Financial Reporting

SEC Poised to Release Proposal on Oversight Board

On the eve on the mark-up of the Senate accounting reform bill, the Securities and Exchange Commission (SEC) announced it, too, will take up the issue of oversight of the auditing profession this week. The SEC has scheduled an open meeting on Thursday, June 20, 2002 to consider the issues. It plans to vote at that time on the release of proposed rules that would create the framework for a new private-sector regulatory scheme.
Community News

Europe Moves to IAS, PwC CEO Urges U.S. Adoption

European authorities recently passed a regulation requiring public companies to adopt International Accounting Standards (IAS) by 2005. Several European organizations were established and/or called upon to help ensure a smooth transition. The events have not gotten much of a reaction in the U.S., but PricewaterhouseCoopers (PwC) Chief Executive Officer (CEO) Samuel A.

SEC Starts Rule-Making Process For Post-Enron Reforms

On June 12, 2002, the Securities and Exchange Commission (SEC) proposed rules designed to improve corporate reporting and restore investor confidence. The proposed rules would require senior executives to vouch for their company's reports, and they would expand the types of events that must be reported as they occur, rather than weeks or months later. Many of these reforms were discussed and/or announced during post-Enron Congressional hearings.
Practice

PwC Finds Accounting Lawsuits Broke Records in 2001

PricewaterhouseCoopers released the results of its 2001 securities litigation study on June 10, 2002.
Practice Management

NYSE Proposes Rules to Calm 'Moments of Madness'

The New York Stock Exchange (NYSE) has drafted proposed rules and recommendations designed to guide the markets past a crisis of confidence that NYSE Chairman Richard Grasso calls "moments of madness" in the days following the Enron collapse.
Tax

SEC Forum To Probe Problems of Small Businesses

The Securities and Exchange Commission (SEC) has announced that its annual Government-Business Forum on Small Business Capital Formation will be held on September 26 and 27, 2002 in Arlington, Virginia. The Forum is a way for small business owners and their representatives to communicate their views and needs to senior government officials. Items slated for discussion include issues in the areas of taxation and securities regulation.

Ex-Andersen CEO Speaks Out on Audit Fees, Reforms

On June 4, 2002, as defense attorneys called their final witness in the Andersen trial, former Andersen Chief Executive Officer (CEO) Joseph Berandino spoke out at the Commonwealth Club in Palo Alto on why auditors should not bear the whole burden of disasters such as the Enron debacle.In his first public appearance since his resignation in March, Mr. Berardino said he was "amazed" at the low auditing fees former Andersen clients have negotiated with their new auditors.

European Commission Issues Accounting Proposal

On June 3, 2002, the European Commission released a proposed financial reporting directive. When approved by the member states, this new directive will amend the existing European Union Accounting Directives and complement the International Accounting Standards (IAS) Regulation that requires certain companies to adopt international accounting standards by 2005. The IAS regulation applies to publicly traded companies.

Microsoft and SEC Settle 'Cookie Jar Accounting' Case

On June 3, 2002, the Securities and Exchange Commission (SEC) announced the settlement of an administrative enforcement action against Microsoft Corporation. The case involves allegations that Microsoft used "cookie jar accounting" to smooth earnings through adjustments to reserves.Commissioner Isaac Hunt explained to Reuters, "It's a cease-and-desist order.
Technology

EDGAR Goes Real-Time with Up-to-the-Minute Filings

Securities and Exchange Commission (SEC) Chairman Harvey Pitt announced on May 30, 2002 that the Commission's Web site will now provide free, real-time access to the filings of companies registered with the SEC. In the past, EDGAR filings were delayed by at least 24 hours on the free site, while some commercial EDGAR service providers supplied up-to-the-minute filings for a fee.
Practice Management

Professor Finds Value-Based Metrics Often Beat GAAP

Stanford Accounting Professor Stefan Reichelstein
A&A

FASB Releases Exposure Draft on Guarantees

On May 22, 2002, the Financial Accounting Standards Board (FASB) released an exposure draft (ED) of a proposed Interpretation entitled, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others."The accounting and disclosure requirements for guarantees were reconsidered in connection with FASB's post-Enron project on accounting for special purpose entities (SPEs).
A&A

The Facts About FASB's Funding Controversy

As part of post-Enron accounting reforms, lawmakers are considering government funding for the Financial Accounting Standards Board (FASB), the organization that sets U.S. accounting standards. This article explains the facts about FASB's funding and asks your input. To help you sort through the issues, below is a summary of the two main concerns, including explanations of FASB's current funding. The explanations incorporate insights provided by spokespersons for the American Institute of CPAs (AICPA) and Financial Accounting Foundation (FAF), the board that oversees FASB.

Europe Reforms Audits, Urges U.S. Cooperation

On May 16, 2002, the European Union (EU) issued long-awaited guidelines on auditor independence in an effort to avoid an Enron-type incident. Among other things, the guidelines recommend that accounting firms rotate audit partners after seven years with the same client and partners wait two years before joining a company they have audited. The recommendations are not binding. Each country is free to adopt stricter requirements. AccountingWEB's sister site in the U.K.
Practice Management

Business Roundtable Addresses Audits, Whistle-Blowing

The Business Roundtable, an elite association of 150 chief executive officers (CEOs) of leading corporations, has released guidelines to increase trust in U.S. companies post Enron. In a press release dated May 14, 2002, the CEOs encouraged all U.S.

IASB Proposes Sweeping Improvements in Standards

On May 15, 2002, the International Accounting Standards Board (IASB) released an exposure draft on "Improvements to International Accounting Standards." The draft introduces a series of wide-ranging improvements to 12 of the 34 standards IASB inherited from its predecessor, the International Accounting Standards Committee (IASC).
A&A

Standard & Poor's Sets Standard For Core Earnings

Standard & Poor's stepped into a standard-setting vacuum on May 14, 2002 and introduced a new set of definitions for measures of corporate earnings commonly used by the financial community. The newly-defined measure of core earnings will soon take on added importance, as the firm plans to incorporate this measure into its COMPUSTAT database for the U.S. and in its U.S.

SEC Chairman Harvey Pitt Connects at Investor Summit

Securities and Exchange Commission (SEC) Chairman Harvey Pitt defended his integrity and scored points with investors at the Commission's first Webcast Investor Summit on May 10, 2002. Most questions asked at the summit were well-focused on the issues of the times, including Web-based financial reporting. Some were answered by Commissioners Cynthia Glassman and Isaac Hunt or Chief Accountant Robert Herdman.

SEC's EDGAR Goes Global to Meet Investors' Needs

Starting November 4, 2002, the Securities and Exchange Commission will take its EDGAR (Electronic Data Gathering Analysis and Retrieval) system global by requiring non-US as well as US issuers of securities to file certain documents electronically.

SEC Hears of Alternatives to Faster Filings

The deadline for comment letters on its proposed rules for faster filings and Web postings doesn't come due until May 23, 2002, but already the Securities and Exchange Commission (SEC) is hearing of alternatives that might be better for both companies and investors. One particularly interesting suggestion came from Jack Ciesielski, owner of R.G.

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