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.

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.

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.

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.

With the Enron implosion still very fresh in the minds of American business, Kmart, which filed for bankruptcy last week, announced that it was beginning an investigation of its internal accounting practices. The investigation was triggered by an "anonymous letter," reportedly by company employees, expressing concern regarding unspecified accounting matters.

Responding to a petition by the Big Five accounting firms, the Securities & Exchange Commission (SEC) issued a statement entitled Commission Statement about Management’s Discussion and Analysis of Financial Condition and Results of Operations.The SEC's statement contains suggested steps that public companies should take when preparing disclosures.

An article in the January 21, 2002 issue of Business Week entitled How Governance Rules Failed at Enron questions the effectiveness of today’s audit committees.

On January 15, 2002, the Securities and Exchange Commission (SEC) settled a case against BellSouth Corporation involving alleged violations of the Foreign Corrupt Practices Act (FCPA).

First quarter earnings announcements of many companies bring news of huge one-time write-offs under the Financial Accounting Standards Board’s Statement No. 142, Goodwill and Other Intangible Assets. This is leading to controversy and changing performance measures.Huge write-offs and controversyFor media giant AOL-Time Warner Inc., the projected write-down for first quarter 2002 amounts to a breath-taking $40 to $60 billion.