Legal issues

Visuals Help Jury Understand Accounting, Find Koenig Liable

More than six months of collaboration between attorneys from the Securities and Exchange Commission (SEC) and The Focal Point LLC, an Oakland, Calif.-based litigation strategy and graphics firm, was successfully concluded when a Chicago jury, on June 29, found James Koenig, former chief financial officer of Waste Management Inc., liable for falsifying accounts while engaging in “massive financial fraud” totaling $1.7 billion, between 1992 and 1997.
Tax

Planned Phone Tax Refund Rules Allegedly Unlawful, Unfair & Exclusionary

An amended complaint has been filed in the U.S. District Court of the District of Columbia asserting the Internal Revenue Service (IRS) devised rules effectively denying refunds to and shortchanging American taxpayers, entitled to refunds, by billions of dollars. The amended class action lawsuit, Sloan et al v.
Community News

News of Ken Lay's Death Sparks Varied Reactions

Kenneth Lay, 64, the convicted founder and former chairman of Enron, died unexpectedly early this morning from an apparent heart attack.The Pitkin, Colo., Sheriff's Department said they were called to Lay's vacation home in Old Snowmass, Colo., shortly after 1 a.m.
Tax

Supreme Court Ends Case Involving Records of Offshore Accounts

The United States Supreme Court on Monday denied the petition for a Writ of Certiorari by Jerome Gippetti affirming the Third Circuit Court of Appeals’ conclusion that an individual’s Fifth Amendment right against self-incrimination is not violated by requiring a taxpayer, in response to a summons seeking production by the Internal Revenue Service (IRS), to produce evidence supporting claims made on a federal tax return pertaining to offshore accounts.

Terrorist Finance Tracking Program Disclosed

Treasury Secretary John Snow announced last week the existence of the Terrorist Finance Tracking Program, according to a prepared statement.
Tax

Accountant Held Liable for Interest Expense from Tax Error

The South Dakota Supreme Court last week upheld a Circuit Court decision allowing a jury to award damages to Doug O’Bryan Contracting Inc. for interest expense on underpayment of taxes that resulted from an error made by his accountant. The state’s high court had not previously allowed recovery of interest expense in lawsuits against tax advisers, the Associated Press reports.Bruce Ashland, a certified public accountant, understated O’Bryan’s income for 1995.
Practice Management

Cross-Border Dispute? Think Arbitration and Boost the Bottom-Line

A recent PricewaterhouseCoopers (PwC) study indicates that 73 percent of in-house counsels worldwide, prefer using international arbitration to resolve cross-border disputes rather than transnational litigation.
Tax

White Collar Crime Prosecutions Down; ID Theft Crimes Up

A case-by-case analysis released by the Transactional Records Access Clearinghouse (TRAC), a nonpartisan research organization, shows that prosecution of white collar crime cases by the Department of Justice (DOJ) in U.S. District Courts has declined by 31.3 percent from levels reported in 2001.

Investigation Spreads to Spring-Loading Executive Stock Option Grants

Individuals familiar with the rapidly expanding investigation into executive stock options grants have told Reuters that the practice of spring-loading, or setting a grant date and exercise price to occur shortly before the release of positive corporate news, is being scrutinized along with the practice of backdating.Advertisement
Tax

Accounting Anomalies Continue for Computer Associates

Computer Associates (CA) will delay its fourth quarter and full year financial results, according to their announcement this week. CA was expected to post 2 cents per share earnings for their fourth quarter, according to the Register.
Tax

Sharp Commission Makes Recommendations Increasing Professional Fees

In seeking a “fairer way” to overhaul Texas’ inefficient business tax structure, Gov. Rick Perry named members to the bi-partisan Texas Tax Reform Commission chaired by John Sharp.

Funding Bill Changes Rules for Ex-Spouses; Military Accountants

Last week the Senate Armed Services Committee approved three adjustments to the Uniformed Services Former Spouses Protection Act as part of the 2007 defense authorization bill (S 2766).
Tax

Guilty Verdicts for Ex-Enron Execs Spark Little Sympathy

A Texas jury on Thursday declared former Enron executives Kenneth Lay and Jeffrey Skilling guilty of fraud and conspiracy.

Accounting Manipulations at Fannie Mae Tied to Bonuses, OFHEO Says

A report by the Office of Federal Housing Enterprise Oversight (OFHEO) released on Tuesday charged senior management of the mortgage giant Fannie Mae with manipulating accounting to hit earnings targets in order to maximize their bonuses and other executive compensation, the New York Times reports.

Stock-Option Backdating Scandal Expands

Although not illegal, the accounting associated with executive stock option backdating “doesn’t feel right,” according to The CorporateCounsel.net. One company, UnitedHealth Group, may end up restating three years of financial results due to option back-dating. This accounting adjustment will see a change of some $286 million in net income for the company.
Practice

GM Restructures Controller’s Office; Hires Outside Financial Advisor

General Motors (GM) announced last week that it will combine the positions of Corporate Controller and Chief Accounting Officer as part of a restructuring of the Corporate Controller’s office. The company’s current controller, Paul W. Schmidt, will retire later in the year. Peter Bible, chief accounting officer, will resign effective June 1st but will assist the company during the transition to the new structure.
Tax

Prosecution, Defense Wrap in Enron Trial; Case Goes to the Jury

Enron Task Force prosecutor Kathryn Ruemmler wrapped up the government’s case against Kenneth Lay and Jeffrey Skilling, former chief executives of the bankrupt company, in a four-hour presentation on Monday in Houston, asking the jury to hold both men accountable for the choices they made and the lies they told. Defense attorneys, who presented their arguments on Tuesday, admitted bad business judgment on the part of their clients but emphatically denied criminal intent or conduct that would support the government’s charges of conspiracy and securities fraud against the two men.
A&A

Hartford Introduces Professional Liability Insurance for Private Accounting Firms

Accounting firms with up to 50 accounting professionals on staff can now look to the Hartford Financial Services Group, Inc. for their professional liability protection as well as their general business insurance needs and financial services products. The Accountants Professional Liability product provides coverage for certified public accountants and other accounting professionals, including public accountants, enrolled agents, tax preparers and bookkeepers.
A&A

FASB Mulls Change to Rule on Pending Lawsuits

The Financial Accounting Standards Board (FASB) is considering lowering the threshold for recognizing a public company's potential loss from pending litigation, a board member disclosed in a recent forum.Advertisement

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