PCAOB

Community News

PCAOB Announces Leaders of Chicago, Denver Offices

The Chicago office is led by Deputy Director of Inspections, Greg Wilson. Mr. Wilson retired in December 2003 as an audit partner from Ernst & Young. He began his auditing career in 1969, specializing in the audits of publicly held retail, consumer and industrial products clients. He also served in various management and administrative positions including Director of the Chicago office audit practice and Regional Director of Human Resources. Mr. Wilson, a CPA, graduated from the University of Illinois with a Bachelor of Science degree in Accountancy.
Tax

AICPA to Comment on PCAOB Proposal on Auditor Independence, Tax Services

The AICPA’s reaction was generally favorable to the rule proposed by the Public Company Accounting Oversight Board concerning tax services that can be offered to public company audit clients, but the Institute will submit a comment letter. Four circumstances are identified in the proposal that would be considered as impairing an auditor’s independence.

SEC Announces Roundtable on Internal Control Reporting Requirements

The Securities and Exchange Commission announced today that it will host a roundtable discussion this spring regarding registrants’ and accounting firms’ experiences implementing the new reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002. The roundtable, which will include representatives of the Public Company Accounting Oversight Board (PCAOB), issuers, auditors, investors and other interested parties, is tentatively scheduled for April 2005.

Rein in the Public Company Accounting Oversight Board: Guest Article

By Peter J. Wallison, resident fellow at the American Enterprise Institute - The Public Company Accounting Oversight Board is a not-for-profit corporation established by the Sarbanes-Oxley Act to regulate the business of auditing public companies. Although industry self-regulatory organizations are not unusual, this one has the extraordinary power to tax all public companies to support its operations. Its freedom from the ordinary mechanisms of accountability for quasi-governmental functions is already having an effect, shown in its rapidly growing budget.

PCAOB Standards, Related Rules Reference Guide Offered by AICPA

The PCAOB Professional Standards and Related Rules (including SEC-Approved Releases and PCAOB Staff Q&A Guidance) has been developed by the AICPA to supply auditors with a workable, current, and comprehensive source of PCAOB standards for their engagements. This compilation delivers – Professional standards and staff guidance – including standards on auditing, attest, quality control, ethics, and independence. PCAOB Auditing Standard Nos. 1, 2, and 3, and all of the conforming amendments related to PCAOB Auditing Standard No.

Disclosures of Control Weaknesses Way Up from 2003

Fifty-six companies reported material weaknesses or significant deficiencies in internal controls last month, compared with 14 companies one year earlier, according to Compliance Week.A total of 582 companies made these kinds of disclosures in 2004, the newsletter reported, with about half of them related to financial systems and procedures, such as problems with the financial close process, account reconciliation or inventory processes. Personnel issues accounted for about 30 percent of the disclosures.

European Companies Grappling with SOX Compliance

Some European companies are wondering if the benefits of being listed on U.S. exchanges is worth the cost of Sarbanes-Oxley compliance, IT-Analysis.com reported.With public and private companies alike struggling to comply with the rigid new requirements intended to improve transparency and accountability, international companies are weighing the pros and cons. Companies with 300 or more U.S.
Tax

PCAOB Slashes 2005 Budget, Reports Recruitment Shortfall

The Public Company Accounting Oversight Board last week approved a revised budget for calendar year 2005 reducing the Board’s 2005 accounting support fee from $152.5 million to $136.1 million.
A&A

FEI Outlines Top Financial Reporting Challenges for 2005

Financial Executives International has identified the top 10 financial reporting challenges for 2005. These challenges will impact the way companies manage their businesses, report their financial results, and compensate their employees. The challenges include:Stock option expensing. The Financial Accounting Standards Board (FASB) has mandated that all stock compensation be expensed beginning June 30, 2005 for most public companies. Smaller public companies and private firms have until the first annual reporting period after Dec.
Community News

SEC Creates Committee to Examine SOX Impact on Small Public Companies

Securities and Exchange Commission Chairman William H. Donaldson announced on Friday the establishment of an advisory committee to assist the Commission in examining the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies. Appearing at a press conference today with the two individuals named as Co-Chairs of the committee, Chairman Donaldson stated, "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements.
Tax

