deloitte is advocating better explanations of the values, risks and ratios needed for a solid understanding of a company's financial position.
Community News

After Tyco's 'Aggressive Accounting,' PwC Vows Selectivity

In a series of advertisements timed to coincide with the release of a critical report on the accounting practices of its audit client Tyco International, PricewaterhouseCoopers (PwC) is vowing a return to an era of greater selectivity in client service.
A&A

FASB Releases FAS 148 on Stock Options

The Financial Accounting Standards Board (FASB) has released Statement No. 148 on "Accounting for Stock-Based Compensation—Transition and Disclosure." This statement provides alternative methods of transition for companies that choose to switch to the fair value method of accounting for stock options. Statement 148 also makes changes in the disclosure requirements for stock-based compensation, regardless of which method of accounting is chosen.

AICPA Readies New Business Reporting Model

The American Institute of CPAs is gearing up to establish a new business reporting model comprising online, real-time disclosures and performance-based measurements.
Practice

Time Names Whistle-Blowers as Persons of The Year

Time Magazine named three women whistle-blowers as its "Persons of the Year." The winners include Enron's Sherron Watkins and WorldCom's Cynthia Cooper, both of whom uncovered massive accounting fraud at their companies.Ms.

Video Shows Enron Execs Joking About Flaky Accounting

The Houston Chronicle has uncovered a home video of a farewell roast for departing Enron former president Rich Kinder in which many Enron executives, all of whom are under federal investigation now, say their heartfelt and sometimes humorous farewells to Mr. Kinder.

AICPA Asks SEC to Clarify Pro Formas Are Unaudited

In its comment letter on the Securities and Exchange Commission's proposed Regulation G, the American Institute of CPAs (AICPA) asked for clarification of the auditor's role with respect to pro forma data and reconciliations."We believe," reads the letter signed by AICPA Chair William Ezzell and AICPA CEO Barry Melancon, "that many investors and readers of pro forma data are under the impression that the auditor is associated with such pro forma data and has, in some way, approved the pro forma adjustment

GASB Issues Two New Exposure Drafts

The Governmental Accounting Standards Board (GASB) has published two new exposure drafts (EDs) for comment. One relates to "Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries." The other is entitled "Budgetary Comparison Schedules -- Perspective Differences."The first ED would require governments to report the effects of capital asset impairment in their financial statements when they occur.

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