Financial Reporting

Freeze - This is The FBA! Lay Down Your 10-K!

Ohio Rep. Dennis Kucinich has indicated that he will unveil a bill this week proposing that the federal government take over the audits of public companies through the creation of a Federal Bureau of Audits.In the most radical proposal to be discussed so far on auditor reform, Kucinich's proposal would sidestep all public accounting firms and would take over the auditing of all publicly held corporations through a proposed new arm of the SEC."Americans rely on the FBI to protect them from criminals and terrorists. But who protects American shareholders from corporate criminals?

Canada's Accounting Standards Setting to be Reviewed

The independent Accounting Standards Oversight Council (AcSOC) announced it is planning to address issues facing accounting standard-setting in Canada as a result of the Enron failure in the United States. A sub-committee of AcSOC has been formed to assist the council in studying Accounting Standards Board (AcSB) research into which accounting standards might have been circumvented in the Enron case, and whether Canadian standards might be at similar risk in the future.
Community News

UPDATE: Andersen Offers $800 Million Enron Settlement

Discussions to settle Andersen's culpability in the Enron bankruptcy began in earnest in a conference call held last week between Andersen attorneys and attorneys for potential plaintiffs in upcoming lawsuits.

Critics Want IASB To Disclose its Business Backers

The International Accounting Standards Board (IASB) has had its ups and downs, as the drama of the Enron investigations unfolded. First, it was the fair-haired boy, when Congress heard testimony that the Securities and Exchange Commission (SEC) should be allowed to accept IASB’s standards for accounting for stock options. This is an area in which the IASB reportedly gained a head-start over the Financial Accounting Standards Board (FASB) because the latter gave in to business pressures to keep these items off corporate income statements.
Community News

PwC Now Added to The Probe in Enron Partnership Deals

Andersen is no longer the only accounting firm taking the heat on the recent Enron implosion.
A&A

FASB Proposes A Change To Lease Accounting

As influential House Energy Committee Chairman Billy Tauzin called for a review of accounting rules “across the country and across corporate boards,” the Financial Accounting Standards Board (FASB) continued its relentless drive to strengthen the standards.
A&A

FASB Moves Forward on Accounting for SPEs

Under pressure to set accounting standards for the kinds of special purpose entities (SPEs) that kept debt off Enron's balance sheet, the Financial Accounting Standards Board (FASB) has tentatively decided on an approach and directed its staff to begin writing an exposure draft.The approach will be a blend of the Consolidated Policy-Modified Approach as of Sept.

Legislators Unveil Corporate and Auditing Accountability Act

On February 13, 2002, law-makers introduced legislation to restore investor confidence in the accounting profession and capital markets in response to the Enron collapse.Known as the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002 (CARTA), the proposed legislation would:Prohibit audit firms from offering certain types of consulting services.Create a public oversight board and Public Regulatory Organizations (PROs) to certify any auditor wishing

SEC Announces 'Quick-Fix' Disclosure Reforms

As the first step in a comprehensive program of accounting reforms, the Securities and Exchange Commission (SEC) has announced it intends to release proposed rules for expanded disclosures. The proposed rules will: Provide accelerated reporting by companies of transactions by company insiders in company securities, including transactions with the company. Accelerate filing by companies of their quarterly and annual reports.Expand the list of significant events requiring current disclosure on existing Form 8-K.
A&A

Former SEC Chairmen Urge Congress to Free FASB

Former chairmen of the Securities and Exchange Commission (SEC) testified before the Senate Committee on Banking, Housing, and Urban Affairs on February 12, 2002 on the issues that have arisen as a result of the Enron collapse. A key topic was their shared frustration with the process for setting accounting principles. They urged Congress to find a way to free the Financial Accounting Standards Board (FASB) from the business pressures of constituencies and funding dilemmas.

Congress Learns How Accountants Can Tag Future Enrons

Many people were surprised by the Enron collapse and lost money as a result. But James Chanos, head of a short-sell investment boutique, was not one of them. His firm profited from anticipating the company's demise. So Congress asked him to testify as to how he knew what no one else did. How to Spot the Early Warning SignsSurprisingly, many of the warning signs were out there in full view to anyone with an understanding of accounting.

Baruch Lev Testifies on Accounting's 'Axis of Evil'

In Congressional hearings on the Enron collapse, Professor Baruch Lev of New York University's Stern School of Business gave the House Committee on Energy and Commerce a short but insightful lesson on the “axis of evil” confronting the accounting profession today. When introducing Professor Lev, Committee Chaiman W. J.

Moody's, S&P Ask Companies To Disclose Rating 'Triggers'

Faced with the prospect of increased scrutiny by the Securities and Exchange Commission (SEC), Moody’s Investors Service and Standard & Poor’s said yesterday they have expanded the types of information requested from companies.

The 'Angel of Accounting Death' Looms on Wall Street

If there's anyone left who believes that the discussions about accounting policies and irregularities over the past two months is nothing but an academic discussion, better check your stock portfolio.Various stock indices closed down 2-3% percent on Monday in reaction to the growing awareness of the possibility of accounting monkey-business in publicly held companies."The angel of accounting death is riding through the market," said Douglas Altabef, a fund manager for Matrix Asset Advisors, which oversees $800 million.
Community News

Andersen Hires Paul Volcker to Reform, Restore Trust

Joseph F. Berardino, managing partner and chief executive officer of Andersen Worldwide, S.C., announced this weekend that former Federal Reserve Board Chairman Paul A.

AICPA Statement on New Auditor Independence Position

The following is the text of an e-mail distributed to AICPA members on Friday, February 1, 2002 outlining the change in position where the AICPA now opposes the practice of a firm providing certain kinds of consulting and internal audit services to a public client which the firm audits.

NASDAQ 100 Turn Big Losses Into Pro Forma Profits

In a study described as a “sad commentary on the state of financial reporting in the United States,” SmartStockInvestor.com analyzed the earnings (or losses) of the top 100 companies on the technology-heavy NASDAQ Exchange for the first three quarters of 2001. The study found the use of pro forma reporting turned combined losses of $82 billion for these companies under generally accepted accounting principles (GAAP) into combined profits of $19.1 billion.
A&A

FASB Releases Proposal for Revenue Recognition Project

The Financial Accounting Standards Board (FASB) has released for public comment a proposal for a new project on Issues Related to the Recognition of Revenues and Liabilities. In many respects, this is a “back-to-basics” project that will reexamine fundamental concepts. But don’t let the theoretical considerations deter you from reading this proposal.
Practice Management

SEC's 'What-if' Numbers Offer Hope To Battle-Weary Companies

Have you heard the one about the man who woke up from a coma and asked, “What’s an auditor?” He got the traditional reply: “Someone who arrives after the battle and bayonets all the wounded.” If Robert Herdman gets his way, that joke won’t be so funny any more. Mr. Herdman is the chief accountant of the Securities and Exchange Commission (SEC), and he has a new solution that will help companies avoid the battles altogether. The Perils of Too Much PrecisionMr.
Practice Management

Investors See Record Gaps in Pro Forma vs. GAAP Earnings

Preliminary statistical data show the difference between operating (pro forma) earnings and net income under generally accepted accounting principles (GAAP) reached an all-time high in 2001. These statistics cover the largest U.S. public companies, collectively known as the Standard & Poor’s 500 (S&P-500). The Securities and Exchange Commission (SEC) and accounting firms have been cautioning companies about the risks of disclosing pro forma earnings and the need to reconcile these earnings to net income under GAAP.

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