SEC’s Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area. The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.
Tax

Board Proposes Rules Concerning Independence, Tax Services, and Contingent Fees

The Public Company Accounting Oversight Board voted unanimously at its open meeting to propose for public comment certain ethics and independence rules concerning independence, tax services, and contingent fees.The Board’s proposed rules fall into three areas. First, the proposed rules would identify three circumstances in which the provision of tax services impairs an auditor's independence: Proposed Rule 3521 would treat registered public accounting firms as not independent of their audit clients if they enter into contingent fee arrangements with those clients.
A&A

SEC May Reject PCAOB's Budget

The Securities and Exchange Commission may not approve the budget of the accounting oversight board, which offers an average salary of $203,000 a year.The Public Company Accounting Oversight Board (PCAOB), which has requested $153 million, offers salary increases of 30 percent a year, according to a report by Bloomberg, which cited people familiar with the matter.The PCAOB, formed in 2002 in the aftermath of massive corporate scandals and bankruptcies, is funded by publicly traded companies.

Judge Upholds Sarbanes-Oxley In Scrushy Fraud Case

Arguments that the Sarbanes-Oxley corporate reform law is unconstitutionally vague did not convince a federal judge, who has rejected Richard Scrushy's claims in his HealthSouth fraud case.Attorneys for Scrushy, HealthSouth's former chief executive, said the law should not be part of the indictment accusing him of fraud, the Associated Press reported. U.S. District Judge Karon O.

SEC Grants Extension On Internal Controls Reporting

The U.S. Securities and Exchange Commission on Tuesday issued an exemptive order to grant certain accelerated filers up to an additional 45-days to include in their annual reports management’s report on internal control over financial reporting and the related auditor’s report on management’s assessment of internal control over financial reporting. Both internal control reports are required under Commission rules implementing Section 404 of the Sarbanes-Oxley Act of 2002.
Community News

Few Audit Committees Are Implementing Key Practices, According to Report

As audit committees struggle implementing the requirements of Sarbanes-Oxley, fewer than one-third implement a majority of practices that lead to higher ratings of the financial audit process, according to the J.D. Power and Associates 2004 Audit Committee Best Practices Report(SM) released this week. The report is a comprehensive, independent study of audit performance in the wake of the Sarbanes-Oxley Act of 2002, which established new compliance and procedural requirements for corporate financial accountability of public companies.

PCAOB Adopts Temporary Rule Relating to Auditing Standard No. 2

The Public Company Accounting Oversight Board on Tuesday adopted a temporary transitional rule relating to PCAOB Auditing Standard No. 2, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements." Section 404 of the Sarbanes-Oxley Act of 2002 and the related implementing rules of the Securities and Exchange Commission require certain companies to include in their annual reports filed with the Commission a report on management’s assessment of the effectiveness of those companies’ internal control over financial reporting.

More Executives Saying 'No Thanks' to CFO Job

Some executives who long dreamt of seeing the title 'Chief Financial Officer' on their business cards are starting to wonder why they ever wanted the job in the first place. The CFO job, thanks to regulatory changes and a push for greater accountability in corporate America, has changed dramatically over the last few years. More scrutiny, more pressure, a huge workload and the stress that goes along with it are causing some professionals to leave the fancy title behind, the New York Times reported.E.
Technology

Increased Scrutiny of Internal Controls on the Rise

Awareness of the Sarbanes-Oxley Act of 2002 had surged in the not-for-profit industry over the past year. According to the second annual Grant Thornton Board Governance Survey for Not-for-Profit Organizations, 83 percent of survey respondents say they are “very” or “somewhat” familiar with the act, compared to 56 percent in the 2003.The survey, which includes responses from more than 700 not-for-profit entities, also found that these organizations are not only aware of the act, but many are also taking action because of it.

SOX 404 Trends for Next Year Beginning to Emerge

As public companies strive to meet compliance deadlines for Section 404 of the Sarbanes-Oxley Act, trends related to how companies will implement an efficient and effective process beyond the initial year of compliance are beginning to emerge, according to the results of a new survey released by Ernst & Young.

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